carrying the
McNary–Haugen Farm Relief Bill in a dustpan out to a trash can labeled "VETO" Economics has been defined as the study of resource allocation under
scarcity. Agricultural economics, or the application of economic methods to optimize the decisions made by agricultural producers, grew to prominence around the turn of the 20th century. The field of agricultural economics can be traced back to works on land economics.
Henry Charles Taylor was the greatest contributor in this period, with the establishment of the Department of Agricultural Economics at the
University of Wisconsin in 1909. Another contributor, 1979
Nobel Economics Prize winner
Theodore Schultz, was among the first to examine
development economics as a problem related directly to agriculture. Schultz was also instrumental in establishing
econometrics as a tool for use in analyzing agricultural economics empirically; he noted in his landmark 1956 article that agricultural supply analysis is rooted in "shifting sand", implying that it was and is simply not being done correctly. One scholar in the field, Ford Runge, summarizes the development of agricultural economics as follows: Agricultural economics arose in the late 19th century, combined the
theory of the firm with marketing and organization theory, and developed throughout the 20th century largely as an empirical branch of general economics. The discipline was closely linked to empirical applications of mathematical statistics and made early and significant contributions to econometric methods. In the 1960s and afterwards, as agricultural sectors in the
OECD countries contracted, agricultural economists were drawn to the development problems of poor countries, to the trade and
macroeconomic policy implications of agriculture in rich countries, and to a variety of production, consumption, and environmental and resource problems. Agricultural economists have made many well-known contributions to the economics field with such models as the
cobweb model,
hedonic regression pricing models, new technology and diffusion models (
Zvi Griliches),
multifactor productivity and efficiency theory and measurement, and the random coefficients regression. The farm sector is frequently cited as a prime example of the
perfect competition economic paradigm. In
Asia, the Faculty of Agricultural Economics was established in September 1919 in
Hokkaido Imperial University,
Japan, as
Tokyo Imperial University's School of Agriculture started a faculty on agricultural economics in its second department of agricultural science. In the
Philippines, agricultural economics was offered first by the
University of the Philippines Los Baños Department of Agricultural Economics in 1919. Today, the field of agricultural economics has transformed into a more integrative discipline which covers farm management and production economics, rural finance and institutions,
agricultural marketing and prices, agricultural policy and development, food and nutrition economics, and environmental and
natural resource economics. Since the 1970s, agricultural economics has primarily focused on seven main topics, according to Ford Runge: agricultural environment and resources; risk and uncertainty; food and
consumer economics; prices and incomes;
market structures; trade and development; and
technical change and
human capital. ==Major topics in agricultural economics==