The 1980 U.S. suspension of grain sales to the Soviet Union illustrates the importance of the choice of conceptual framework for empirical analysis of international trade problems. A spatial equilibrium model of wheat and coarse grains trade assumes perfect substitution among exporting nations' commoditites by importers and, thus, precludes the embargo from having a large impact. The imperfect substitutability assumption of an Armington model results in larger consequences from the embargo. For small shocks, the Armington model better captures the rigidities characteristic of international grain markets. The spatial model provides insights on adjustments to large shocks, but rigidities persist in actual markets.

Agriculture was once seen as the solution to many of the nation's problems. A strong agricultural sector translated into a strong America. Kohl et al. have presented four reasons for the past public commitment to agriculture. First, the agricultural sector has had considerable political power; second, there has been a widely held perception that farmers were economically disadvantaged relative to the rest of society; third, for many decades the growth of rural economies has been dependent on healthy agricultural sectors; and, finally, information produced by colleges of agriculture has been seen as a public good worthy of support by general tax revenues.

The objective of this paper is to give an overview of research policy issues and conceptual analyses for the South for the following economic development questions:

1. What are the relationships of southern agriculture to rural areas and communities?

2. What trends and adjustments are underway and having an impact on economic development in the region?

3. What directions should economic development research take to analyze and understand the current situation?

Suggested methods to reduce farm financial stress have included interest rate buy-downs and debt forgiveness. This study develops a method to estimate the proportion of individual farm financial stress attributable to an income problem, a leverage problem, and an interest rate problem. Of the Kansas Farm Management Association farms with a financial problem, 30 percent of the total financial problem is caused by an interest rate problem, 28 percent by a leverage problem, and 42 percent by an income problem. A reduction of leverage or interest rate to the level attained by the average nonstressed farms would make 31 percent and 32 percent of the stressed farms profitable, respectively. Therefore, in the short run, an interest rate buy-down or a debt reduction would be equally effective.

Dr. Henry has prepared a very thorough and thoughtful assessment of research needs concerning the relationships between farms and rural communities in the South. He has been true to his reputation—Dr. Henry does not skim lightly over any topic. He has diagnosed the subject area carefully, referenced current literature in his appraisal of research and policy needs, and drawn very defensible conclusions. Better still, his conclusions are basically consistent with my biases. To have one's intuitive conclusions substantiated by the experts is heady stuff indeed. The points in his paper with which I disagreed most consistently were found in extensive quotes from others, so we are clearly both on the right track.

Risk analyses often require a measure of individual risk aversion. Here a procedure is presented to calculate risk aversion parameter ranges wherein individuals would exhibit preference among a set of risky prospects.

In considering farm structure issues and the need for policy and research, we concluded that the right questions were being asked by the profession (Bergland). Rather than generate another list of research and policy priorities, we decided that what is really needed is a discussion of the data used to address these policy and research questions. Therefore, this paper will focus on data needs for economic and policy research.

The pricing behavior of the Florida celery industry under the current federal marketing order was examined by analyzing the implied market structure of the industry using a model proposed by Appelbaum. Point estimates of the oligopoly power index suggest that some degree of price enhancement above that which would be characterized by a perfectly competitive market may have occurred. However, the bulk of statistical evidence suggests that the departure from marginal cost pricing implied by the industry's pricing behavior is not statistically significant.

The general goal of the Skees and Reed paper is to emphasize the need for data which permit anticipatory, problem-oriented research by the agricultural economics discipline. More specifically, they seek more funding and support for the concept of state-generated data and, very specifically, support for panel design surveys by each state.

The demand for and supply of U.S. wheat, corn, and soybean exports is specified in a dynamic framework. Obtained results indicate differences in the export behavior of each product. U.S. corn exports are elastic, while U.S. soybean exports exhibit an inelastic response. For wheat, the derived elasticity of export demand had a positive sign. Hypothesis testing validated the dynamic structure of the estimated models in all markets. Stability properties were confirmed in export markets of corn and soybeans, but results were inconclusive for the wheat market. Adjustment coefficients indicate that exports and export prices do not adjust immediately to their equilibrium levels. Multiplier impacts indicate a stable path of convergence for all markets, with minimal impact of exogenous shocks on wheat and corn exports and export prices. Soybean export prices exhibit a significant response to changes in domestic export capacity, but minimal response to other exogenous shocks.

