Dialogue between the AES and the Agrifood Industry, 26 June 2024
 
The Agricultural Economics Society hosted this one-day event in London, focusing on the question How could the agri-food industry and academic agricultural economists mutually benefit from engaging in dialogue to address current and future sectoral challenges? This pilot conference took the form of an interactive dialogue, bringing together academic and commercial agri-food economists with industry players and representatives. It provided an instructive forum to understand what we, as agricultural economists, can do to help industry with the challenges they face, and was invaluable in gaining an insight into the needs of the industry and what issues could be addressed by agricultural economists.

Speakers included NFU and AHDB economists, the Competition and Market Authorities, farmers, food processors and retailers, and AES members. Several short presentations set the scene for discussion across a range of topics: what landowners and farmers, food processors and retailers want from agricultural economists, and the role of government and policy. A key issue concerned the contribution of agricultural economics in the 21st Century, as we approach the AES Centenary year in 2026.

Some common themes arose during discussion and panel sessions, ably chaired by Lord Curry. These included the availability of data and its intelligent use, the importance of trade and trade policy (especially differential regulations), the role of agricultural economics in policy monitoring and evaluation (how do we measure success?), and the potential value of our profession to the industry and to government in these challenging times, given that agricultural economists are not always involved. Perhaps too often agricultural economists do not tackle the key issues of concern to the public and policy makers - and are neither translatable at the farm or firm level nor readily accessible to non-experts. Issues of increasing interest include accounting for externalities given the importance of rural, environmental, animal, and human health issues, and enhancing resilience and risk management. But caution is needed as the diversity of agri-food sector sizes and structures, performance and business objectives limits making sweeping generalizations.
The event generated much interest and enthusiasm among the participants, and we look forward to feedback, which will be considered by the AES Executive in taking this forward in the future to ensure we as a profession are fully aware and informed about how we can best support a thriving and viable future for the agri-food industries in the UK that meet a wide range of consumer and societal needs.

Notes from individual sessions

Is there still a role for Agricultural Economics
•    Agricultural Economics is important because it matters as many topical issues such as Climate Change, Net Zero, Food Security, Biodiversity, Productivity are ‘agricultural economic’ issues.
•    Economic issues involve multiple, often uncertain, trade-offs and potentially perverse outcomes which, if ignored, lead to sub-optimal policy and guidance, such as a Net Zero policy that ignores greenhouse gas emissions arising from imports.
•    How do we measure success? (need clear, ‘SMART’ objectives)
•    Research and communication in Agricultural Economics can be both informed (‘evidence based’) and objective (‘positive rather than normative’)
•    What is a good policy? Agricultural Economics has a framework for evaluating policy / policy proposals (but there are challenges of data analysis).

What do farmers and landowners want from Agricultural Economics?
•    To know who you are (people are important).
•    Landowners / tenants; livestock / arable farmers will have different objectives and requirements: farmers are different.
•    Some proportion of farmers just ‘want to farm’ and treat government support as providing the income to do this.
•    Risk management: farmers want information, data, forecasts on which to base decision making.
•    Metrics: farmers are willing to engage but need understanding of the farm business: e.g. cost per unit output can be affected by unforeseen events (and is thus also a risk).
•    Farm businesses are largely microbusinesses with limited resources and multiple demands on these resources: there are multiple “attention grabbers”.
•    Guidance should be applicable to individual farms (‘farmers are different’).
•    Opportunity to present independent evidence and allow farmers to make the decision e.g. transition from Basic Payment to SFI payments (but need to ‘get them in the shop before selling’).
•    Agricultural Economics has yet to explain and therefore produce good information on why productivity differs across different countries.
•    Potential imbalance between policy objectives: e.g. trade-offs between environmental objectives and food security.

What do food processing and retail sectors want from agricultural economists?
•    Market structures and pricing within supply chains have received more attention (in the Ag Econ literature for example) than contract arrangements between suppliers and retailers, other issues within the food supply chain.
•    Farm products are very different: e.g. poultry supply chain is more predictable than other sectors.
•    Much focus has been on fairness in supply chains (to farmers, to consumers) but not enough done on resilience.
•    Environmental metrics and how to integrate these across the supply chain (‘Scope 3 emissions’).
•    What is the value of compliance to quality standards: e.g. Red Tractor?
•    How does the UK compare with other countries on environmental and production standards (biodiversity, productivity).
•    Industry needs good data across all ‘metrics’ – resilience, production, QA, environmental and so forth.
•    Don’t just provide answers – provide a map: how did we get here, where are we going (suggests that dynamics are important, industry is not static). From this “provide information on which we can make better decisions”.
•    Decline in data quality is a concern (cf Tim Harford).
•    Opportunities to improve standards: trade in some products may have inconsistent standards; is there a potential competitive advantage in imposing standards domestically?
•    The challenge of data analysis: But what do agricultural economists do?
•    Academic journals require originality and an important application of an existing approach.
•    There are fashionable topics: now it is ‘choice experiments’ and ‘willingness to pay’ studies. But are these relevant to the agricultural industries? (saying you are willing to pay can differ from revealed preferences in actual purchases).
•    Applied research may not be effective: it is applied, but ‘no one listens’ (or perhaps there are other reasons).
•    Lack of effectiveness generally: e.g. obesity is known to be a problem but very little progress. Some measures (e.g. sugar tax) enacted but effect not as expected (e.g. not consumption but product content reformulation).
•    We don’t capture big changes: most analysis is ‘at the margin’. Thus, are we capturing whether ag systems (biologically, financially) are resilient?
•    Policy debates or research informing these debates often do not involve economics: ‘there isn’t an agricultural economist in the room’. When there is it is a case of reverse engineering and ‘restoring order’.
•    Perception that Agricultural Economics is biased. (too close to government, different sectors of the industry?).
•    Are we forgetting lessons learned such as the 1990s - reduce price support for production/increase support for public goods? UK ag policy now an exception?
•    Multiple objectives make it difficult to achieve any one objective.

Panel Discussion
•    Good data are important.
•    Recognise challenges: population growth, water scarcity, positive and negative externalities across a range of dimensions – and so forth: ‘it is complicated’ (but Economics can provide parsimonious approaches to modelling complexity? Capture the whole but simplify the components).
•    Engagement with the above often not ‘economic’ (it does not capture the whole).
•    Prices do not reflect societal values (e.g. pollution, biodiversity).
•    Presentation is important – evidence and understanding of those being ‘advised’.
•    Policy often ‘reactive’ and thus tends to rely on sciences (e.g. veterinary science).
•    Farmers’ thinking is dictated by policy environment such as Australasian farmers perhaps more focused on markets as government support has been historically lower than EU / UK (‘you need a map to understand where you are’ – also, environmental problems perhaps greater in Australasia for similar reasons).
•    Change does not always affect the tail of the distribution the most: e.g. small farmers are less interested in commercial status and thus policy reform that affects farm finances may matter to them less than medium sized farm businesses; large businesses survive on lower costs per unit output.
•    Correct misconceptions: e.g. sugar consumption per head much higher in the sixties than now; price gouging = price signals; farmers already involved in a range of biodiversity schemes, policy making in response to social media….

Carmen Hubbard (carmen.hubbard@newcastle.ac.uk)
Sarah Baker (sarah.baker@ahdb.org.uk)