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Department of Agricultural, Environmental, and Development Economics

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News from AEDE: February 2016

  1. Letter from Tim Haab, AEDE Department Chair

    AEDE’s future is bright.

    Retirements and faculty vacancies create uncertainty for the future of academic departments, and three retirements of long-time AEDE faculty members over the past year is certainly no exception.

    Over the past six months, the AEDE faculty embarked on a search for four new faculty members. In the Fall, four search committees developed position descriptions and advertised for the four positions. In December, the faculty screened over 500 applicants for the four positions. In early January, 11 AEDE faculty members travelled to San Francisco to conduct over 50 short interviews with potential candidates—I can attest that San Francisco is lovely from the Hilton window.

    Over the last two weeks of January and first two weeks of February, we brought 12 outstanding candidates to campus for day-long interviews. That’s 12 job seminars, almost 50 business meals, and 12 days’ worth of meetings scheduled with faculty, students, stakeholders and administrators; all within a span of four weeks while our faculty continued to manage teaching, research and outreach responsibilities. It was an impressive accomplishment and took the collective engagement of all of our faculty and staff.

    I am nothing short of impressed with how smooth the process ran.

    In the end we were able to attract four outstanding new faculty members to AEDE, from some of the best programs in the world and we were able to outcompete some of the top programs in the country for these outstanding new faculty members. In future newsletters we will be introducing our new faculty members in depth, but for now I will simply say it is our pleasure to welcome:

    • Daniela Miteva, PhD in Environmental Economics from the Nicholas School of the Environment at Duke University (2013) to the position of Assistant Professor of Sustainable Development and Economy
    • Leah Bevis, PhD from the Dyson School of Applied Economics at Cornell University (anticipated 2016) to the position of Assistant Professor of Sustainable Food and Farm Policy
    • Zoe Plakias, PhD in Agricultural and Resource Economics from the University of California, Davis (anticipated 2016) to the position of Assistant Professor of Agribusiness
    • Yongyang Cai, PhD in Computational and Mathematical Engineering from Stanford University (2009) to the position of Associate Professor of Global Economic Modeling

    AEDE is not the same today as it was yesterday, and tomorrow AEDE won’t be the same as today, but as John F. Kennedy once said “Change is the law of life. And those who look only to the past or present are certain to miss the future.”

    The past four months have convinced me that I am proud to work with such a dedicated group of colleagues committed to the future of applied economics at Ohio State.

    I am excited for the future of AEDE.

  2. Meet Mark Partridge: Professor, Swank Chair, and the “Most Influential Author in Regional Science”

    We recently sat down with Mark Partridge, a regional economist, AEDE professor, and Ohio State’s C. William Swank Chair in Rural-Urban Policy to talk about his work, the Swank program and some of his favorite places to visit across the globe. Check out our Q & A with him.

    In a recent study you were ranked as the most influential author working in the field of regional science. What trends do you see in the future in this field?

    Regional science and regional economics are very germane as tools to help direct future policy issues that will guide society. For example, issues of income inequality and poverty are not just important political issues in the U.S. but they are important global issues that drive long-term economic growth and how political institutions adapt to solve pressing socioeconomic challenges.

    Moving forward, society is increasingly interested in issues such as climate change and mass migrations after traumatic shocks such as war, economic volatility, or climatic events. These have long been key issues that have dominated regional science. For instance, issues of how people migrate in response to climatic conditions and environmental conditions have been studied by regional scientists since the 1970s, forming what should be the basis of current research on how climate change will affect mass migration.

    Going forward, I think regional science will continue to focus on the major issues that face society. One issue that I think will remain at the forefront is helping local regions create sustainable development that is inclusive for their residents.

    How has working at a large research institution like Ohio State helped you further develop your research portfolio?

    Being at The Ohio State University has been so rewarding for my research. I have been exposed to so many brilliant scholars across the university, allowing me to learn from many different fields and viewpoints.

    Probably the most rewarding aspect are the ideas and enthusiasm that our students possess. I enjoy teaching but it is the most fun when students teach the professor. I have learned so much from their ideas and unique views.

    What is the subject matter of your most recent research and what impact do you hope to see from this research?

    Much of my research has been on how economic shocks such as the development of new industries or world economic volatility affects local communities and their regions. This is demonstrated with my current work on France, the U.S., or China, as the global economy produces winners and losers.

