Beyond the Dinner Table:
Among the few bright spots during the recent recession, agriculture has played a crucial role in our economic recovery, and remains a vital component of the United States economy. In fact, U.S. farmers create well over $100 billion in annual economic activity each year, and they provide the foundation for 21 million agriculture-related jobs across America.
Today, agriculture is among an increasingly-rare slate of industries in the United States that operate at a trade surplus. From 2007–2011, agriculture exports grew at twice the annualized rate of the decade prior. Enabled by remarkable increases in productivity— for instance, the average dairy cow today produces about 22,000 pounds of milk per year, compared to 5,300 pounds in 1950—U.S. agriculture is becoming increasingly competitive abroad. While other industries continue to struggle to substantively recover from the recession, agriculture saw one of the most robust years on record in 2012. And the U.S. Department of Agriculture is projecting 2013 to be an even stronger year.
In spite of improvements in productivity and positive impacts on economic stability, the domestic agriculture industry is faced with a number of challenges both internal and external. For instance, more than half of the 210,000 farmers today in America are over 55 years of age. Farm land is regularly turned into residential and commercial properties. And with a growing national population of over 300 million, we are becoming more reliant on foreign sources of food—nearly 17 percent of the food Americans consume is imported, up from around 11 percent in the 1990s.
Our country must ensure a regulatory environment that allows our farmers to compete domestically as well as globally, and encourages continued improvements in production. Current policy favors farm subsidies and direct payments to farmers to create price floors and to help farmers survive the ups-and-downs of the agriculture cycle. But that money may be better spent elsewhere.
A recent study published by researchers from UC Davis and the University of Minnesota showed that every $1 invested in increasing agricultural productivity generates an estimated $20 of economic benefit, whereas every $1 spent on farm subsidies actually produces an economic benefit of less than $1. Investment in agriculture research and development will continue to augment productivity gains for U.S. farmers, increasing the volume of available domestic food, stabilizing food costs, accelerating exports, and improving the profitability of farming. Dedicating some portion of the funding currently allocated to subsidies to instead improve transportation infrastructure is another good place to start, lowering the cost of transporting supplies to farms and moving crops through production to market.
While farming may not often figure prominently into modern conversations about the United States economy, agriculture should be regarded anew as a critical component of U.S. economic stability and prosperity, and the level of investment in domestic agricultural productivity should reflect the importance of agriculture to our nation’s future.
This post is part of an ongoing series of data-driven commentary on current events. It was originally published in the Zion’s Bank Economic Outlook Newsletter and the Deseret News.
Founder and Chairman
Randy Shumway founded Cicero Group (www.cicerogroup.com) in 2001. It began humbly, with four people working out of Randy’s house. At the beginning of 2017, when Randy stepped down as CEO, Cicero had grown to a highly-respected, global management consulting firm.
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