This study reports results of an acreage supply equation using individual farm data and develops implications for bias introduced by use of aggregate data. The analysis shows that use of aggregate acreage response models underestimates the absolute value of price elasticities and the lagged adjustment process. Further, aggregated analyses cannot incorporate some variables found to be important in explaining from level acreage response.

United States agriculture is at a crossroads. The current financial crisis in agriculture eventually will force the farm sector to follow one of two general directions for the future. One of those courses is to retreat from reliance on export markets, the loss of which triggered the current farm financial crisis, and to return to greater reliance on domestic demand. The other course is to return to a world market orientation, regain export markets lost during the 1980s, and develop and exploit a growing world demand for agricultural commodities. Each of these alternatives implies a different future for United States agriculture and a different future for the Agricultural Economics profession.

Accurate estimation of the responsiveness of agricultural commodity supplies is vitally important. Government policy negotiations rely on supply estimates in predicting both commodity and intercommodity effects of changing programs and in anticipating their consequent social benefits and costs. Individual farmers and agribusiness firms need them and associated price predictions in making investment and production decisions.

An example of agricultural research technology transfer and implications for the fiscal coordination and conduct of agricultural research programs is presented. Uniform Soybean Tests conducted in four Southern States are used to estimate the potential for transferability of soybean variety research among homogeneous sub-areas. The results indicate a high degree of transferability among the sub-areas. Coordinated management of soybean variety research could potentially provide more effective expenditure of soybean breeding research investments. Additionally, the concept or research transferability is not limited to soybeans or soybean variety research. Increased coordination of agricultural research investments by individual states may enhance existing benefits.

Increasing concentration in food processing has important economic implications for agricultural producers and consumers. This paper addresses the issue by focusing on a case where pure monopsony conditions appear to hold–catfish processing in West Alabama. Farm-level impacts of the market power imbalance are described via a six equation theoretical model. Results show price elasticity of farm supply governing the economic incentive to the processor for exploiting its market power: less (more) elastic supply implies greater (lesser) divergence between competitive and monopsony price. The theoretical model is operationalized using an indirect procedure recently suggested by Houck for estimating farm level supply elasticities. Based on these supply elasticities and historical prices, the model predicts a 12-35 percent potential reduction in prices received by West Alabama producers as a result of market power imbalance.

The purpose of this paper is to evaluate the effect of the proposed deep draft port user fee on export grain flow patterns and provide insight into potential marketing system adjustment costs which may result from diverted flows. A multiperiod, network flow model is used to conduct the analysis. Analyses show grain flow patterns to be affected most by a port specific fee which is based on weight. The annual variation in flows generated by imposition of port user charges is generally less than the historical year-to-year variation and, in most cases, the altered port area flows can be accommodated by existing infrastructure.

Since the early 1970s, the economic environment and the agricultural sector in particular have been characterized by constant change. Technologies are rapidly changing from the farm level through the various processing stages to the marketing of food products. New food products and markets, both domestic and international, are continuously emerging (Connor). Unprecedented linkages to world markets and to domestic macroeconomic policies have also been factors shaping the agricultural and nonagricultural sectors in the past 10 to 15 years. For the most part, the effects of these changes on the demand for agricultural products have not generally been empirically determined. Little attention has been paid to keeping abreast of changes and their implications for farmers and processors in any systematic fashion.

Incorporation of futures markets into the theory of the firm under uncertainty has received considerable attention in risk management. A theoretical model of optimal firm decisions in cash and futures markets considering price, production, and financial risks is presented. Production and marketing strategies for corn and soybeans in Georgia and Illinois are analyzed to determine the optimal amount of futures contracting which may be a hedge or a speculative position. A partial hedge is optimal for most situations for risk averse producers when the amount hedged is variable. With fixed quantity transactions, speculative and cash positions, but not hedging, tend to be E-V efficient.

