Interregional Competition in Agriculture. With Special Reference to Dairy Farming in the Lake States and New England.

Abstract

THE purpose of this study was to forecast, from the mid nineteen-thirties, the probable trends in dairy farming in two districts of the United States which were competitors in certain markets for liquid milk and milk products. Because adjustments in output take time, it was assumed that ten years would be required before farmers in these regions had fully adjusted their plaiis to changes in the relative prices of milk and other products. The method adopted was to select certain farms regarded as of the main systems of dairy farming in the chosen regions. For each of these farms, a series of budgets was drawn up showing the most profitable combination of enterprises and level of output, assuming that milk prices had changed, relative to other prices, by a stated proportion, either up or down. Such calculations involved a detailed study of each farm, its current trends in output which might be reflecting past price changes, its limitations in the way of building, soil, climate or labour, and the range of opportunities open to it at differing price levels. The forecasts made for these typical farms were then adjusted to allow for the average of a large group in which there were bound to be casualties by storm, disease or change of occupier; a supply curve) was then constructed which showed what levels of milk sales could be expected from each farming area and from each region ten years after there had been a substantial change in the relative level of milk prices. Finally, the actual sales from these regions and as far as possible from the originally surveyed farms, were obtained for 1946 to compare with the forecasts made before the war. Over this period, the change in milk prices was not much below that assumed as the basis for one set of calculations-a relative rise of 20%, but the actual level of output turned out to be much higher than had been deduced from the pre-war studies. The discrepancy between actual and forecasted sales differed in size between regions, between counties and between the budgeted farms, but the forecasts were all too low. The original calculations had assumed, naturally, that there would be no appreciable change in technique, but this particular decade brought two