Water utilities are being subjected to progressively greater economic pressures. The demand for water is increasing, due to both a growing number of customers and rising per capita consumption. Consequently, many utilities are faced with declining reserves of water, necessitating additional investment to develop sources of supply. Frequently, new or enlarged facilities to treat, store and distribute the larger volume of water are required. Public policies, also, are promoting the extension or development of public water systems to serve sparsely populated suburban communities, small towns, and rural areas. All these changes affecting the demand for water, combined with rising construction costs, are causing water utility costs to skyrocket.

Each generation believes it has a monopoly on crises. Its spokesmen declare how exceptional are the perils of its day. Crossroads are invariably said to loom ahead.

It is, therefore, with diffidence that I declare my uneasy feeling that our nation is approaching a crisis decision as to the kind of economy and kind of government that are to prevail through ending years of our century. I am not timid to the point of silence because I have not customarily played a Cassandra role. My direst warnings have been of prospective demise of central markets for setting cattle prices.

The image of concern portrayed here regarding the future structure of agriculture is done in livid rhetoric and with a very broad brush. I share the concern of Breimyer and others regarding this issue. But, I do not think it necessary to engage in the inferential stretch required to forecast a cataclysmic set of national circumstances in order to justify considering it. I do not believe that we have devastated the continent. I do not foresee economic stagnation of the national economy, or unmanageable power accruing from an alarming skewness in private wealth distribution. I believe that we have the inventiveness to cope with the emerging energy crisis and with the depletion that is occurring in some of our key resources. I do not believe that our collective moral values will erode until we worship almost totally at the altar of science and materialism. And most important of all, I have an abiding faith that our system of government has the resiliance to adjust to the requirements of the future regardless of what these may be.

Pressures are increasing for reforms in financing of local government services. At the local level, the property tax is a major source of concern. Two major charges leveled against the property tax are (1) that the property tax is regressive and (2) that financing local government services through the property tax leads to inequities in services received.

The charge that the property tax is regressive stems from the fact that it is a tax on wealth and not on income. The amount of real property owned by a person is not necessarily proportional to his ability to pay taxes. Several studies have shown that property taxes are regressive; i.e., that low-income families pay a greater percentage of their income for public services than do middle- and upper-income families.

In many regions, irrigation water is pumped from an underground aquifer that receives little or no recharge. With an exhaustible water supply, water available in year t + 1 depends on quantity of water available in year t − 1 and the quantity withdrawn in year t. As the water supply decreases, pumping costs increase and returns to water and management decline.

The exhaustible nature of the water supply causes an especially difficult problem for the farm operator in that he must allocate water within and among years. In addition, the farm operator is faced with irrigation investment decisions; e.g., type of irrigation distribution system to use. He must consider simultaneously, labor intensive versus capital intensive systems and effect of each system on present value and economic life of his specific water supply. To manually evaluate the alternatives, making the necessary calculations would be prohibitive in terms of both cost and time.

U.S. agricultural economic research has traditionally focused on farm production and marketing efficiency. In the future it must give more attention to equity.

Americans will certainly maintain their interest in producing things more efficiently. But, it is a healthy sign that they are also becoming more interested in making sure that changes are made fairly, justly, and impartially.

While there has been an increasing amount of agricultural economic research directed toward the problems of equity, there has not been enough. While I could present a paper documenting this research, I think it more useful at this point to consider seriously our overall research policy and try to reach some conclusion about whether it has adequately come to grips with the economic and social issues pressing upon us today.

I applaud Quentin West for what he said in his paper and commend him for the directions he had outlined for the Economic Research Service. If there was a time when economists could ignore the equity dimension in their analysis, it is no more. The agricultural establishment, largely uncritical lovers of traditional agricultural research and education, and the young radicals, largely unloving critics exemplified by Hard Tomatoes -- Hard Times, hold very different images of who pays for and who benefits from publicly supported agricultural research and education. Differences will not be resolved without better information in the hands of both groups.

It would be hard to quarrel with the thrust of ERS analysis reported by West for Tobacco and other programs. So I will deal with his shortcomings of omission rather than commission. Specifically, I will quantify the distribution of costs and benefits from agricultural research and education.

Regulatory activity to maintain the status of the independent milk company as a viable competitive force in the milk industry has been a central focus of regulatory policy since the 1930's. Some authorities question the degree of emphasis on preservation under the law, but most feel that there is an important element of protection embodied in regulatory activity affecting the industry. We feel that this aspect of the law is important and is the focus of this article.

Legal protection of the independent dairy is afforded from three sources. The Robinson-Patman Act, which prohibits firms from discriminating in price where the effect may be to substantially lessen competition, has been enforced extensively by the Federal Trade Commission (FTC) on behalf of independent milk companies. For example, of 53 complaints filed by the FTC from June 1950 to June 1964, nine were against dairy companies. Independent firms have protected their own position under the law in treble damage private litigation. As a group, the national and regional dairy concerns have been involved in almost continuous treble damage litigation on charges of discriminatory pricing in recent years.

I shall treat my subject, not as a Government official, which I am, but as a university professor, which I also am, on leave from Purdue University. I begin, like a professor, by defining terms.

For about forty years farm policy people have considered the term “agricultural programs” to mean programs for controlling production and price and increasing the income from our major crops. This ignores other agricultural programs like rural development, research and education, regulatory activities, environmental programs, and food distribution. In dollars spent and numbers of persons affected, these other programs bulk larger than the commodity programs. But I interpret my assignment as relating to the commodity programs.

