This paper provides an economic analysis of the historical agricultural price and income support policy, a policy of market-determined prices and income, and a policy linking market-determined prices with sector-wide farm income stabilization in years of economic disaster. The analysis compares commodity prices, net farm income, and government expenditures over the period 1970 through 1982 based on estimates generated by USDA's Food and Agricultural Policy Simulator (FAPSIM). The historical policy generates the highest income and most stable prices. Market-determined income is lowest and has the greatest variability. Stabilization minimized income variability at intermediate income levels.

This study analyzed supply functions for agricultural output and demand functions for factors of production for Georgia. These relationships were derived with duality theory from a normalized quadratic profit function. Land has been included in other duality studies as a fixed factor as opposed to an endogenous factor. In this study, the system of supply and demand equations was augmented with a supply equation for land, which allowed land rents to be an endogenous factor. Consequently, it was possible to measure the impact of output and input prices on land rents.

Agricultural lenders have a stake in and are in a position to influence their borrowers' management decisions. Risk management practice adoption is an area in which lenders might want to exercise this influence. This study employs logistic statistical models to estimate lenders' influence on crop producers' decisions regarding use of three alternative risk management practices: federal multiple-peril crop insurance, crop hail and fire insurance, and forward contracting. Results suggest lenders can exert significant influence on these decisions but that poor communication between lenders and borrowers likely reduces this influence.

The purpose of this study was to describe an LP/IO model for evaluating the economic impacts of alternative farm policies on rural communities and demonstrate its capabilities by analyzing the impacts of three farm policies on a rural community in Texas. Results indicate that in the noncrop sector, two groups of industries are most affected by farm policy. The first group relates to production directly (agricultural services, banking and credit, and nondurable manufacturing) and the second group relates to households (retail trade and services). Farm policies which reduce production but increase net returns cause losses for the first group while benefitting the second group. Both groups are made worse off by farm policies which reduce agricultural production and the value of output.

In this paper, consumer demand for food diversity is measured by the entropy and Simpson indices for budget shares. Results show that consumer demand for food diversity is related to total food expenditures and house-hold size and composition.

This study developed an intertemporal profit function to determine optimal conservation adoption strategies under alternative scenarios with respect to crop prices, relative yields, discount rates, and other assumptions. Special emphasis was placed on determining from the analysis when the switchover from conventional to soil-conserving practices should take place. Technological change was incorporated by allowing crop yields to vary over time. Our analysis thus provides a new, more precise measurement of the cumulative net benefit differential. The optimal period for switchover from conventional to soil-conserving practices was found to vary depending on the assumptions made about corn prices and discount rates. Empirical results were based on an erosion damage function (EDF) for Western Kentucky corn production.

The Southeast is a net importer of milk and milk products. Milk must be imported from other regions at certain times of the year. Reverse osmosis (RO) is a new processing technology which could significantly reduce milk transportation costs between regions by removing half the water from raw milk prior to shipment. A network flow algorithm, which incorporates federal milk orders and solves for the least cost procurement pattern, was used to assess the impact of RO on southeast milk marketing orders under alternative raw product pricing scenarios.

Self-employment taxes, “effective” marginal tax rates, and discounting schemes which allow for alternative purchase and disposal dates of machinery are incorporated into the traditional optimal replacement interval model. Empirical results indicate that these alterations decrease the optimal replacement intervals by up to three years from those obtained with traditional modeling assumptions. Inclusion of self-employment taxes decreases both the penalty attached to early replacement and the net present value (cost) of tractor ownership.

The 1985 Farm Bill departs from recent farm bills in moving toward more restrictive acreage control. The change from a two- to a five-year average in calculating base acreage and enforcement of limited cross-compliance appear to significantly alter crop mix decisions on representative Alabama cotton farms.

E-V studies traditionally have relied on historical data to calculate returns and variance. Historical data may not fully reflect current conditions, particularly when decisions involve government-supported crops. This paper presents a method for calculating mean and variance using subjectively-estimated data. The method is developed for both government-supported and non-program crops. Comparisons to alternative methods suggest the approach provides reasonable accuracy.

