Talent Search for Agribusiness Firms

Economic times are good in agriculture, and that is reflected in the hiring among agribusiness firms.  With many or most positions being knowledge-based, the talent search for agribusiness firms becomes more important as people are the key resource.  So what does the pipeline for talent look like for agribusiness firms?  Does it come mostly from graduates of Colleges of Agriculture?  Does a college education focused on agriculture pay off for students with an interest and background in the industry?

The market for graduates of the College of Agriculture and Life Sciences at Iowa State University is very good.  This shows up in many ways.  For me personally, I see it through participation in placement of students in industry.  This can occur through connecting a student to an associate in industry as they explore career alternatives or through trying to match up someone from industry who is recruiting with a student that has interests, experiences, and talents that fit.

I also see it through the participation by almost 200 companies in the College of Agriculture and Life Sciences Career Day, where agribusiness firms compete for top talent in internship and full time positions.  Mike Gaul from Career Services continues to report placement for our students of almost 100 percent within six months of graduation.  A report by a number of universities show starting salaries for College of Agriculture graduates at $42,026 for Ag Business graduates, $38,139 for Ag Studies/Education graduates, $40.246 for Agronomy graduates, $43,953 for Food Science graduates, and $47,444 for Ag/Biosystems Engineering graduates, all good starting wages.

There are academic studies that estimate that the number of agricultural graduates qualified for management/business positions with agribusiness firms represents only 60 percent of the job openings.  Agribusiness firms turn to graduates of allied fields such as business to fill the remaining 40 percent of their job openings.   The reason may be an under-supply of agriculture graduates relative to demand, or alternatively, that non-agriculture graduates have skills that are not being developed as fully in traditional agriculture programs.  The former suggests a need for increased recruitment into traditional agriculture majors, while the latter suggests a need for changes in curricula and course content to improve the competencies of agricultural graduates.

Georgeanne Artz, Peter Orazem, and I published a paper examining this issue last week, Does the Jack of All Trades Hold the Winning Hand?: Comparing the Role of Specialized Versus General Skills in the Returns to an Agricultural Degree. We analyze a survey of Iowa State University alumni, those graduating between 1982 and 2006.

Contrary to perceptions, we find that most agriculture majors end up working outside the agriculture industry.  There are substantial returns to agriculture majors working in agriculture, but only when the firms are located in urban areas.  Some majors, most notably Animal Science and Agricultural Education and Studies, appear to have substantial sector-specific skills as measured by large pay gaps between jobs inside and outside agriculture.  Others, most notably Agricultural Business, earn a wage premium outside agriculture consistent with the development of skills that are broadly valued across sectors.  Importantly, differences in GPA of majors across the two sectors vary only by small amounts, suggesting that sectoral wage differences are due to the skills developed in the major and not to differences in the abilities of individuals across the agriculture and non-agriculture firms.

On average, non-agriculture majors earn about $13,000 more than agriculture majors.  In urban areas, there is no significant difference in average income between agriculture and non-agriculture sectors.  However, agriculture majors earn a substantial premium over non-agriculture majors in urban agricultural firms, while non-agricultural majors receive a significant premium over agriculture majors in non-agricultural sectors.

The pattern is markedly different in rural markets.  Salaries for all majors are over $18,000 less in rural markets.  Salaries in rural agricultural firms are even lower, averaging $30,000 less compared to their urban counterparts.  However, there is no premium paid to agriculture majors in rural agriculture firms.  Still, non-agricultural majors receive a $15,000 premium in rural non-agriculture sectors.  Clearly urban versus rural residence is a key factor in assessing the returns to agriculture majors overall and relative to other college majors.

The range of salaries across ag majors is remarkable.  Within agriculture, the highest average salaries go to Animal Science majors whose pay more than doubles the average in Agricultural Engineering and Plant Science.  Outside of agriculture, the top salaries in Agriculture Business are more than double those in Agriculture Engineering and Natural Resources.

Equally remarkable differences exist in the probability of finding employment in the agriculture industry.  Less than 4 percent of Food Science majors work in agriculture, barely more than the proportion of non-agriculture majors.   Meanwhile, over one-quarter of Plant Science and Agriculture Engineering majors take jobs in the agriculture sector.  Average earnings fall as the fraction employed in agriculture, suggesting that agricultural firms do have trouble competing for college talent at least on average.

There are substantial differences across majors in the average paid inside and outside of the agriculture industry.  The majors in the table above are listed in order of the size of the premium paid for working in agriculture.  The premium approaches 100 percent in animal science and exceeds 50 percent in Natural Resources.  However alumni in other majors earn a premium for working outside agriculture, the largest a 51 percent premium among Agricultural Business majors.

We also found large negative effects on earnings for alumni graduating during economic downturns.  Those who graduated with agriculture majors during the 1980s, a time of stress in the agricultural economy, were paid less than those who gradated later, and their salaries continued to lag over time.  More specialized agriculture majors graduating during the 1980s agriculture recession were disproportionately impacted, suggesting that having a narrowly focused major may be risky in that it makes it more difficult to adjust to changing economic circumstances.  Significant shifts in industry dynamics, apart from economic distress, may also represent a risk to having a more narrowly focused major.

Taken together, these findings have important implications for curriculum decisions in agricultural degree programs.  While teaching more specialized, industry-specific knowledge and skills can reward students who land jobs in agriculture, it can hurt the majority of majors who find work in other sectors.  Returns to development of specialized skills and knowledge while obtaining an undergraduate degree vary considerably.  In fact, this paper shows that there are inherent risks in specialization of undergraduate studies, whether those risks arise from career changes, sector-specific changes or shocks, or economic circumstances.

Our analysis suggests there is ample justification for continued emphasis on development of generalized skills for any major or program of study.  Examples of such innovations include writing intensive exercises across the curriculum; experiential learning using case studies, simulations, interaction with industry professionals, and projects from private companies; and incorporating oral reports and group projects with more traditional forms of instruction.