The combination of larger farms, rapidly increasing land values, and tax laws has resulted in increasing tax liabilities for the seller of farm real estate. After a real estate owner has made the decision to sell, he must choose the method of sale from several alternative selling strategies. Each selling strategy has a different impact on after-tax earnings. In the U.S., large numbers of farmers face this decision each year, as 4 to 5 percent of farms transfer annually. In addition, more than four-fifths of farm transfers are credit-financed. Sellers have been the predominant source of financing, providing more than two-fifths of all credit extended annually for farm real estate purchases.

Antitrust laws generally seek to promote competition in U.S. markets. Alternatively, these laws attempt to correct the type of market failure that occurs when the market does not sustain price competition or embodies undesirable features, such as prices fixed and agreed upon by rival sellers. It is well known that the federal policy to curb price-fixing agreements was central to the enactment of the Sherman Act of 1890. Formal cartels of the 19th and early 20th centuries, with their sales quotas, exclusive sales agencies, price-fixing committees, and customer and geographic sales allocations, apparently have been eliminated from the contemporary scene. Despite the disappearance of United States based formal cartels, there has been considerable litigation in recent years over pricing behavior of individual firms. A wide array of agricultural and food industries have been involved in these actions.

During the 1970s, many changes have influenced U.S. agriculture. Researchers have devoted considerable attention to analyzing the effects of greater variability of agricultural product prices and means of coping with imperfect knowledge. Questions related to energy and the environment are receiving increased research emphasis. Hathaway has written on inflation and food prices and Tweeten has analyzed the real price effects of inflation on agriculture and total net farm income. Agricultural lenders, farmers, and others have expressed concern about higher land prices and capital requirements, but little research has been directed toward analyzing the effects of inflation at the firm level.

It would be presumptive of me to inject an Alabama bias into the rank ordering of research needs which should be addressed by the agricultural economist; I prefer to address the issue of how priorities will be set and how the use of the research will be brought about.

These topics have received much attention over the last decade, in the journals of both the Southern Agricultural Economics Association and the American Agricultural Economics Association.

Tax reform, the incidence of taxation, and any implied restructuring of the rates at which individuals are taxed are recurrent issues which public policymakers must address. The advocation of reform or restructuring may be couched in various terms or approaches, but ultimately it must be concerned with the incidence of taxation and the rate of taxation in relation to income level. Arguments for changes in a tax structure may range from unsubstantiated value judgments to comparisons of taxes paid in relation to income but, regardless of the justification, each proposal is based on implicit or explicit evaluation criteria. An approach based solely on a comparison of tax paid in relation to income does not address one of the central issues—the sacrifice which the taxpayer perceives as he/she gives up income.

The fact that the local property tax remained virtually unchanged for so many decades prior to the 1950s is remarkable, considering the myriad modifications that have emerged during the past quarter century. Perhaps the historically low tax rates shielded many of its unfavorable characteristics which have been attacked in recent years. Because of rising land values and rising tax rates per dollar of value, the property tax in a majority of the states was modified, usually to protect agricultural or residential interests. Two factors contributed to the passage of the many tax reform programs for agriculture: (1) a belief that property taxes discriminated against farmers because farmers paid a disproportionate share of their income in property taxes and (2) a desire to affect land use by preserving farmland and open space.

The spatial distribution of economic activity has been the subject of much theoretical study during the last 150 years. The two-state study which provides primary evidence for this article is, to the authors' knowledge, the first attempt to analyze statistically the determinants of industrial location in rural communities with an explicit objective of more enlightened public action at the local, state, and federal levels.

Since the mid-1960s, agricultural economists have given much attention to research on farm-firm growth. One procedure used in this type of research has been multiperiod linear programming models, e.g. [1, 6, 9, 11, 14, 17]. Several researchers using the multiperiod linear programming framework have compared optimizing criteria. Generally, comparisons were made between maximizing some type of present value criterion and maximizing net worth at the end of the planning horizon. The different assumptions associated with the two maximizing criteria have resulted in different optimal growth patterns.