    Another key theme is my current work on income inequality and poverty and how policy can work to reduce their negative effects on the economy, well-being, and on governance.

    Another key area of my current research is assessing how the recent shale boom and the "old" carbon economy such as coal have affected local areas that have experienced development of extractive industries.

    What has been the greatest accomplishment of the C. William Swank Program in Rural-Urban Policy since you became the program’s Chair?

    There are many accomplishments that I am proud of in my work as the Swank Program Chair.

    One is the relationships and connections that I have made in my outreach work with key stakeholders such as Ohio Farm Bureau, Ohio County Commissioners, and various education and workforce groups. Closely related to this are the relationships that I have made with my Swank assistants in developing policy briefs and trying to shape better policies for Ohio and its communities.

    Another is my outreach work on energy development. While many noted the "boom" aspects of the initial rush for drilling, I have tried to caution communities to look more at the long-term in that energy cycles are highly volatile and to plan for not only the boom but also for the inevitable bust. I believe that Ohio communities have heard many of these arguments and there have been fewer problems as the energy economy cooled off.

    Another is my research on how rural and urban areas are economically interdependent and the need to develop regional policies for better economic outcomes. One area that illustrates the impact of this research is the recent push by international development organizations such as the World Bank and OECD to consider focusing development efforts on the smaller and intermediate sized cities.

    Finally, I am also proud of the international reputation we have developed for the program. When I came to OSU, I was charged with building an international footprint and I believe that we have succeeded.

    What is your favorite country that you have traveled to and why?

    I have been fortunate to visit many countries for my work. Yet, I caution people considering international travel that I am not a good person to consult on things to do. A culinary pleasure for me is a burger and fries. While abroad, I spend most of my time thinking about a country's economic development and what can be learned from those patterns.

    The country that fascinates me the most is China. In China, you see the hustle and bustle that I suspect characterized the remarkable rise of large American cities in the late 19th and early 20th centuries, but on a much larger scale. Likewise, China is experiencing the same growing pains as the U.S. did, such as dramatic transformation with major winners and losers. One key difference is the U.S. developed with a much more hands-off approach, while China has been heavily guided by the hand of their central government. It will be fascinating to see how each approach fares in the long run.

  3. Ani Katchova Presents on Farm Income on Capitol Hill

    Ani Katchova, AEDE Associate Professor and Ohio State’s Farm Income Enhancement Chair, presented at a Capitol Hill briefing on February 11, 2016 focused on “Dynamics of Farm Profitability: Factors Influencing the Decline in Income.”

    Jeffrey Hopkins from the USDA’s Economic Research Service (ERS) and Allen Featherstone from Kansas State University presented with Katchova. The briefing was organized by The Council on Food, Agricultural & Resource Economics (C-FARE) and the Agricultural & Applied Economics Association (AAEA).

    While in Washington D.C., Katchova also visited with staff for Ohio Senator Sherrod Brown to discuss the agricultural outlook for the state of Ohio. She also met with Senator Pat Roberts, Chairman of the Senate Committee on Agriculture, Nutrition, and Forestry, and with USDA Chief Economist Robert Johansson to discuss U.S. farm income and farmland market trends. 

    “I felt honored to have the opportunity to share information and present at the Capitol Hill briefing,” Katchova said.

    During the briefing, Katchova presented an analysis of data from USDA ERS’ February agricultural forecast. Reflecting on declining farm incomes, Katchova noted: 

    • In 2016, net cash farm income is anticipated to decline by 2.5 percent
    • Net farm income is anticipated to decline by 3 percent between 2015 and 2016. 
    • Also in 2016, farm assets are expected to decline by 1.6 percent, farm equity by 2.2 percent, and farm debt is anticipated to grow by 2.3 percent

    However, despite these tensions in the marketplace, Katchova noted that there is hope. “Even with two years of forecasted decline, the farm sector balance sheet is very strong with solvency ratios for the agricultural sector that are near historic lows,” she said.

