Some Thoughts on Agricultural Productivity and Atmospheric Carbon Dioxide

by Dr. David Debertin

Spending large sums on public funds and drastically altering how people live their daily lives with respect to the use of fossil fuels would be politically much more popular if it could be shown that with climate change and global warming, the food supply for the nation and the world would be in serious jeopardy if these costly steps were not implemented.

Technology has moved forward very rapidly in agriculture over a hundred years or more resulting in a food supply in the developed world that is ordinarily cheap, abundant and safe for consumers. The USDA compiles reams of annual data on the production for individual crop and livestock enterprises both for the US and for smaller geographic regions such as states and even individual counties. The best data are generally for individual crop or livestock enterprises at the state level, such as corn yields in Indiana, where there exists annual data for the past 100 years or more. All of these data are readily available from the USDA for downloading directly from the Internet.

Generally, the annual yield data for an individual crop may exhibit wide swings both up or down for a specific location in a specific year, and these year-to-year swings (mainly weather-related) tend to get more extreme the smaller the geographic area. The yield data on corn for the entire US would tend to be smoother that for an individual state such as Indiana, and the data for Indiana would tend to be smoother than for the same data for an individual county in Indiana.

In the US at least, the really important part of food consumption centers on three animal proteins, chicken, pork and beef. The consumption of fish has been rising, but is still not near the big three.

Of the big three, chicken and pork in the grocery store have been really inexpensive for a long time, sometimes cheaper on a per-pound basis than many raw fruits and vegetables. Beef has been a bit more expensive than the other two, with a somewhat different production system as well.

Three plants important in animal production are corn, soybeans and wheat. Chicken and pork are largely grown in confinement and fed rations consisting mainly of corn and soybean meal, the high protein remnants of the soybean after the soybean oil is extracted. Beef works a little differently. Generally calves graze on pasture until they reach a weight (maybe half the slaughter weight of 1000 lb) in which they are moved into a beef feedlot, where they are again fed a ration containing lots of corn and soybean meal until slaughter. There is also a burgeoning market for beef in which the animal was fed grass on pasture its entire life, but this is still a small share of total beef production. A large share of fish is now being farmed, and fish farming usually requires farm-grown plant-based feeds as well.

Most milk is produced from cows in confinement, and fed a ration containing corn, soybean meal and alfalfa or maybe corn leaves (as silage) in some form. So the cost of producing corn and soybeans and alfalfa meal or pellets becomes important in determining the cost of milk. Generally milk is being oversupplied currently and the price for fluid milk, basic cheeses and ice cream are very low.

At the core of all of this is what is happening to the real (inflation-adjusted) prices for corn, soybeans and wheat, which in turn depend on long-term yields, productivity gains and, of course, demand for food by consumers.

Corn is particularly interesting. First, current use statistics reveal that the biggest use for corn (40%) is not to feed animals but to make fuel-grade ethanol that is used as a 10% or possibly 15% substitute for all petroleum-based gasoline. About 36% of US corn production is used as animal feeds with the remaining 14% for everything else, including corn-based food items such as cereals and corn meal, but also things like corn-based non-food items such as industrial plastics.

In 1985, I wrote the first version of my production economics textbook, and used $4 price for corn in a bunch of different tables and illustrations. The most recent version of my book I wrote in 2010–2012, and at that time I debated revising every table as corn was selling in the $5 to $6 range. That would have been a major additional undertaking with the potential for creating and then finding a lot of new errors that might have occurred accidentally when revising the tables, so I somewhat reluctantly decided not to take on the task.

Currently, corn has been selling for slightly less than my 1985 assumed price of $4 per bushel. I’m seeing a US price for November 9, 2018 of approximately $3.70 per bushel.

A quick application of an overall inflation calculator shows me that if the price of corn had merely increased with the overall Consumer Price Index, corn that sold for $4 in September of 1985 should currently be selling for more than twice that in September of 2018, $9.32 to be exact.

I’ve never quite understood the rationalization for lacing gasoline with corn-based ethanol. And benefits that might accrue from a reduced price-per-gallon from the ethanol-laced product are normally more than offset by a reduction in vehicle mileage per gallon, since ethanol is a lower-btu product than gasoline from crude oil. The scheme only works if the price of crude oil is very high. I guess there are those who would claim that ethanol in gasoline slightly reduces carbon dioxide emissions and therefore is somehow saving the planet from climate change, but the case for that happening to any degree appears to me to be weak if at all. So I am left with the idea that corn prices would be much lower than $3.70 per bushel if you suddenly pulled 40% of US demand for corn away. But then, really cheap corn would be very good for producers of pork, chicken, beef and dairy, and prices for foods in these categories would end up being still lower for consumers.

