One hundred and fifty years ago, the 1862 Morrill Land Grant Act was signedinto law. Wise people at that time recognized that the private market foreducation failed to produce an efficient level of education decades beforethe economic theory was developed to explain that market failures reduceefficiency. The purpose of this paper is to review the history of selectedevents that resulted in the development of publicly funded U.S. educationalinstitutions and to issue a challenge for our profession to do a better jobof educating about the theoretical justification for using tax dollars tosupport university education and agricultural research and the efficiencyenhancing consequences of that use.

I am perhaps not the best person to argue the case of Agricultural Economics over that of Applied Economics. WhenI came to Clemson in 1975, we were Agricultural Economics and Rural Sociology. When the number of sociologists dropped to one in1990, we became Agricultural and Applied Economics. OurPh.D. program had already adopted the title Applied Economics in 1984. People like Jim Hite, Buddy Dillman, and MarkHenry were leaders in Environmental Economics and Rural Economic Developmentand were fans of Applied Economics. I strongly agreed withthese name changes at the time. Clemson was in the vanguard of similar namechanges across the country over the past 25 years. But, I wonder now if wewere wise or not.

So, here we are again, beating on a horse that, while not dead, is alreadyout of the barn.

When asked to speak to the question of whether the word “applied” should bein the title of our association, I understood that I was to make the casefor including “applied” in addition to the word “agriculture,” not replacingit. I think focusing narrowly on either “applied” or ”agriculture”needlessly reduces our options, and, in my view, excludes the preferredoption. My argument is for the title, Southern Agricultural and AppliedEconomics Association, or SAAEA. I am making a case for that change.

Even as self-employment continues to increase, policymakers remain largelyunaware of this trend and fail to see it as an opportunity for addressingenduring joblessness. In part, this is explained by limited data on theself-employed and by widespread perceptions that returns to self-employmentare low; that the self-employed are merely patching together piecemeal workopportunities requiring limited skills; and that there are no local economicimpacts or spillover benefits into other sectors. Contrary to theseperceptions, recent studies suggest that self-employment has tangiblepositive economic impacts not only on wage and salary employment but also onper capita income growth and poverty reduction. This article synthesizes thepertinent emerging literature and assesses dynamics of the lags involvedbetween self-employment shocks and subsequent employment growth.

Since the Internet's inception its impact has been felt across the UnitedStates, but the distribution and adoption of the Internet has notnecessarily been uniform geographically. As more consumers and businessesrely on the Internet to access information, the data transmissionrequirements have also increased. Consequently, access to broadband hasbecome increasingly more important since dial-up cannot realistically handlethe increased requirements. The use of broadband in agriculture can providebetter access to price, weather, and management information while alsoopening new markets. However, many rural communities lag behind urban areasin broadband access and adoption rates. This study evaluates, through theuse of a producer survey, the level of broadband Internet use, motivationsfor its use, degree of access to broadband, and willingness-to-pay (WTP) tofund broadband infrastructure investments. Results from the producer surveysuggested farmers utilize the Internet primarily for accessing weatherreports, e-mail, market reports, and agricultural news. Notably, thesurvey's WTP questions allowed for the use of an interval regression tocalculate producer WTP for varying demographics. The results suggested thatproducers who were younger, farmed larger farms, and those who currently usethe Internet but do not have broadband access were WTP more in propertytaxes to support broadband infrastructure investments than those of adiffering demographic. Because WTP levels varied drastically depending onthe underlying demographics, it becomes difficult to pinpoint a WTP levelfor a one-time payment in property taxes that would be acceptable from apolicy standpoint.

Three economic opportunities are presented for rural areas in this invitedpaper session: self-employment, investments in broadband infrastructure, andagritourism. Self-employment has shown growth in rural regions at theexpense of wage and salary employment in the long-term. Productionagriculture interests by themselves are unlikely to provide sufficientfunding to expand infrastructure for broadband in rural areas. Agritourismapproaches appear to be very wide ranging with many educational demandsneeding to be met to maximize its diversification possibilities. Researchand extension faculty should be careful to focus on explaining the tradeoffsof these opportunities so that rural stakeholders do not fall victim to thelatest academic economic development fad.

This paper examines two interrelated issues in commodity markets, namely,the cyclical relationship between stocks and commodities and the function ofcommodity and agribusiness indexes in portfolios. A high negativecorrelation has existed between stock and commodity prices over the past 140years. Moreover, the two markets have alternated in price leadership with29-32-year cycles. The recent price dominance in agricultural commoditiesstarted in 2000, a result supported by the empirical results of theportfolio allocation analysis. For a risk-averse investor, irrespective ofthe period analyzed, placing funds in agribusiness and/or agriculturalcommodity indexes was sound investing.

The crop farming sector has been relatively profitable in the past severalyears, whereas the general economy has gone through a great deal of turmoil.In this research, we constructed an Aglndex, which tracked the stock pricesof publicly traded companies dealing with agriculture performed since 2000.As a group, the market values of publicly traded firms within the Aglndexexceeded those of Standard & Poors 500 (S&P 500) since 2000. Returnswere higher for agricultural firms compared with S&P 500 firms.Performance varied across agricultural sectors with fertilizer and seedcompanies performing the best.

The first decade of the 21st century has perhaps witnessed morestructural change in commodity futures markets than all previous decadescombined. Not only have trading volumes and open interest increasedmarkedly, but this time period also saw historic changes in both trading andparticipants. The available literature indicates that the irrational andharmful impacts of the structural changes in commodity futures markets overthe last decade have been minimal. In particular, there is little evidencethat passive index investment caused a massive bubble in commodity futuresprices. There is intriguing evidence of several other rational andbeneficial impacts of the structural changes over the last decade. Inparticular, the expanding market participation may have decreased riskpremiums, and hence, the cost of hedging, reduced price volatility, andbetter integrated commodity markets with financial markets.

Nonfarm investors might benefit from diversifying their portfolios byinvesting in the agricultural sector. Such diversifying investments couldinclude investments in agricultural stocks or long-only futures positionsthrough index funds. The papers in this session investigate thediversification potential of agricultural investments and discuss theeffects of investments in index funds on agricultural markets.

Despite extensive literature on contributing factors to the high commodityprices and volatility in the recent years, few have examined these causalfactors together in one analysis. We quantify empirically the relativeimportance of three factors: global demand, speculation, and energyprices/policy in explaining corn price volatility. A structural vectorauto-regression model is developed and variance decomposition is applied tomeasure the contribution of each factor in explaining corn price variation.We find that speculation is important, but only in the short run. However,in the long run, energy is the most important followed by global demand.

The effects of population, income, prices of major inputs, and exchange rateof the U.S. dollar on the prices of three key agricultural and foodcommodities (feed grains, oilseed, and fruits) for 13 low-income countriesand seven middle-income countries were evaluated. Given the short timeperiod, a modified seeming unrelated regression-vector autoregressive modelthat incorporates the lagged exogenous variables property of time seriesmodels and the system of equation estimation is employed in the analysis.The study finds no single factor that persistently explains all soaring foodprices as reported in the literature. The only factor that persistentlyexplains soaring food prices are the contemporaneous and one-year laggedexchange rates and income.

This discussion is a review and critique of the three papers in the 2012Southern Agricultural Economics Association invited paper session titledCauses of Agricultural and Food Price Inflation and Volatility.