Economies of size for farm firms in the United States are a traditional interest of agricultural economists (Heady). Continued interest in this topic is related to the implication of economies of size for the size structure of farm firms. The structure issue has the potential to affect not only current farm firms but also agricultural marketing firms, rural communities, and consumers of agricultural commodities (Krause and Kyle). In the past, the relationship between economies of size and farm firm growth was the basis for research. More recently, the relationship of economies of size to public policy issues has gained attention (Bardnam, Hall and LeVeen, Seckler and Young).

Changes which have occurred in the U. S. agricultural and economic environments over the past few years have important implications for the financing of agriculture. Increased dependence on purchased inputs, coupled with inflation in all areas, has placed added emphasis on the need of farmers to secure capital to fund their operations. A parallel concern is the ability and willingness of financial institutions to supply adequate financing.

Commercial banks have a dominant position in the total agricultural market and as a result farmers are dependent on them (Melichar and Waldheger). Because of this dependence and for the health of the agricultural economy, commercial banks must continue to supply adequate amounts of funding. If banks are to do this, they must continue to perceive agricultural lending and relationships with agriculturally oriented customers as being consistent with their own profitability goals. Our research results indicate the relative importance and profitability associated with agricultural customers in comparison with other customers.

One of the more significant changes in the U. S. agricultural industry in recent years has been the increased use of credit to finance production and capital expenditures. Since 1970, outstanding farm debt has more than doubled, rising at an average annual rate of 9.3 percent. However, because net farm income has not increased as fast, the debt burden for farm operators has become relatively higher (Melichar and Waldheger).

This increase in debt load has made financial evaluation more difficult for lenders. Narrow profit margins and increased average loan size have made financial institutions more aware of the need to determine, for their loan portfolio, how borrower and agricultural business characteristics relate to debt repayment ability and loan quality.

Climatic conditions in semiarid regions like the Oklahoma Panhandle result in wide fluctuations in rainfall, dryland crop yields, and returns to agricultural producers in the area. Irrigated crop production increases peracre yields and significantly reduces fluctuations in yields and net returns.

Irrigated production of food and fiber in the Oklahoma Panhandle has developed rapidly during the past three decades, increasing from 11,500 to 385,900 acres since 1950 (Schwab). The primary source of irrigation water in the area is the Ogallala Formation, an aquifer underlying much of the Great Plains region. Until the past couple of years, the presence of relatively low cost natural gas led producers to expand irrigated production and apply high levels of water to crops irrigated in the area.

Under new federal programs, soil and water conservation practices are relied upon to make a major contribution to the control of nonpoint sources of water pollution. Economic efficiency is to be considered in selecting these practices. Although only an experimental program funding of $50 million has been appropriated, $400 million of Rural Clean Water Program funds in 1980 were authorized. The program is to be administered by the Secretary of Agriculture with the concurrence of the Administrator of the Environmental Protection Agency. Because its implementation may eventually necessitate major land use changes and capital investments as part of 5- to 10-year contracts with farmers, we examine how soil conservation plans can incorporate potential changes in market prices of crops.

Containerization of transoceanic general cargo shipments was pioneered in 1966 when Sea-Land Service, Inc. initiated a containership service from the U.S. East Coast to Europe. Shipping of cargo in uniform-sized sealed containers of truck-trailer size revolutionized the marine transportation industry during the 1970s. The intermodal container enables the shipper to pack his cargo in the container at his own premises and deliver the cargo to a port to be transferred to an ocean vessel and delivered overseas to the foreign consignee, without the contents of the cargo being handled at each stage of the journey. Initially, the container was moved to an ocean port by rail or truck, but recently this leg of the movement has been adapted to inland river movement via the container-on-barge.

Farm machinery energy accounting has taken basically three approaches.

The first approach is concerned with the energy embodied in farm machinery on a national basis. Two studies have attempted to show the aggregate amount of energy embodied in the manufacture of farm machinery. Using input-output analysis, Bullard et al. provide estimates of the energy costs of goods and services for 1967. Measured in BTUs per dollar of final product, the energy cost of farm machinery at 1967 price levels is given as: coal, 34,478 BTUs; natural gas, 24,794 BTUs; refined oil, 12,541 BTUs; and electricity, 5,396 BTUs.

The attraction of new industry is an ongoing concern for most local officials. Generally, local officials are aware of the private sector benefits of new jobs and income. Attention is beginning to be paid to secondary private sector impacts such as the effect of new industry on local wage rates and the problems associated with in-migration of labor to fill new jobs. Borts and Stein (Chapter 9) give a theoretical discussion of these issues.

In addition researchers and policy makers are interested in the development of models that estimate the impact of new industry on local government expenditures and revenues. Many computerized versions of local fiscal impact models are reviewed in a recently published text (Burchell and Listokin, pp. 345-59). The popularity of these models is understandable because of the potential benefits to be derived from accurate forecasts of local fiscal impact. For example, a community can determine the magnitude of a tax incentive it can offer to industry and still maintain a positive fiscal impact for local government. Zoning laws can be written to encourage land use patterns that will be efficient from the public sector's perspective if the public expenditures and public revenues associated with alternative land use patterns can be predicted. Finally, local areas may be able to demonstrate to state government that a large-scale industrial project will benefit the fiscal position of the state but be a burden to the local fiscal balance.

Farmers and other business people commonly consider multiple goals or objectives in their-decisions, especially investment or other long-run decisions. Various techniques, such as discussed by Keeney and Raiffa, have been developed to incorporate multiple goals or objectives in decision making. These techniques differ in how the decision-making process is viewed, empirical data required about goals, and solution algorithms. Considerable emphasis has been given to development of alternative models and solution algorithms, but problems (Willis and Perlack), of quantifying farmers' goals for use in these models have received relatively little attention.