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Adjustments of Midwest Grain Farm Businesses in Response to Increases in Petroleum Energy Prices*

Published online by Cambridge University Press:  28 April 2015

James B. Kliebenstein  and
Jean-Paul Chavas
James B. Kliebenstein
Affiliation:
Department of Agricultural Economics, University of Missouri-Columbia
Jean-Paul Chavas
Affiliation:
Department of Agricultural Economics, University of Missouri-Columbia
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Extract

Since the early 1970s, the increasingly tight energy situation has introduced a new emphasis, if not a wholly new concern, into the economics of agriculture. Assuming the tight energy situation continues, or even intensifies in the future, it is likely to require economic adjustment in U.S. agriculture—an agriculture heavily dependent on fossil fuels.

Dvoskin and Heady have shown that when maximizing farm profits is the primary goal, energy price levels have a minimal impact on acres of crops produced under reduced tillage methods in the U.S.. However, when energy minimization was the primary goal, there was a substantial shift from conventional to reduced tillage. An ERS study proposes that forms of reduced tillage can be a major means of achieving fuel savings. Reduced tillage methods do reduce fuel requirements, but these are accompanied by higher chemical requirements. Eidman, Dobbins and Mapp found that with current energy prices, a form of reduced tillage for corn production was preferable to conventional tillage methods. In a recent study, Musser and Marable concluded that with respect to machinery purchases, energy cost increases are providing incentives for substitution of labor for capital.

Type
Research Article
Information
Journal of Agricultural and Applied Economics , Volume 9 , Issue 2 , December 1977 , pp. 143 - 148
Copyright
Copyright © Southern Agricultural Economics Association 1977

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Footnotes

*

Journal Paper No. 7950 of the University of Missouri Agricultural Experiment Station, Columbia, Missouri. The authors wish to thank Harold Breimyer, Gary Devino, Robert Finley, Charles Headley and three anonymous reviewers for their helpful suggestions that significantly improved the manuscript.

References

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