    Additionally, she reflected on farmland values and rents in her briefing using an analysis of data from USDA’s Land Values Summaries. She noted:

    • U.S. cropland values increased by a modest rate of 0.7 percent in 2015
    • U.S. cropland cash rents increased by 2.4 percent in 2015. 
    • Regionally, while Ohio experienced an increase of 3.5 percent in cropland values in 2015 and 3.6 percent increase in cash rents in 2015, several other states in the Corn Belt experienced declines. Regarding this discrepancy, Katchova noted that one explanation is that rental contracts are typically not negotiated every year and farmers may not be willing to lose control of their rented acres.

    At the briefing, Katchova also presented her research with Mary Ahearn from USDA ERS on the land needs of beginning and young farmers. They have found that these groups own less farmland than their established counterparts and current low farm income rates may be impacting them greatly.

    “Not only do beginning and young farmers need to pay land rents and debt payments on real estate, but they also need to grow as they establish their operations which puts additional pressure on their declining farm income,” she said.

    At the briefing Katchova also noted that farm financial ratios, measuring liquidity, profitability, and solvency have all worsened in the last two to three years, but they are still among the highest in the last decade. 

    “Overall, the ag sector is coming down from historic highs but is currently in a strong position, with only a limited number of farmers experiencing financial distress,” she said.

    Learn more about Ohio State’s Farm Income Enhancement program. Click here to view Katchova’s presentation from the February 11th briefing.


    Top image: Ani Katchova presented at the Capitol Hill Briefing “Dynamics of Farm Profitability: Factors Influencing the Decline in Income,” organized by C-FARE and AAEA, February 11, 2016.

    Bottom image: Ani Katchova discussed future trends in farm income and farmland markets with Senator Pat Roberts, Chairman of the Senate Committee on Agriculture, Nutrition, and Forestry, February 11, 2016.

  4. Ian Sheldon Named Andersons Endowed Chair in Agricultural Marketing, Trade and Policy

    With approval from The Ohio State University Board of Trustees, Ian Sheldon, a professor in the Department of Agricultural, Environmental, and Development Economics (AEDE), was recently named Ohio State’s Andersons Endowed Chair in Agricultural Marketing, Trade and Policy. His appointment will run through August 31, 2020.

    In announcing the promotion, AEDE Department Chair Tim Haab noted that the appointment “…represents a recognition of Ian’s ongoing commitment to outstanding teaching, research and outreach at the interface of international agricultural, environmental and trade policy.”

    As Andersons Chair, Sheldon oversees the Andersons Program in International Trade, which is a broad-based program focusing on research and outreach in the area of international trade and public policy.

    Past research by the program has included topics such as food prices and trade policy, international trade and ethanol, and the connection between trade and the environment, among others. Funding for the endowment comes from the The Andersons, Inc.

    Former holders of the Andersons Chair include Luther Tweeten, now AEDE emeritus professor, and Barry Goodwin, now a distinguished professor at NC State University.

    “I am honored to follow in the footsteps of Luther Tweeten and Barry Goodwin, former incumbents of the Andersons Chair in the Department of Agricultural, Environmental, and Development Economics. I hope to continue their tradition of conducting high quality applied economics and policy research in the food and agricultural sector,” Sheldon said.

    You can learn more about Professor Sheldon and the work of the Andersons Program here.

     

  5. Highlights from the 2016 Agribusiness Club Trip to Texas

    Author: Hannah Kirby, Agribusiness and Applied Economics Undergraduate Student

    In January 2016,  the Ohio State Agribusiness Club journeyed on our annual trip which took us all around the state of Texas. The trip consisted of 35 students, accompanied by AEDE staff member Holly Hall.

    On the first day of the trip students arrived in Houston and visited one of Cargill's grain elevators. The group got to see how grain is pulled up off of ships, railroad carts, and trucks and then hoisted into storage bins. We then visited the Cargill control room where monitors displayed the availability of grain in the bins and we watched video of unloading of the company's commodities.

    The second day took the Club to Richmond, Texas to see the George Ranch Historical Park. The ranch is a living history site that preserves and interprets the four generational storyline of a Texas family beginning in 1824 and spanning more than 100 years. We got to walk through the ranch's homes and see the long-horn cattle, which created the foundation of the farm. Our ranch tour ended with a show from the working cowboys on the ranch who demonstrated roping and herding skills. Students then headed to San Antonio to view the site of the Battle of the Alamo. In the evening, everyone got dressed up for dinner on the Riverwalk.