The 1980s have been a period of dramatic change for the income tax code in the United States. Although numerous modifications were considered in policy deliberations, two key goals, the reduction of the importance of tax considerations in investment decisions and tax simplification, emerged from the discussion and guided drafting of the 1986 Tax Reform Act. This study examines the importance of tax considerations in investment decisions under the provisions of the Tax Reform Act of 1986 and its predecessor, the Tax Equity and Fiscal Responsibility Act of 1982. The study then compares the tax liability under these tax codes with a nondistortionary tax scheme. Results indicate that the Tax Reform Act of 1986 reduced the distortionary effects of the tax code on capital investment decisions. However, a large portion of the reduction can be attributed to the change in the average tax rate.

A major objective ofthe Food Security Act of 1985 was to make the United States more competitive in world markets. U.S. wheat exports in 1987/88 were 75 percent above their 1985/86 level. This paper analyzes the change in U.S. competitiveness in wheat exports by quantitatively assessing those factors responsible for this export expansion. The results indicate that about half of the increase can be attributed to the provisions ofthe 1985 Act. About 40 percent ofthe increase is due to nonprice factors in the Soviet Union and China—namely production shortfalls and domestic policies—that increased import demand. The rest is due to reduced competitor yields.

Most previous estimates of elasticities of export demand for U.S. soybeans have emanated from single import equations subject to aggregation and simultaneous equation bias. This analysis tests U.S. soybean export data for aggregation and simultaneous equation bias and divides the aggregate data into six market equations to reduce these biases. Elasticity estimates from the six equations are compared with elasticity estimates from single equation OLS and 2SLS estimations using the same aggregate data. Results suggest that distortions from unjustified 2SLS estimation may exceed those from aggregation bias.

This study determines the effect of government payments on real agricultural asset values using Bayesian vector autoregression. In developing the empirical model, special attention is focused on the informational content of government payments. The results indicate that government payments to farmers have little effect on real asset values in the long run. In the short run, an increase in government payments to farmers may be associated with decline in asset values.

A mixed integer linear programming model was developed to simulate the decision environment faced by an entry-level vegetable producer contemplating production for the whole-sale market. The model included activities which permitted consideration of 13 vegetable crops within a spring, summer, and fall rotational system. Rotations were permitted within given bounds established by marketing, rotational, and price risk constraints. Rotations were generally stable with respect to markets and relative to crop mixes as target income and acceptable negative deviation levels were varied. Spring and fall broccoli and turnip greens and late spring-summer yellow and zucchini squash were dominant crops in the triple crop rotations in the Atlanta and Cincinnati markets.

Income variability and means for managing risk continue to receive much attention in farm management research. In this paper, irrigation is presented as a risk-management strategy that offers potential diversification benefits. Potential diversification opportunities largely result from a wider range of enterprise production activities. A portfolio analysis of dryland and irrigated farm scenarios indicates that income stabilizing and diversification effects of irrigation substantially modify the risk-return position of a typical farm in northeast Louisiana. Safety-first considerations along with Target MOT AD programming procedures also are used to evaluate the impact of irrigation on the farm's financial performance.

A microcomputer program to perform Generalized Stochastic Dominance (GSD), Quasi-Second Degree Dominance (SSD), and Quasi-First Degree Stochastic Dominance (FSD) is described. The program is designed to run on IBM-compatible personal computers with a Hercules or CGA graphics adapter. It is menu-driven and has options for GSD, quasi-FSD, quasi-SSD, graphics, and calculations of premiums associated with use of dominant distributions.

XLAYER, an expert/knowledge-based microcomputer program, was designed and developed to diagnose layer management problems and recommend expert remedial management advice. The program also provokes management action by calculating the economic loss attributed to major management problems. It analyzes data generated by a commercially marketed layer performance financial microcomputer program and has demonstrated the ability to emulate poultry management experts in the diagnoses of 80 individual layer management problems. The program provides scarce expert poultry management advice to poultry layer managers regardless of size and scale of operation.

A minicomputer online information retrieval program is described that is designed to facilitate timely distribution of agricultural market news to state and county research and extension faculty. These faculty have designed programs that extend this information to clientele in their areas. An evaluation indicates that users find great value in this network. Usage has grown rapidly over the period the network has been available. This program is available and can be used by other states and clientele.

The major mechanisms for the transference of price and output risk by crop producers are examined. These include the use of futures and options contracts, government price-support and deficiency-payments programs, and crop insurance. Iso-revenue curves are used to highlight the distinctions between these alternatives.