Technological innovations in agriculture can impact supply and prices. Major advancements include mechanization, fertilizers, hybridization, and biotechnology, allowing farmers to produce more with fewer inputs. This shifts supply curves outward. Demand for food is inelastic in the short run, so producers benefit from higher output but face downward pressure on prices. New technologies also influence livestock markets. For example, sexed semen allows beef producers to selectively breed more steers. However, the technological treadmill theory holds that over time, each innovation only maintains total revenue rather than increasing it due to inelastic demand. Emerging biotechnologies may also impact agricultural marketing systems.

1. Sohail Ilyas
University of Agriculture
Faisalabad Pakistan
sohail17@hotmail.com

2. Technology and
Agriculture
Economic Impacts of
Advancing Technology

3. How does technological innovation
impact agriculture?
 Major Technological Advancements in
Agriculture
 Mechanization
 Chemical Fertilizers
 Hybridization
 Biotechnology

4.  Technology Impacts the Supply of
Agricultural Products
 Supply Shifters
 Prices of Related Goods
 Corn – Soybeans
 Cattle -- Leather
 Price of Inputs
 Technology – Allows a farmer to produce more
with a given level of inputs
How does technological innovation
impact agriculture?

5. How does technological innovation
impact agriculture?
 What Does that Supply Shift Look Like?
Supply
Price
Quantity
Supply1
Original Price
Q Q1

6. Supply and Demand Elasticities
 Demand Elasticity for Agricultural Products
 Inelastic Demand, Why?
 What does that mean for the producer?Demand for Food (Necessity)
Inelastic
Price
Quantity
Demand for Luxury Automobiles
Elastic

7. Supply and Demand Elasticities
 Supply Elasticity for Agricultural Products
 Short Run
 Intermediate Run
 Long Run
Supply - Short Run
Price
Quantity
Supply - Intermediate Run
Supply - Long Run

8. New Technologies in the Livestock
Industry
 Artificial Insemination
 Sexed Semen
 The ability to choose the sex of the offspring
 Why Beef Cattle?
 Why Dairy Cattle?

9. New Technologies in the Livestock
Industry
 Cloning
 The ability to make an exact duplicate animal
with the same genetic makeup
DollyDolly?

10. The Case for Beef Cattle
Supply of Beef
Demand for Beef
Price of Beef
Quantity of Beef
Supply1 of Beef
Original Price
New Price

11. What about the market for Steers?
Supply of Steers
Demand for Steers
Price Steers
Quantity Steers
New Supply of Steers

12. Nutrient Requirements for Heifers and Steers
0
10
20
30
40
50
60
550 1200
ThousandsofMCalariesrequiredtoreachliveweight
Steers Heifers

13. And the market for Heifers?
Supply of Heifers
Demand for Heifers
Price of Heifers
Quantity
New Supply of Heifers

14. Price Differential Between Steer and Heifer Calves
0
20
40
60
80
100
120
74
80
86
92
Year
$percwt.
Heifers Steers

15. Price
Quantity
The Technological Treadmill Theory
Supply
Demand
How does technology affect
the total revenue of the farmer
over time?

16. The Technological Treadmill Theory
Supply
Demand
Price
Quantity
When supply increases from the
technological change, what
happens to Total Revenue?
Total Revenue = Price * Quantity
P
Q
TR

17. The Technological Treadmill Theory
Supply
Demand
Price
Quantity
S 1
Supply has increased and Total Revenue
changes from the tan box to the blue
box.
New Total Revenue = Price1 * Quantity1
P
P1
Q
Q1
TR1

18. The Technological Treadmill Theory
Supply
Demand
Price
Quantity
S 1
The red shaded region is a loss in
total revenue and the green shaded
region is the gain.
Since the loss is larger than the gain
Total Revenue has gone down.
P
P1
Q
Q1
Loss
G
A
I
N

19. The Technological Treadmill Theory
Supply
Demand
Price
Quantity
S 1
Why does this happen?
Inelastic demand of agricultural
commodities.P
P1
Q
Q1
Loss
G
A
I
N

20. Emerging Technologies in Production
Agriculture Over the Last Decade
 First Generation Technologies
 Biotechnologies that have made it to market
 Flavr SavrTM Tomatoes in 1994
 Bt Cotton
 Roundup Ready Soybeans
 Second Generation Technologies

21. Biotechnology and the Agricultural
Marketing System
 How is the marketing system going to handle
new products that used to be just commodities?
Commodity Value Added Product

22. Other Potential Impacts From
Biotechnology in Agriculture
 This impact on the marketing system could
create opportunities for other products as well.
 Non-Traditional Crops
 Organic Crops
 Heritage Crops and Livestock