    On the third day of the trip we journeyed to Fredericksburg, a town with lots of shopping. We hiked up to the Enchanted Rock, a .67 mi hike to a summit where we could see small pools of water and fragile wildlife habitats. After some fantastic barbeque, the group headed to Austin to stay for the night.

    The next day we headed to Cargill's animal feed mill in Giddings, Texas. There we received an overview of the industry and operations as a whole, followed by a plant tour including everything from ingredient testing, maintenance, feed mixing, bagging and shipping. The next stop was College Station where we started with a tour of Texas A&M University's meat lab, followed by an extensive tour of their newly built equine center. The center’s barns were fully equipped with arenas, stables, locker rooms, classrooms and a beautiful event facility.

    The morning of our fifth day we went back to Texas A&M University to tour their newly remodeled football stadium. We got a behind the scenes tour and learned the history and stories of the structure. Next, the group headed over to the island of Galveston to tour ADM’s grain elevator port. We got to see the port up close, how ships are loaded, and the port's control room.

    Texas was a great experience for students, enabling us to gain extensive knowledge of working agribusiness in this part of the country. We would like to thank the sponsors who made the trip possible, along with all the facilities that welcomed us. We can’t wait to see where our next trip will takes us!

    You can check out our photos from the trip here.

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    The OSU Agribusiness Club consists of members from different majors within the College of Food, Agricultural, and Environmental Sciences at The Ohio State University. The Club meets twice a month and hosts guest speakers from various agribusinesses who present on their companies and talk to students about internship and job opportunities. The Club also hosts an annual banquet and sponsors a scholarship for AEDE undergraduate students. Agribusiness Club members also take an annual trip within the U.S. each year.

  6. Swank Program Piece in The Conversation: How Should the U.S. Government Help Coal Communities?

    This article was originally published on The Conversation. Read the original article.

    Authors: Mark Partridge, Mark Rembert, and Michael Betz

    As the United States adopts policies to lower greenhouse gas emissions, some communities will benefit from the shift to lower-carbon energy sources. But others will lose.

    Communities that have historically relied on coal production – especially in Appalachia – have been suffering major economic and employment losses for decades. Today far fewer miners are needed to produce the coal that we consume, and alternative energy sources like natural gas, solar and wind have chipped away at coal’s cost advantage. These forces have led to many lost jobs in coal-reliant regions, which will only intensify as the coal industry becomes more efficient in mining and the nation takes steps to reduce greenhouse gas emissions.

    In response to coal’s uncertain future, last year the Obama administration proposed a US$3 billion plan called Power+ to assist coal-dependent regions.

    Transitioning local economies that rely on resource extraction industries requires long-term investments. Instead of significantly expanding investment in coal-reliant communities, two-thirds of the Power+ Plan funding is directed toward providing what we consider life support to the coal industry. These investments are unlikely to have any significant short-term effect on employment in coal-reliant regions. In our view, the plan misses an opportunity to provide the sustained investments communities need to develop a post-coal economy.

    Why has coal employment declined?

    Since 1949, coal industry employment has fallen from more than 500,000 workers to fewer than 63,000 workers today. Coal advocates contend that environmental regulations, such as the Clean Air Acts of 1977 and 1990, have caused hardship and job losses in many coal-dependent regions. But what these policies actually have done is to change where coal is mined.

    By requiring power producers to reduce sulfur emissions from electricity generation, the Clean Air Act triggered a shift in U.S. coal production from Appalachia, where coal is high in sulfur, to western states with abundant supplies of low-sulfur coal. However, overall U.S. coal employment was mostly unaffected by these regulations.

    Drag line and coal haul truck at North Antelope Rochelle Mine, Wyoming. Peabody Energy/Wikimedia, CC BY

    Instead, the decline in coal employment has been largely driven by market forces. The coal industry has invested in new mining methods and better machinery, so production requires far fewer coal miners.

    What’s more, coal is rapidly losing market share. Natural gas surpassed it twice as a fuel for power generation in 2015. Coal once dominated all other sources as the primary fuel for U.S. electricity production, but now faces increased competition from other energy sources, most notably shale natural gas, wind and solar. Through September of 2015, all of the new electricity generation capacity added in the U.S. was powered by natural gas, wind and solar, while nearly all of the retired capacity was powered by coal.

