A sample of 226 cash grain farms in the Lake States-Corn Belt region are analyzed to estimate the impact of restricting pesticide use on profits. These 226 farms are classified into small, medium, and large farms according to their sale revenues. The results suggest the existence of pest management practices that could substantially reduce pesticide use without incurring economic losses. The reductions in profits associated with gradual reductions in pesticide expenditure appear to increase with farm size.

Per capita rice consumption in the U.S. has doubled over the past decade. The effects of social and demographic variables on the household's rice consumption decisions are analyzed along with income and price variables. A double-hurdle model is used to solve simultaneously the consumer decisions whether to purchase rice and how much. The joint decision hypothesis is tested and accepted. The non-normal distribution of error terms may be responsible for possible bias in the empirical test of the joint decision hypothesis. The hyperbolic sine transformation is used to correct the problem in this study prior to testing the joint decision hypothesis.

The prospects for U.S. beef products in the advent of a North American Free Trade Agreement were examined using a system-wide approach to import allocation. Results indicate that increases in the standard of living in Mexico and Canada would stimulate increased importation of processed and unprocessed beef products. Bulk beef product in both countries had expenditure elasticities greater than one, while semi-processed and highly processed beef products had expenditure elasticities of less than one.

Ordinary least squares and seemingly unrelated regression procedures were used to analyze the impacts of changes in rice prices and production costs on U.S. rice planted acreage. National and regional response models were estimated over the 1970-92 period. Supply-inducing prices of rice were estimated as a function of effective rice support prices and seasonal average market prices. Expected production costs per acre were estimated using lagged actual total variable cash production expenses per acre adjusted by the previous 3-year average annual change in variable expenses. Estimated short-run price and production cost elasticities were found to be inelastic at the national level. However, the magnitude of the production cost elasticities were found to be greater than the price elasticities. Estimated long-run elasticities at the U.S. level were inelastic for changes in price but elastic for changes in production costs. Although acreage response varied across regions, similar relationships were found between price and production cost elasticities.

My objective today is to put forth a call for each of you to rethink how we do applied policy analysis. I plan to justify the need for this rethinking using a variety of arguments. Some of my arguments will be familiar to most if not all of you, others may be unfamiliar to most if not all. I claim no originality for the basic theoretical arguments, they all appear in the literature. What 1 hope you find to be original and useful is the synthesis of these arguments. Furthermore, though in places 1 will point out the need for additional theoretical work, my primary goal is to convince practicing agricultural policy analysts to become more comprehensive in their analyses. In the grand tradition of presidential addresses, my remarks cover a rather broad range of issues at the expense of depth on any one issue. Nevertheless, I hope that my remarks will stimulate discussion and thought about how we as agricultural economists do applied policy analysis.

A Barro-type economic growth model is estimated for the 50 states in the U.S. using data for three decades beginning in 1960. Frontier estimation techniques are used to test for the presence of state-specific shocks to economic growth that are independent of the usual, normally-distributed random errors. We find that large, positive shocks to growth occurred during the period 1960-90. Our results indicate that the error term structure assumed under OLS may not be appropriate for modeling economic growth.

Industrialization is rapidly becoming a topic of great attention. Driven by fundamental economic forces, industrialization seems likely to advance more quickly in the coming decade to more industry segments. By changing the way agriculture does business, industrialization will also bring change to public policy and agricultural institutions. Commodity policy will increasingly be out of step with a product-oriented industry. And as industrialization blurs the lines between producers and processors, land grant universities and the extension service will face challenges assessing who their customers are.

An automated price reporting system developed through computer technology and hedonic price theory is used to estimate daily cotton market prices, premiums, and discounts. This objective approach for reporting cotton market prices was developed to complement the objective measures of high volume instrument grading of cotton. The computerized, econometric system is limited to the Texas and Oklahoma marketing regions where sales are readily available from electronic markets. The econometric based system has shown all the characteristics of an efficient price reporting system; it is accurate, reliable, consistent, and repeatable in its working process and price estimates.

