This study investigated farmers' incentive to forward purchase inputs. A model of farmer decision making was used to derive an optimal forward contracting rule. Explicit in the model was the tradeoff between the quantity of input to be purchased in advance, and the remaining portion to be purchased later on the spot market. Results indicated that the primary reasons farmers contract inputs are to reduce risk and to speculate on favorable price moves. A numerical example of fertilizer used in corn production indicated that the size of the price discount was the dominant factor in forward contracting decisions.

Unilateral liberalization of U.S. peanut policy was evaluated using a model of U.S. and world peanut supply and demand. Under the proposed policy, world peanut price would rise slightly to $.20 per pound at the U.S. farm level. U.S. production would decline by 578 million pounds per year and would be offset by imports of 582 million pounds. U.S. net farm income would fall by $405 million per year. Lost income per farm would be $21,000 per year while the average outlay of consumers would decrease by $.84 per person at farm level price. Government expenditures would be virtually unchanged because of the market orientation of current policy.

A credit scoring function incorporating statistical selection criteria was proposed to evaluate the credit worthiness of agricultural cooperative loans in the Fifth Farm Credit District. In-sample (1981-1986) and out-of-sample (1988) prediction performance of the selected models were evaluated using rank transformation discriminant analysis, logit, and probit. Results indicate superior out-of-sample performance for the management oriented approach relative to classification of unacceptable loans, and poor performance of the rank transformation in out-of-sample prediction.

The effect of capital structure and seasonality of fresh market vegetables was examined via the Target MOTAD model. The level of capital indebtedness and the selection of either a fall or spring season resulted in significantly different levels of enterprise mixes, expected returns, risk magnitudes, rates of change of risk magnitudes, and operating capital requirements. The fall season demonstrated larger initial levels of risk and larger increases in the level of risk due to increases in indebtedness. The spring season showed larger increases in risk between the minimum risk point and the maximum expected return point (linear programming solution) on the risk-efficient frontier. Operating capital requirements were substantially higher for the fall season than for the spring season. The operating capital requirements of the spring season were significantly affected by the level of indebtedness and the magnitude of risk selected by the grower, while the larger operating capital requirements of the fall season were only marginally affected.

This paper explores changes in traditional commodity programs from the perspective of domestic welfare. A theoretical model was developed which describes domestic welfare changes that follow from policies consistent with reductions in international price distortions. The model was applied to the 1985 Farm Bill. This provided an historical example of a policy change that simultaneously improves domestic welfare and reduces protectionism.

This paper presents findings from an analytical scheme that offers a promising alternative to traditional procedures of modeling acreage response. The scheme addresses the two-step decision process in which program and nonprogram planting decisions are modeled separately, conditional on the decision to participate. This provides a more realistic and intuitive portrayal of producers' decision making process. The model is applied at the regional level to assess the impact of farm programs on acreage response for corn in the Cornbelt and Lake States, and for wheat in the Northern Plains. The impacts of policy variable changes on participation and planted acreage are also analyzed.

Quasi-experimental techniques were developed to provide decision-making tools for documenting the impacts of developmental highways in rural areas. Regression discontinuity analysis (RDA) with limited observations was used to compare economic changes in highway counties to those in adjacent and non-adjacent control counties. The RDA models found statistically significant changes in population, per capita income, and taxable sales related to highway development. The study found that some counties benefitted from developmental highways, some were unchanged, while some experienced economic decline. RDA models with adjacent controls had better explanatory powers while those with non-adjacent controls were more sensitive to highway-related changes in economic activity. When significant non-highway activities were present, adjacent control models may have understated highway-related impacts, while non-adjacent control models may have overstated these impacts. Arguments for using adjacent and non-adjacent experimental designs are discussed.

A mailed questionnaire wasr used to assess consumer concerns and potential consumption response attributable to the introduction of bovine somatotropin (bST). Responses from 605 households in Virginia are described and analyzed. Logit models were estimated to identify which issues shape consumers' decisions to alter milk purchases contingent on the introduction of bST and to determine whether socioeconomic characteristics explain consumers' attitudes toward these issues. Estimates based on survey responses point toward sizable reductions in fluid milk purchases if bST is introduced. Large retail price reductions are predicted to be insufficient to offset these estimated decreases. Consumer education and marketing strategies are discussed.

Trade coverage ratios were calculated to assess the 1989 incidence of non-tariff measures (NTMs) on imports of agricultural products by major industrial nations. Overall, 36 percent of all food items were found to be covered by one or more NTM in the European Community. Corresponding figures for Japan and the United States were 59 and 17 percent, respectively. Imports of agricultural products confront a wide variety of NTMs in markets of industrial nations. Results of the analysis were used to shed light on prospects for reaching agreements on agricultural reform issues in the Uruguay Round of multilateral trade negotiations.

The efficiency of livestock futures markets continues to receive attention, particularly with regard to their forward pricing or forecasting ability. The purpose of this paper is to present a more general theory that encompasses the forward pricing concept. It is argued that futures contract prices for competitively produced nonstorable commodities, such as live cattle and live hogs, follow a rational formation process. Futures contract prices reflect expected market conditions when contracts are sufficiently close to the delivery month that the supply of the underlying commodity cannot be changed. However, prior to the period when future supplies are relatively fixed, futures contract prices should adjust to reflect the competitive equilibrium, where output price equals average costs of production. Presented evidence suggests that live cattle and live hog futures markets support the rational price formation hypothesis: prices for distant contracts reflect average costs of feeding. Implications for risk management strategies are considered.

This study estimated import demands for U.S. fresh grapefruit in Japan, France, Canada, and the Netherlands. Historically, these nations have imported about 90 percent of U.S. grapefruit exports. Four import demand functions were specified and estimated by joint generalized least squares based on the sample period 19691 to 1988IV. Results show that U.S. FOB price, per capita income of importing countries, exchange rates, price of substitutes, U.S. grapefruit promotion programs, and removal of trade restrictions have had an important effect on U.S. fresh grapefruit exports. Analyses suggest that U.S. producers can effectively promote fresh grapefruit in foreign markets, and that trade concessions have an important influence on grapefruit exports.

This paper examines the impact of the Tax Reform Act of 1986 and the Social Security Amendments of 1983 on effective tax rates and average tax payments for farmers. The 1987 and 1988 Internal Revenue Service Individual Public Use Tax Files were used to estimate 1987 and 1990 tax rates and burdens. Results suggest that despite recent reductions in marginal income tax rates, the Federal income tax continues to be progressive. However, the regressive nature of the social security and self-employment tax greatly reduces the progressivity of the combined Federal income and payroll tax burden. For most farmers, combined social security and self-employment tax payments exceed Federal income tax liability.

The potential economic impacts of the introduction of bovine somatotropin (bST) on U.S. milk supply and demand are analyzed using a national model of Class I and Class II milk markets. The results indicate that the introduction of bST will lead to lower milk prices, higher milk production, and larger government purchases of dairy products. Unlike previous economic analyses of bST, this analysis considers both supply and demand effects of bST. The implication is that studies that ignore potential demand-side effects may produce misleading results.