International markets for the majority of agricultural commodities are extremely complex. They include public and private traders along with influences from domestic and international government policies. In recent years, the United States has experienced a decline in the market share in two of its major agricultural exports—rice and wheat. For example, at one time the United States had roughly 45 percent of the world wheat market; but, by the end of 1985, its share had dropped below 40 percent. Also, in terms of rice, the United States market share has dropped from 25 percent to below 20 percent.

A multi-product cost function model was used to analyze energy demand in various agricultural subsectors. This approach has advantages over previously used approaches since it reduces aggregation bias, considers technological jointness, and provides various disaggregative measures related to energy input demand. When fitted to West Virginia county level data, labor and miscellaneous inputs in crop and livestock production were found to be substitutes for energy, while capital, machinery, and fertilizer were complementary to energy. Energy demand was inelastic and increases in machinery prices had the largest reduction effect on energy demand. Technological change was found to be capital, machinery, and fertilizer using, but it was labor and energy saving. Analyses indicated that the elasticity of demand for energy inputs with respect to livestock output was significantly larger than the elasticity with respect to crop output.

My assignment is to ask what has been happening to the position of southern agriculture in national and world markets, and why. I do not have to answer the whole “why” question because the part of the answer relating to marketing institutions and policy is being handled by the other panelists. But I am sure you will agree that even the left-over bits are more than can be treated—at least by me—in a single paper.

Factors which explain supply response behavior of South Carolina tomato growers were determined. Two well known supply response models were used for comparison: the Nerlovian structural model and the Just risk model. The Just risk model reflected the significance of the risk effect in both stable and unstable periods. An evaluation of forecasting power between the two models was indeterminate. Growers are apparently willing to invest in more information with increased market instability because growers were influenced by the Florida winter price of tomatoes in planting decisions during the period of instability.

Since 1981, American agricultural export earnings have plummeted from $43 billion to around $29 billion for 1985, a 37 percent decline. Many factors have been offered as partial explanations for this phenomenon: a strong dollar, the continued fallout from the grain embargo placed by the Carter Administration on the Soviet Union, poor American marketing practices in international agricultural markets, debt problems in heretofore rapidly developing third-world countries that had been among our fastest growing export markets, and uncompetitive practices spawned by the foreign trade policies of our major competitors in international agricultural markets.

Artificial drying of corn in the Southeastern Coastal Plain was shown to be financially feasible for average annual per farm production levels of greater than 10,000 bushels. Net present values for four types of drying systems were evaluated using simulation modeling in which weather conditions, yield levels, and prices were entered as stochastic variables. Scale of production and irrigation substantially influenced crop drying potential. Stochastic efficiency analysis was used to evaluate the riskiness of the investment.

The objective of this paper is to estimate the impact of domestic policy on comparative advantage of agriculture in the South. I utilize estimates of projected prices in a market-centered agriculture to examine the degree of insulation from market forces for major crops produced in the South and to calculate the relative net returns per acre in the absence of commodity programs. The price and net returns are probably below long-term equilibriums but are useful measures of relative prices and returns among commodities even if the returns are negative.

An analysis of risk attitudes for a sample of grain sorghum producers in the Texas Coastal Bend is reported. Four alternative functional forms were estimated on data elicited by the direct elicitation of utility approach. The exponential functional form described most producers' utility preferences better than other utility forms. Relationships between exponential risk measures and both producer attributes and farm characteristics, including interactions among them, were identified as significant. Risk aversion was found to diminish with more experience in farming and to increase with more leasing of farm land. Risk aversion was also found to decline with larger farm size and to increase with higher dependency of farm operators on farm income.

International markets have been important to Southern agriculture since the 17th century. During that early period, the colonization of the South was primarily oriented to the production of such crops as rice, tobacco, forest products, and cotton for export to Europe (McPherson and Langham). In more recent times, the South has also been an important source of exports of wheat, corn, and soybeans.

This study examines the effects of alternative government farm programs and hypothetical price variability levels on two Texas cotton farms which were simulated stochastically over a 10-year period. Results indicate that a combination of high price variability and participation in government programs stimulates growth and wealth accumulation.