Agricultural production economists have observed the impacts of technological change on agricultural production for many decades. A related observation is that mass starvation worldwide is now an important problem but largely only in countries with totally messed-up central governments, North Korea and Venezuela to name two of them. But mass starvation is generally not an issue in any country that has its political act together.

Historically, agricultural economists have attributed rising productivity levels to a host of different small improvements in plant and animal genetics, pesticides, more efficient machinery and a general continuing improvement in the efficiency of production systems. In a country such as the US, production agriculture is capital not labor intensive, which significantly means that only a tiny share of the nation’s population needs to be actively engaged in raw food production, freeing everyone else to be able to work in mostly higher-wage jobs outside of production agriculture.

My friend and colleague Eldon Ball has only recently retired from the USDA. He is generally regarded as the world’s leading expert at both measuring and studying changes in agricultural productivity in the US and in countries around the world, but also studying the important question as to why do productivity changes take place relentlessly in most agricultural production. Eldon has a lot of the same questions regarding the specific mechanisms at work that I have.

Are the people who dream up new technologies and production methods simply brilliant to manage to keep the price of corn at less than half of what it should be had it just followed along with the US CPI?

The idea that rising atmospheric carbon dioxide emissions over the past 50 years or more is largely blamed on increasing industrialization along with increased burning of fossil fuels and therefore may have played a role in increasing not decreasing farm-level productivity is novel to most agricultural economists. I am saddened by what appears to be a willingness of some agricultural economists to jump on the bandwagon that says rising carbon dioxide emissions and the resultant negative consequences of carbon dioxide-caused climate change will somehow reduce agricultural production not increase it and thus will contribute to mass starvation around the world. Some of those making these claims seem to be completely unaware of the fact that life itself depends on the carbon dioxide in the atmosphere, and that photosynthesis in plants can only occur if atmospheric carbon dioxide is readily available. I often wonder how many students in colleges of agriculture even realize this. To label carbon dioxide as a harmful pollutant not a gas necessary to sustain life seems to perpetuate the myths. The entire food system that produces corn, wheat and soybeans and the animals that are fed grain not to mention leaf-based biomass in pasture is grounded in chemistry that has photosynthesis and carbon dioxide at its very core. To deny this makes you a “plant science or maybe a plant physiology denier.”

So the debate will center not on the subject of whether or not carbon dioxide is a gas necessary to sustain life on earth, but rather on exactly how each plant uses the carbon dioxide it receives from the atmosphere with some plants being more efficient at utilizing higher levels of carbon dioxide than others.

And finally, there is the important question of how to measure the share of the agricultural productivity gain that can be reasonably attributed to gradually-rising atmospheric carbon dioxide levels rather than to the collective brilliance of a host of agricultural scientists, both public and private, whom each have made small contributions to improving the efficiency of how food in all its forms is being produced. This is no small puzzle. I’ve tossed out a 20% number as a starting point. That is, 20 percent of the gains we have seen in agricultural productivity over the past 50–75 years can be directly linked not to the brilliance of agricultural scientists, but rather to the simple fact that with industrialization, atmospheric carbon dioxide has risen along with benefits for plant growth. This number may vary by crop and the mechanisms each plant uses to convert carbon dioxide into starches, sugars and proteins, but 20% is a good starting point for thinking about the topic. I have been pleased to learn that some others not referencing me have tossed out a number in the same general range.

Dr. David L. Debertin

Debertin is best known as the author of the book, “Agricultural Production Economics” which is widely used everywhere around the world by upper division and graduate programs in agricultural economics.

BS (1969 Ag. Education-Agronomy ), MS (1970 Ag.Economics), North Dakota State University
MS Thesis: Cost-Size-Quality Relationships Affecting North Dakota Schools (Thor Hertsgaard, director), 1970 PhD, Purdue, August, 1973, Ag. Economics
Editor, Journal of Agricultural and Applied Economics 1993–1995 Volumes (with Angelos Pagoulatos and Barry Bobst)
Editor, Review of Agricultural Economics for the 1997 and 1998 volumes. Co-founded the Review of Ag. Economics in the current format under AAEA sponsorship (with Angelos Pagoulatos)