This address is directed toward applied economists as they provide information to private and public decision makers. Central to this discussion is the role of markets as institutions in achieving society's desired ends. Current “economic correctness”–the view that unfettered markets are superior in achieving efficiency, growth, and welfare-has attempted to return a larger role to the private sector, but the relative roles of market-oriented versus government-oriented solutions to problems are often not well appraised. Views presented herein calls for agricultural economists to move simultaneously toward an understanding of the strategic behavior of firms in imperfectly competitive markets and toward an adoption of policy analysis consistent with a socially complex and globally integrated economy.

Cost, returns, and economies of scale for small, medium and large catfish farms with recirculating ponds are presented for the upper Texas coast. Internal rates of return are 0.150, 0.183 and 0.219, respectively. Total investment is higher than farms with static ponds but investment per unit production capacity is 7 percent to 16 percent lower. Average total cost per pound is between $0,565 and $0,541, (11 percent-20 percent lower than farms using current technology). These results have implications for regional comparative advantage of catfish production as well as incentive for adoption of new technology in conventional ponds.

The ornamental horticultural industry continues to be one of the most rapidly expanding sectors in agriculture. This study examined a decision model for landscape plant production based on portfolio analysis. A quadratic programming model was developed to generate an optimal crop portfolio for a selected southeastern nursery. Empirical results indicate opportunities exist for modest diversification to offset income variability in landscape plant production and marketing.

Morale and faculty development are closely related. The agricultural economics profession must decide what it is about. There is room to practice the principle of comparative advantage and allow a degree of specialization in teaching, extension, and research. To continue in the role of an applied discipline, there must also be an opportunity for the young professional to establish rapport with, and understanding of, the private sector and the policy-making arena. If that is to happen, there must be encouragement in the institutional setting and by faculty colleagues who respect the importance of investment in building rapport and in establishing credibility. If that environment is present, morale should be good and faculty development will occur.

This paper presents an empirical analysis of the strategic forces shaping U.S.-Mexico trade relationships and the possibilities of extending the trade agreement to the rest of the Americas. The paper concludes that constituency interests, party loyalty, the proportion of a state's population of Hispanic origin, and the influence of textile-related employment in the state were significant explanatory factors in the Congressional Fast Track vote that occurred in May of 1991.

The average real salary of agricultural economists has risen approximately 20 percent over the last two decades. Currently agricultural economists' salaries are approximately 6 percent above the average college of agricultural salary and 1 percent above the average of all university faculty. Over the last two decades agricultural economists' salaries have remained among the highest in the college of agriculture and their numbers have risen as a percentage of total agricultural faculty. Conversely our profession, and the college of agriculture in general, has experienced declines in salary levels and faculty numbers relative to average university salaries and total faculty numbers.

Conjoint analysis, widely used in marketing research, offers an alternative resource valuation approach suited to outdoor recreation activities characterized as multiattribute. Design, implementation, and interpretation of conjoint analysis are reviewed in the context of recreation applications. Conjoint analysis is used in an analysis of waterfowl hunting in Louisiana. Using primary data collected from a survey of waterfowl hunters, ordered logit is used to estimate willingness-to-pay for recreation experience attributes.

The economic viability of the Boll Weevil Eradication Program in Alabama, Florida, and Georgia is assessed based on a five-year survey of producers. Results indicate the program increases yield 100 pounds per acre. This implies a 19 percent internal rate of return for producers over a ten-year period.

A dual cost function approach is developed as an alternative to time series and simplistic approaches for estimating farmers' expected operating rates of return on assets. A translog restricted cost function is estimated using data provided by 152 North Carolina dairy farmers over the period 1976 through 1986. The predicted costs from the fitted restricted cost function are used to construct estimates of farmers' expected operating rates of return on assets. The estimates from this structural approach explain more of the variation in observed rates than do time series estimates or sample mean observed rates.

Market forces, when viewed from the perspective of faculty salaries alone, clearly indicate that the highest and best use of a faculty member's time and expertise is no longer university employment. As a result, many productive faculty members are becoming increasingly dissatisfied, and many top domestic undergraduate students are eliminating academia as an employment alternative. This trend operates to the long-run detriment of the land grant university system. In part, these forces are a direct result of outdated and/or unimaginative administrative policies, inadequate reward systems, and the inability of the profession to demonstrate its productivity in terms that society understands and appreciates. Implications are drawn for land grant consulting and grantsmanship policy.

This paper analyzes output changes in the U.S. agricultural economy from 1972 to 1977 using a 477-sector input-output framework. The empirical model is based on benchmark input-output data from the U.S. Bureau of Economic Analysis for 1972 and 1977. Output changes were decomposed into components attributable to technical change, domestic final demand change, export demand change and import substitution. A major advantage of the decomposition is its ability to identify the output change in a given sector due to general equilibrium effects in all sectors.

Human capital theory suggests that job opportunities will create incentives for human capital investment. If job information does not flow freely, or if they prefer not to move, students will make investment decisions based upon local job markets. Communities with a high percentage of low-skill jobs which do not reward high school and higher education do not create incentives for students to finish high school or continue beyond high school. Data from Virginia support this hypothesis. Targeted job creation, and improved labor market information may create incentives for increased human capital investment in many rural communities.

The debate over privatizing and water markets has moved back and forth for decades between the “I” and the “We” perspectives. Rather than either/or, a balanced “I&We” view of water institutions is needed. West is meeting east in water law. Public interest needs must be satisfied in appropriate decision forums, but marketing may prove a social improvement when used as a supplement. Balancing an “I&We” institution involves establishing an acceptable or tolerable level of interference through judicious mixing of state, common and private property regimes. Third-party effects are eliminated as mutual gain arises in a variety of decision forums.

A whole-farm simulation model is used to analyze the impacts of PST adoption on representative farms in Missouri and Indiana. Farmers who do not adopt experience lower average annual net cash farm incomes than adopters. Lower feed prices and/or an average PST/feed response decrease the incentive to adopt. Payment of a 5 percent carcass merit premium (CMP) and/or higher grain prices greatly increase the economic incentive to adopt.

Whether or not privatization facilitates rural development depends upon what rural development means. In practice, rural development often is the result of a struggle between rent defenders and rent seekers. A positivist concept of rural development is proposed, and the institutions of public choice are examined to determine how they might influence privatization decisions. The conclusion is that whether or not privatization improves efficiency of adjustment in rural economies depends upon the specifics of political deals required to achieve a particular act of privatization.

Several common flexible functional forms are evaluated for Texas agricultural production utilizing three procedures. Nested hypothesis tests indicate that the normalized quadratic is the marginally-preferred functional form followed by the generalized Leontief. Predictive accuracy results are ambiguous between the generalized Leontief and the normalized quadratic. Statistical performance favors the normalized quadratic. These two functional forms consistently dominate the translog.