Most major crop and livestock prices became considerably more variable after 1972, resulting in increased producer price risk. Uncertainty in cattle feeding was compounded in that both input (feeder cattle and feed) and product (fed cattle) prices became quite variable after 1972. This uncertainty, accompanied by considerable losses in cattle feeding during the 1973-1975 period, has made hedging a more desirable option [1, 9]. Several studies have examined a short hedge on live cattle at the beginning of the feeding period as a means of reducing risk and increasing returns to cattle feeders. Selective hedging strategies generally reduced the variance of returns per head as well as improved returns during periods when cash feeding was unprofitable [2, 5]. Routine hedging of every pen clearly reduced profits during periods when cattle prices were rising while providing some protection during cash-feeding loss periods [6]. Feeding live cattle on a cash basis was more profitable than routine hedging prior to 1973 [6].

Producers and processors of many agricultural commodities can choose from among several coordination arrangements including spot-market exchange, contractual arrangements, and vertical integration. Firm decisions about coordination arrangements are important because they affect the success or even the survival of the firm and also cause broader impacts. The choice of marketing arrangements will influence a firm's profitability through prices received or paid, quality premiums or discounts, marketing costs incurred, exposure to production or price risk, and perhaps capital requirements. These firm decisions may have repercussions throughout the industry. For example, decisions by processing firms to shift from spot purchases to contract purchases may effectively foreclose the opportunity for producers to make spot sales. Decisions by processors to vertically integrate into production may force specialized producers out of business by limiting their marketing alternatives. Firm decision models focusing on choices among coordination arrangements should be helpful for prescribing and predicting firm behavior, predicting trends in relative importance of alternative arrangements, and evaluating policies (e.g., laws prohibiting processor ownership of production facilities) that are designed to influence these trends.

The title of this paper provides almost unlimited latitude for discussions of the contributions, or lack thereof, of the scientists engaged in the application of a body of knowledge commonly referred to as agricultural economics. Because a complete review of the field of agricultural economics would exceed the scope of a paper, this discussion will be oriented to selected issues. The issues discussed are related primarily to empirical analyses. Selected definitions are used to provide a basis for the arguments presented.

The production of beef cattle has historically been an important component of the Southeast's agricultural economy. In 1977 the region had 24.6 million cattle and calves, accounting for more than 28 percent of the total mature beef animals in the United States [3]. Despite this large and active cattle industry, however, the region is substantially deficient in carcass beef production.

Policy in the form of the Food and Agriculture Act of 1977 “emerged” as from behind a tree and was greeted by a hail of sticks, stones, and arrows from the farm strikers. It is appropriate to begin with a note of sympathy for the Department of Agriculture, particularly the Secretary who has so often in early 1978 borne the brunt of farmer dissatisfaction. In certain ancient societies it is said to have been traditional to respond to crisis by sacrificing the life of the king to appease the gods. As you know, in our country the chief executive has delegated this responsibility to the Secretary of Agriculture.

In addition to the domestic price and income areas that are the traditional center of attention, I want to discuss emerging policy on international agricultural trade, and the regulation of agricultural production and the food marketing industry. Though the Department of Agriculture is sometimes not the lead agency in these matters, it should nonetheless be considered in discussion of the agricultural policies of the Carter Administration.

Beef cattle production gradually has become more specialized with increasing separation of activities among geographic regions and farmers. The research literature commonly identifies two tiers of production — (1) cow-calf enterprises and (2) feedlot finishing [14, 19]. An intermediate tier — special feeding activities whose main functions are to assemble and grow out calves from a weaning weight to a weight and condition ready for feedlot finishing — has been operating for years. In recent years, as these activities have become more visible and distinct from the cow-calf or finishing enterprises, the name “backgrounding” has come into common usage among producers and market analysts [8].

The importance of risk in affecting production decisions is amply attested in the economics literature. Recent investigation of the influence of risky alternatives on supply relations has included both econometric analyses and programming studies. Hazell and Scandizzo suggest that when risk aversion is present, the slope of the supply schedule (i.e., with price plotted on the vertical axis) is expected to be greater than that for a risk-neutral supply schedule.

In spite of considerable interest in the supply implications of risk aversion, little empirical attention has been given to its effects on factor demand. The authors attempt to do so, and examine the applicability of Hazell and Scandizzo's supply assertion to factor demand.

In the United States. 146.5 trillion Btu's of energy were used in the production and marketing of poultry products in 1974, at a cost of $550 million [4, p. 261. Processing plant operations accounted for about $130 million or 24 percent of these costs. Because of increased mechanization and higher sanitation standards, the poultry processing industry has become more energy intensive over time. Expanding volume and increased emphasis on further processed products also have contributed to greater energy use.