    U.S. net electricity generation. EIA

    Many coal advocates continue to blame environmental policies, such as the Obama administration’s Clean Power Plan – which the Supreme Court has temporarily blocked and will review in June – for job losses in the coal industry. But in reality, mining jobs are primarily driven by market forces.

    How to help coal communities

    To aid workers and communities where industries are declining, governments typically choose one of two approaches: offering direct support to those industries or funding investments in people and places.

    Industrial support aims to maintain employment by providing subsidies or regulatory relief. The U.S. auto industry bailout, in which the Treasury Department invested nearly $80 billion in the auto industry to save General Motors and Chrysler from bankruptcy, is a recent example. President Obama’s proposed Power+ plan would provide $2 billion in tax credits for the deployment of carbon capture technologies on coal power plants to hopefully allow them to continue production. These tax credits are in essence a subsidy to coal producers.

    But industry support policies are unlikely to provide effective aid for workers and communities in coal-dependent regions, for several reasons.

    First, declining coal employment has largely been driven by productivity gains. Providing subsides to the industry may slow the decline in production, but their effect on employment will be diminished because mining operations are more productive and efficient at extracting coal. It is likely that most of the benefits from industry subsides will go to owners of coal companies who may live far away, not to workers or their communities.

    Second, our research has shown that dependence on coal adversely affects noncoal employment in places like Appalachia. High levels of coal employment are associated with lower levels of entrepreneurship and higher levels of migration out of Appalachian regions as coal crowds out other types of businesses. Prolonging coal employment may actually slow the transition to other economic activities and reduce long-term economic growth.

    Alternatively, aid programs could invest in people and places through initiatives such as job retraining programs, small business support, and infrastructure programs. The proposed Power+ plan designated $110 million for workforce development programs for coal communities. Of this, $20 million was earmarked for retraining coal workers to help them transition to new jobs and careers, and $90 million was designated for workforce development and training programs associated with mine cleanup.

    So far, however, Congress has approved only a few small pieces of the Power+ plan. And even if the plan was fully funded, its workforce development programs would only provide a little more than $1,700 for each worker employed in the coal industry. Including the mining workers that have already lost their jobs reduces the dollar/worker amount even further. Moreover, research on the gains from retraining programs for laid-off workers has been inconclusive.

    One issue is that displaced workers tend to seek new work based on skills from their previous jobs, which significantly outweighs the effect of job-retraining programs. When focusing on improving a particular community or region, retraining programs can have even less of an effect. If retrained workers cannot find work that matches their new skills, they are likely to migrate to another region.

    The plan also included some funding for place-based initiatives, including $1 billion in funding for cleaning up hazardous abandoned coal mine lands and polluted waters and $25 million to the Appalachian Regional Commission to support economic development planning, entrepreneurial development and investment in basic infrastructure. We are more encouraged by these proposals, although we feel that they are underfunded.

    Investing in quality of life

    What does work? We have found that entrepreneurship and creativity are key factors for promoting economic development in lagging areas of Appalachia. To support this approach to development, aid programs should focus on improving the quality of life in coal communities and attracting new, highly skilled residents. This could be achieved by investing in natural resource amenities, which the plan does through its proposed $1 billion investment in abandoned mine cleanup.

    Another strategy would be to investing in basic infrastructure, such as road maintenance, public schools and health care. By making a long-term investment in these necessary services, the federal government can free up local governments to invest local tax dollars in assets that are unique to each place. The Appalachian Regional Commission, a partnership between state and federal agencies, already facilitates these types of programs. Substantially increasing funding to the ARC would be an effective way to help coal communities.

    President Obama’s Power+ plan rightfully acknowledges that energy policies are negatively affecting some regions, but we believe the money is misaligned. If the goal is to help coal-dependent communities transition to a post-coal economy, $2 billion in tax credits for the coal industry will be ineffective.

    Instead, that money would be better used to invest in basic infrastructure. A place-based investment strategy does not guarantee rapid economic development in these areas, but it can improve the quality of life for people who are most impacted by our national shift away from coal.


    Mark Partridge, Professor of Rural-Urban Policy, The Ohio State University; Mark Rembert, Ph.D. Student, The Ohio State University, and Michael Betz, Assistant Professor of Human Development and Family Science, The Ohio State University