What does an Agricultural Economist do?

Often when I introduce myself, whether at a BBQ, conference or industry networking event even though I use the words ‘agricultural economist’ people instead hear ‘agronomist’ or ‘accountant’ or ‘some really boring thing that involves numbers that don’t reflect reality’!

First of all, my green thumb skills are somewhat lacking so I’m certainly no agronomist and an accountant’s primary job is really to minimise the tax you pay which is quite different to an economist.

To understand what an agricultural economist does, it first helps to understand what economics is actually all about.

Basically, everything on this earth is scarce, that is, limited in some way. So whether we’re talking about actual things – soil, water, cows, or time, or people and their skills, knowledge and ability to process information there is a limit to how much is available.

Economics is the study then of how these scarce resources are allocated.

If you pick up a first year economics textbook it will talk about things like ‘budget constraints’, ‘utility maximization’ and ‘supply and demand curves’ which may sound horribly boring and complicated. But really all they’re talking about is how people decide how they’re going to spend their limited budget of time and money.

Without thinking about it, everyone is engaging in these activities every day. For example, think about what you had for breakfast today. Was it a simple piece of toast and an instant coffee at home or did you splash out on a large latte and a fancy muffin on the way to work?

Whichever it was, somewhere subconsciously you made a decision about whether you should allocate more of your time and money budget to breakfast or more to something else to maximise your ‘happiness’ (utility in economics-speak) for the day.

So what does this have to do with agriculture (apart from talking about food…)?

Well farmers, graziers, fishers and foresters also have to make these decisions every day.

‘Should I grow wheat or barley?”

“Should I sell these steers now to a feedlot or keep them to sell direct to the meatworks?”

As an agricultural economist, it is not my job to make that decision for you, but to give you the tools and a way of analysing the choice so you can make an informed decision.

Then when you start looking beyond the individual producer at the regional or industry level an agricultural economist can help to answer questions like:

“How do we allocate water licences to maximise production and efficiency” or “Should industry invest more research on this technology or that one”? or “What are global grain prices likely to do if there is a drought in Australia or disease in the Ukraine?

A good agricultural economist will provide objective answers to these questions based on the data available and not on their own feelings, political opinions or preferences.

Maybe then its because economists spend their time dealing with what is rational and sensible but not necessarily exciting that they sometimes get the reputation for being the fun police.

So just to prove that economists do have a sense of humour...

#agriculturaleconomics #aboutme


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