Luther G. Tweeten

The Economics of Global Food Security

This article outlines a food security synthesis: that food insecurity traces to poverty, that poverty must be addressed by economic development, and that economic development flows from application of the standard model that is now mainstream economics. Food-insecure countries do not follow the standard model; their policies for agriculture and other sectors deter development. Reasons lie in institutions such as government and in attitudes. The economics of food security is straightforward. The challenge of food security for our time is for economists to work with others regarding socioinstitutional changes essential for proven policies and practices to supply adequate diets.

Toward an Optimal Rate of Growth in Agricultural Production Research and Extension

Publicly supported investments in nonconventional inputs, principally agricultural production research and extension (R), contributed significantly to gains in productivity and have been a low-cost source of additional output. Several studies (Peterson; Tweeten, 1970, chap. 5) reveal rates of return clustering around 50% on public R investment. Ironically, this rate of return implies economic inefficiency-the nation has foregone production from greater use of low-cost sources of farm output. In competitive equilibrium, an efficient allocation entails an equal rate of return among alternative investments, given appropriate adjustment for risk. For economic efficiency, more investment is called for in agricultural research and extension to drive the rate of return down to levels consistent with returns on alternative uses for limited funds. Previous studies show only the historic rate of return on R investment. Such estimates are of limited use in judging appropriate future levels of R. The purpose of this study is to determine a more nearly optimal rate of future investment in publicly supported agricultural production research and extension. Specific objectives include: (a) Updating previous estimates of rates of return on past investments in R; (b) Estimating expected rates of return on alternative future levels of investment in R, showing investments required to reduce the rate of return to a more nearly optimal level; (c) Examining the impact on future farm prices, income, and usage of conventional production inputs associated with alternative rates of growth in farm productivity; and (d) Inferring tentative conclusions regarding optimal growth in R consistent with equilibrium rates of return in (b) and the ability of the farming industry to adjust to productivity gains as determined in (c).

Social and Private Rates of Return to Investment in Schooling, by Race-Sex Groups and Regions.

In this article, social and private rates of return to schooling investment are computed in four race-sex groups (white males, males of other races, white females, and females of other races). Social and private rates of return also are computed for the aggregate of the four race-sex groups within each of four U.S. Census Regions and for the United States as a whole. Adjustments are made in the rates of return of white males for secular growth in earnings, mortality, ability, and taxes. The empirical investigation is based on 1959-60 schooling cost estimates and 1959 earnings data from the 1960 Census of Population. Private rates of return suggest that, in general, schooling is an attractive investment across all schooling levels and for all race-sex groups. Aggregated over all schooling groups, the unadjusted social rates of return were 15.1, 10.2, 6.4, and 10.3 percent for white males, males of other races, white females, and females of other races, respectively. Although adjustments for the nonschooling factors affected both private and social rates of return for elementary schooling and college only slightly, the effects for high school were substantial. Among the four U.S. Census Regions, high social rates of return were associated in general with low levels of social investment in schooling. The South, with the lowest level of schooling per student, incurred the highest social rate of return whereas the West, with the highest investment per student, received the lowest social rate of return. The adjusted social rate of return to all U.S. schooling investment (excluding graduate training) in 1959 was 11.8 percent.

Macroeconomics in Crisis: Agriculture in an Underachieving Economy

The American economy performs like an auto engine whose radiator is choked with lime deposits. Some time ago, it was discovered that adding generous amounts of tap water to the radiator permitted high power output without overheating. As the years went by, however, lime deposited in the radiator by the tap water reduced cooling capacity-tap water had to be added continuously for adequate engine performance even under normal loads on level highways. Deposits finally built to the point where nearly all agree that something has to be done to restore power to this basically sound, but occluded, engine. One recommendation is to use a high pressure radiator cap for increasing engine performance without continually adding water. But the concern is that something will burst under the pressure. Another recommendation is to remove the radiator and cook out the lime deposits. The drawback is protracted engine downtime. These are basically the dilemmas and options facing macroeconomic policy today. Performance of the economy as apparent in high inflation and unemployment rates, in slow real growth, and in a weak dollar in international exchange has reached crisis proportions. Economists and the public are convinced the economy is capable of better performance, but there is no concensus about how to restore

Wheat Storage and Trade in an Efficient Global Market

Domestic and international linkages in speculative stockholdings and trade of wheat are analyzed using a dynamic rational expectations model of the world wheat market dominated by the U.S. and the EU. The results demonstrate the importance of endogenizing both storage and trade in studying commodity markets and suggest that past government stockholdings have not followed efficient market outcomes. Results indicate that elimination of the Export Enhancement Program by the U.S. and of export restitution payments by the EU are unlikely to have a major impact on wheat exports from the two regions but will save millions of tax dollars in both regions. Copyright 1996, Oxford University Press.