Technology has made U.S. agriculture one of the world's most productive and competitive industries. Farmers have already witnessed the dramatic results of two major technological eras in agriculture. The mechanical era from 1920 to 1950 allowed farmers to make the transition from animal-powered agriculture to engine-powered commercial agriculture.

Concerns over declining farm numbers, shifts in farm size distribution, and associated infrastructural problems have led to a heightened awareness of structural considerations within policy making circles. Future policy decisions will have substantial structural consequences for the agricultural industry. Often, however, the indirect effects of grain pricing policies on the livestock sector have been overlooked in these policy decisions. The incorporation of price effects into a Markov chain analysis of pork farm size distributions and the simulation of those projections to the year 2000 under various price scenarios should provide some insight into the future structure of livestock farming in the South.

Concern over the effects of public policies based on misspecified econometric models motivates interest in a procedure to test, diagnose, and improve the specification of models that have been estimated with three-stage least squares. A test of system-wide specification based on Hausman's specification test is employed in a test of the a priori restrictions placed on the parameters of a structural model of the U.S. shrimp market. The null hypothesis of proper specification is rejected. After diagnosis via a comparison of unrestricted and restricted reduced forms and respecification, the null hypothesis cannot be rejected.

In an excellent analysis, Dr. Ghebremedhin discusses the impacts of technological changes on “small versus large farms, public costs in rural communities, and the future direction of research needs.” I cannot but wholeheartedly agree with some of his conclusions; e.g., that “technology has increased agricultural productivity and created new jobs, but it has also displaced persons from their occupations and livelihood.”

The current round of Multilateral Trade Negotiations (MTNs) under the General Agreement on Tariffs and Trade (GATT) was launched at Punta del Este, Uruguay, in September, 1986. Thus, it bears the appellation, “Uruguay Round,” although negotiations have actually been taking place at GATT headquarters in Geneva, Switzerland, since early 1987.

Forecast users and market analysts need quality forecast information to improve their decision-making abilities. When more than one forecast is available, the analyst can improve forecast accuracy by using a composite forecast. One of several approaches to forming composite forecasts is a Bayesian approach using matrix beta priors. This paper explains the matrix beta approach and applies it to three individual forecasts of U.S. hog prices. The Bayesian composite forecast is evaluated relative to composites made from simple averages, restricted least squares, and an adaptive weighting technique.

The Uruguay Round marks the eighth time since the end of World War II that the member countries of General Agreement on Tariffs and Trade (GATT) have attempted to negotiate a reduction in trade restrictions and protection. Previous rounds of negotiation have had remarkable success in reducing trade protection.

Off-flavor in catfish restricts farm marketings 10 to 45% depending on the season. The economic impact on society of this imposed supply restriction depends, in part, on the elasticity of demand for catfish. Econometric estimates based on disaggregated processing plant data indicate an elastic demand at the processor level but an inelastic demand at the farm level. Short-run social welfare gains from the elimination of off-flavor are estimated to equal 12.0% of farm revenues ($10.0 million in 1983). The inelastic demand for catfish at the farm level, however, means that most of the societal gains will accrue to individuals beyond the farm gate. Thus, an economic justification exists for public sector funding of off-flavor research.

Let me start out by thanking you for giving me this opportunity to share a few thoughts with you on the European Community's (EC) agricultural policy—and on some recent important developments affecting farm trade. I am especially grateful to you because the opportunity comes at a time when consideration of farm policy and farm trade is more than ever on people's minds.

A production frontier methodology is used to measure the overall efficiency of a sample of farms obtaining credit from the Farmers Home Administration (FmHA) compared to nonparticipants. The study did not find evidence that the efficiency of FmHA farms improved between 1981 and 1984. Results indicate that the overall efficiency of FmHA borrowers is associated with selected financial characteristics of the farms.