Issues ancient and modern in the structural organization of agriculture are newly being legitimized. As one evidence, hundreds of extension meetings this winter will utilize a new set of leaflets entitled, “Who Will Control Agriculture?”. In popular articles, speeches, and research reports various aspects of the question are being examined. Even Secretary of Agriculture Earl Butz, himself an agricultural economist, has proclaimed the relevance of the subject, not to mention his chief economist, Don Paarlberg, who has addressed the same subject frequently.

Among these several sources the focus varies: optimal size of farm or feedlot; tax issues; the comparative advantage of the corporate and other forms of organization; economies of vertical coordination; the nature of contractual integration; and bargaining power for farmers and farm workers.

Interrelationships among enterprises on individual farms complicates decision-making by the individual producers and efforts to estimate producer response to alternative farm programs. This is especially true for wheat producers, where wheat both competes with other field crops and can be used for grazing (an input to beef production). Acreage allocated to wheat provides little indication of the quantity of wheat grain that will be produced since stockers may be withdrawn from grazing wheat throughout the production period. Wheat output is determined by length of grazing. With sufficiently attractive cattle prices, relative to wheat prices, wheat may be used only for graze-out (no grain harvested). The actual outcome depends primarily on price of wheat, price of beef and the characteristics of the government wheat program.

The recent emphasis in farm management research has centered on issues of financial management and firm growth. Consequently, a number of studies have identified and evaluated alternative production, financial and marketing strategies that result in growth or expansion of the farm firm. These studies have explicitly or implicitly assumed that the firm is a viable economic unit and the ownership structure will not change during the growth process. Thus, the life cycle of the firm has been severed from the typical life cycle of the enterpreneur, and the financial, economic and human problems of entry and exit of farm entrepreneurs into and out of the agricultural production sector have not been confronted. The following discussion will briefly review the characteristics of the life cycle of the family firm and indicate why entry-exit problems are particularly acute in the agricultural production sector. Then, specific micro and macro issues that merit empirical investigation, including the firm and industry implications of coordination (or the lack thereof) of the entry and exit processes, will be identified and discussed.

These observations by Machiavelli on the nature of human behavior seem most appropriate when reviewing the current status and distribution of benefits of producer bargaining. While the concept of bargaining by farmers is not new, it has experienced a resurgence of interest of unprecedented magnitude in recent years. This increased emphasis has led some to refer to agricultural bargaining as a “concept whose time has arrived.” Also, this development suggests the possibility-if not the promise-of the initiation of a “new order of things” to many of those who have observed it.

It is well recognized that a number of factors, basically technological in nature but having significant economic effects, have made feasible a drastic restructuring of the fluid milk industry. This is the economic outgrowth of developments that have been shifting the economies of scale in processing sharply to the right, that have all but eliminated home route delivery, that have improved quality and shelf life of the product, and that have provided methods for handling and moving milk over wide areas at low costs.

Interregional trade and associated price differences between regions has been the subject of extensive economic analysis. Trade patterns reflect intraregional supply and demand conditions and transfer cost among regions. Once patterns of trade are established, price differences among regions simply reflect transfer cost from exporting to importing regions. But, patterns of trade do not necessarily remain stable over time.

We should be indebted to Dr. Berry for his cogent observations on some key aspects of the producer bargaining issue. At the same time, however, I would be remiss in my role as discussant if I failed to point out two major shortcomings of his paper. First, the current status of producer bargaining is treated incompletely. Second, and more glaring, is the complete omission of any discussion of the distribution of benefits of agricultural bargaining.

It should be mentioned that both these shortcomings could be remedied simply by changing the title of the paper. For example, if the address was entitled, “Producer Bargaining: Its Present Status in the Dairy Industry,” these two criticisms would be largely unwarranted. I must also confess that if the assigned roles of Professor Berry and myself were reversed, he would very likely be levying the same comments about my presentation. For a complete analysis of the assigned topic involves a Herculean task – but a task with which we must come to grips in the near future.

Agricultural lending institutions are faced with a perpetual task of periodically evaluating personal and financial attributes of their borrowers. This examination is necessary in order to determine the present quality of the loans and to assess the current financial position of each borrower. Moreover, analysis of each borrower's financial performance establishes a basis for extending, limiting or withdrawing the present line of credit and for determining the amount and kind of supervision needed.

Selected problems and opportunities inherent in educational work with large Agricultural and Agribusiness firms are examined in this paper. The problems arise largely because of the increasing size and complexity of today's large firms; the nature of their requests for assistance; and existing means of teaching the personnel of those firms. The opportunities lie in helping solve their problems in a manner which retains University contact with this important audience without disrupting academic budgets and faculty relationships.

The authors of this paper are to be congratulated for the comprehensiveness and clarity which they were able to obtain throughout the paper. Their major contribution is the listing of the strengths and weaknesses of selected educational and/or consulting delivery systems, as in Table 1. They farsightedly point out that the major decision at this juncture is whether to deliver assistance to the large agriculture clientele, rather than which vehicle is selected for delivery.

This discussant was intrigued with the justification put forth for our working with the large commercial farmer. Indeed, to work with this group seems to offer a panacea, one which none of us would demean.

Producers within the cattle industry are faced with three major types of risks: (1) risks of losses in quality; (2) risks of quantity losses; and (3) losses resulting from unfavorable changes in cash prices. Quality and quantity risks are physical risks that can be dealt with through managerial techniques, adoption of new technology, and the use of fire, storm, and theft insurance. The risk associated with unfavorable price changes does not lend itself to an insurance approach. Producers must, therefore, become speculators in the cash market or choose to employ marketing strategies designed to transfer price risks to other market functionaries.