Agricultural policy for the 21st century.

Farm Commodity Programmes - Essential Safety Net or Corporate Welfare? Agricultural Policy - Pre- and Post-FAIR Act Comparisons The Content of Farm Policy in the 21st Century An Empirical Analysis of the Farm Problem Income Variability of the U.S. Farm Sector and Public Policy Crop Insurance Coalitions and Competitiveness - Why Has the Sugar Programme Been Resilient? Rational Policy Processes for a Pluralistic World The Changing Economics of Agriculture and the Environment Farmland is Not Just for Farming Anymore - The Policy Trends Kuznets Curves For Environmental Degradation and Resource Depletion Competing Paradigms in the OECD and their Impact on the WTO Food Security - Trade and Agricultural Commodity Policy.

Public Policy for Agriculture after Commodity Programs

The Federal Agricultural Improvement and Reform (FAIR) Act of 1996 opted for the market instead of the government to allocate resources and set returns in agriculture. Decoupled transition payments will continue to year 2002, after which they may be discontinued. A modest safety net of marketing loans and crop insurance may remain after 2002, but the era of government supply management of primary crops appears to be over. In this paper, our objective is to consider appropriate public policy for U.S. agriculture without price-related subsidies and attendant managed supplies. The discussion is suggestive, not exhaustive, and is intended to stimulate thinking on how postcommodity program policy might better serve the needs of agriculture and the public at large.

Theories Explaining the Persistence of Low Resource Returns in a Growing Farm Economy

Low rates of return (defined as earnings below opportunity costs) on farm resources have long been considered a major farm problem and one justification for government commodity programs. This paper first analyzes influences (such as economic growth, inflation, and technology) that generate disequilibrium and low returns. But the major issue analyzed is why farm disequilibrium persists after an extended period of full national employment, a strong national economy, an expansion of the aggregate farm plant, and a slow growth of farm productivity in the 1960s. The fixed resource theory, the increasing returns to size theory, and the imperfect competition theory are examined to explain persistence and permanency of disequilibrium and low returns. The fixed resource theory explains low returns as a labor fixity problem and suggests that the problem is either nonexistent or temporary. The increasing returns to size theory points to an extended duration for the low returns problem as long as the large majority of farms continue to operate on uneconomic size units. Finally, the imperfect competition theory depicts low returns as virtually permanent, given the economic structures of the farm and nonfarm sectors.

Investing in Research and Education versus Commodity Programs: Implications for Agricultural Productivity

The long-term impact of research, education, and various government support programs on U.S. agricultural productivity was analyzed using an error correction model. Results indicate that the proposed reduction in commodity program expenditures (e.g. 1996 Farm Bill) is unlikely to reduce agricultural productivity. Results suggest that shifting public funds from commodity programs to education and research would raise U.S. agricultural productivity. Our estimates of long-term rates of return to public research are lower than those from most previous, perhaps due to our improved model specification, but are high enough to justify continued public investments to raise productivity.

The Economics of Small Farms

The role of the small farm in American agriculture has been the focus of much public discussion since Secretary of Agriculture Bob Bergland elevated farm structure to the national political agenda during the Carter Administration. Eight hypotheses based on common assertions concerning the alleged advantages of the small farm were tested in the light of available empirical evidence. No basis was found to accept any of the eight hypotheses. There may be reasons to preserve and even encourage small farms but they are not the reasons commonly given for political initiatives and public policies favoring small farms. Although it is questionable whether any size of farm can be viewed as optimal, the strongest case is for the typical moderate-size family farm of today rather than for small farms or large industrial-type farms.