Economist seeks to determine the contribution of food and agriculture industries to US economy

Richard Dunn
Richard Dunn

Richard Dunn, associate professor in the Department of Agricultural and Resource Economics, is recognized as one of the leading scholars in the economics of obesity; in 2015 he was a plenary speaker on the topic at the International Health Economics Association Biennial World Congress in Milan, Italy. Prior to arriving at UConn in 2014, he established an extensive research portfolio focused on how the economic environment influences risky health behaviors. For example, he recently published an article that connected declines in the stock market to increases in smoking, alcohol abuse and poor mental health. Another project demonstrated that the Great Recession caused alcohol purchases and drunk driving fatalities to increase.

Dunn is now embarking on an ambitious long-term project to compile and analyze federal administrative and survey data to document the contribution of food and agriculture industries (FAI) to the US economy. Statutory reporting requirements generate a wealth of information about the economic activity at US businesses. This data is a valuable resource that can inform policy decisions, improve production efficiency, increase the competitiveness of US firms and better guide economic development in rural America.

Although the United States Department of Agriculture collects extensive information about on-farm activity, they do not compile data on other segments of the food and fiber supply chain. Rather, these sectors are the responsibility of the Census Bureau. Without a mandate to systematically coordinate reporting across all the economic sectors that constitute the supply chain (on-farm production, manufacturing, warehousing, wholesaling, professional and business services, transportation, retailing and food services), the contribution of food and agriculture to the US economy will be underappreciated.

Dunn explains that when the United States Department of Agriculture was founded in 1862—President Abraham Lincoln declared it “the people’s department”—agricultural production was far more localized. “At the time, the vast majority of farms were small family operations. It would not have been uncommon for a farmer to use his own seed and fertilizer. Your family worked the farm, although maybe you hired a few farmhands to help with the planting, growing and harvesting. You might take your grain to a gristmill or maybe you had one on your property. You would can and preserve fruits and vegetables yourself. You would butcher your own animals or take them to someone in town, but you’d take the meat home to salt it and dry it. While there was an active trade in crops and livestock, a significant share of activity that transformed raw agricultural output to food for consumption was contained on the farm, so our mindset has historically linked all of agriculture to what happens on the farm.”

After 150 years of technological innovation, increased global trade and steady migration from rural to urban areas, the food and agriculture supply chain looks radically different. Dunn explains, “From the growth of railroads and refrigerated trucking to the advent of fast-food restaurants and prepared meals, the number of exchanges that take place between the farmer and the consumer has increased dramatically. The organization of data collection to properly measure and study the businesses engaged in this process has failed to keep pace.”

This lack of a coordinated data collection structure has far-reaching implications. Dunn points out, “If we think of agriculture only as the value of things that come off the farm, then we know that the contribution of agriculture to gross domestic product has been falling for more than the past hundred years. But much of what used to be that contained activity has branched off further and further out to more specialized parts of this gigantic supply chain.”

“How important is food and agriculture and all of the things that make our food consumption possible? I know it is not 1 or 2 percent of the US economy, but no one knows precisely what percent of the US economy it is. Is it 10 percent? Is it 15 percent? No one knows.” He continues, “We don’t know the answers to incredibly basic questions, like how many establishments are engaged in the supply chain? How many workers do they employ and what kind of wages do these workers receive? Where are these businesses and firms located? What type of geographic concentrations exist? How important are these various sectors to the economic health of rural America? How are these things changing over time? What kind of innovation is happening? How is innovation in one sector impacting other parts of the supply chain? We cannot begin to answer these basic questions when we do not even know which firms are part of the supply chain.”

Dunn is working with colleagues at federal agencies and research universities to use existing administrative and survey data to overcome these data challenges. He acknowledges, “Given current budgetary pressures, creating new federal infrastructure to study FAI in a holistic manner is simply not feasible. Nevertheless, there is an amazing amount of valuable new knowledge we can generate using data that already exists across different federal statistical agencies, but has yet to be combined and analyzed for this purpose.”

Along with collaborators at the University of Wisconsin-Madison, where Dunn received his PhD in the Department of Economics, he has secured funding from numerous sources to support this project, including a cooperative agreement with the USDA Economic Research Service, a USDA Hatch grant and a $500,000 grant from the National Institutes of Food and Agriculture under the Agriculture and Food Research Initiative. Part of this funding allows Dunn to travel to Cambridge, Massachusetts, several times a week to access data at the Federal Statistical Research Data Center housed at the National Bureau of Economic Research. It has also allowed him to present early results at several conferences, including the Council of Professional Associations on Federal Statistics workshop on linking federal agricultural data; an invited paper at the Agriculture and Applied Economics Association annual meeting; and the Federal Statistical Research Data Center annual research conference.

Dunn concludes, “In all of my classes, I highlight the famous quote from Sherlock Holmes: ‘Data! data! data!’ he cried impatiently. ’I can’t make bricks without clay.’ Before we can answer really complicated questions, we need to create good data. We are creating those data in this project. I hope and expect the outputs of this project will provide farmers, producers, policy makers and consumers the facts they need to make informed decisions.”

By Richard Dunn and Jason M. Sheldon