Agriculture operates in an uncertain environment. Yields, prices, and resource usage can change dramatically from year to year. However, most analyses of the agricultural sector, at least those using mathematical programming methods, assume decision making is based on average yields, ignoring yield variability. This study examines how explicit consideration of stochastic yield outcomes influence a sector analysis. We develop a model that can be used for stochastic sector analysis. We extend the risk framework developed by Hazell and others to incorporate discrete yield outcomes as well as consumption activities dependent upon yield outcomes. An empirical application addresses a comparison between sector analysis with and without considerations of the economic effects of yield variability in a global warming context.

Agricultural industrialization and sustainable development issues are important contemporary areas of debate. This paper argues that the two processes are a consequence of a set of forces operating in our global system. It outlines a number of conceptual interactions between the two phenomena and examines economic development and sustainable development policy implications that appear to be logical extensions of the arguments presented.

Drabenstott and Davis and Langham both present insightful discussions of the causes and consequences of industrialization in agriculture. Their discussions address industrialization as defined by the Council of Food, Agriculture, and Resource Economics (CFARE). According to CFARE, industrialization includes two components, increased consolidation of farms and increased vertical coordination within the marketing channels for food and fiber. Davis and Langham focus primarily on the causes and consequences of increasing consolidation of farms, while Drabenstott focuses on the causes and consequences of vertical coordination. This definition of industrialization should be expanded to include consolidation of firms that provide inputs and services to agriculture and consolidation of firms that handle and process agricultural products.

This study examines the valuation of research as intangible capital in agriculture using Tobin's q theory. The market value of public research capital is estimated to be 8.6 times higher than conventional assets. Private research capital is valued 5.2 times higher than conventional assets. The estimated valuation multiplier for all farm assets dropped 1/3 over the last decade. In recent years the valuation multiplier has dropped below a dollar, which indicates the market is undervaluing farm assets.

Rural-urban differences in the supply of nursing home services are hypothesized to be jointly affected by competitive and regulatory forces, government policies, and the cost structure. Study findings indicate that rural services are slightly less accessible and lower in quality. A translog cost share function reveals no difference in the operating cost structure of rural and urban homes. Cost shares for nursing care are directly related to the degree of skilled nursing provided by homes. Significant scale economies were not detected for any of the major operating costs.

The authors in this session are to be commemorated on their attempt to integrate the bodies of knowledge of agricultural industrialization and sustainable development. Drs. Davis and Langham's broad based paper explores the domestic vrs. international markets, small vrs. large farmers, North vrs. South theory, and finishes with the unique issues of developing countries. Dr. Drabenstott's paper is primarily concerned with domestic industrialization. This paper is full of examples of how industrialization has taken place and explores the possibilities of the future. Drabenstott does not attempt to answer or to discuss the issue of sustainability. Instead he focuses on the new consumer demands being placed on firms for quick services and quality products.

This article evaluates the effects of alternative fluid milk procurement strategies on the aggregate net revenue of Florida cooperative members. They are (1) supplemental milk obtained from import sources, (2) supplemental milk obtained from a supply plant, (3) increased supply as a result of an expanded production area, and (4) supplemental milk obtained through pooling arrangements with regional dairy cooperatives. The final ranking of a scenario appears to be dependent primarily on the total cost of exports within the model. The optimum procurement strategy for Florida cooperatives should concentrate on reducing the quantity of surplus milk.

The socioeconomic movement is an effort to better explain human behavior by combining insights of economists and sociologists. This paper contributes to the socioeconomic literature by including the influence of relationships, values, and social bonds in the neoclassical economic model by introducing social capital coefficients. The usefulness of the resulting social capital model is demonstrated theoretically in a two-firm cooperative model and tested empirically using data from a survey of students who allocate their time between individual and joint projects.