Level Of Farm Income Research Articles

Characteristics and conflicts in Norwegian agriculture

This article raises the issue of the extent to which a single nation can develop a “national agricultural policy,” pursuing internal goals in agrarian development, goals that vary significantly from those of other industrialized countries. What are the conflicts arising from such a policy and how do these conflicts interfere with the general agricultural crisis of these countries? The Norwegian case is explored as an example of a blend of social-democratic and center-populist agricultural policies. The decision in 1975 by the Norwegian Parliament to establish the income level of farmers at the same level as workers is seen as an experiment. As agricultural policy, this new departure represented a deviation from the earlier policies of rationalization. The Social Democrats developed their new position as a result of internal and external pressure. A series of reforms financed by the new state incomes from oil production were undertaken, of which income equalization and a farm relief service were the most important. Most Norwegian farmers speak of the reform years as “the good years of escalation.” Equity was reached in 1982, but nevertheless several problems emerged: 1) the escalation of subsidized incomes led to overproduction and decreasing incomes from the market (after 1982), 2) the large budgetary transfers to agriculture caused a legitimation crisis, fueling the constituency of the right-wing Progress Party, 3) the large subsidies to agriculture contributed to the fiscal crisis of the state, 4) the problems mentioned above, contributed to the general crisis of the Norwegian Social Democracy which finds itself with dwindling support. The likely outcome of the present Norwegian farm crisis is the implementation of an agricultural policy that will protect the most vulnerable sector and open the more competitive sector to market forces.

Using CREAMS and Economic Modeling to Evaluate Conservation Practices: An Application

AbstractEconomic modeling of the impacts of soil loss from agricultural activities traditionally has been based on the Universal Soil Loss Equation (USLE). Most studies have not considered the effects of agricultural production on N, P, and pesticides in runoff. This study, involving a representative Pennsylvania dairy farm, uses the CREAMS model (Chemicals, Runoff, and Erosion from Agricultural Management Systems) to estimate surface runoff losses of soil, plant nutrients, and pesticides. The CREAMS is a continuous simulation model that allows the user to compare the effectiveness of management practices for reducing these losses in a consistent and comprehensive tices for reducing these losses in a consistent and comprehensive manner. The usefulness of the CREAMS simulation model is demonstrated for analysis of agricultural cropping activities and their impacts on losses of chemicals and soil in runoff. Linear programming was used to simulate the impacts of farm‐level water pollution restrictions on farm income. The findings suggest that nonpoint source pollution can be reduced without necessarily reducing farm income. Farm income levels could be maintained by adopting conservation tillage practices or by changing crop rotation. Conservation tillage was found to be the most effective method for maintaining income when water pollution restrictions were imposed. Two years of corn (Zea mays) followed by 3 yr of alfalfa (Medicago sativa) was a profitable and effective rotation for controlling runoff losses. Continuous corn, at the other extreme, caused substantial losses of income when restrictions were imposed.

The Political Economy of Agricultural Research and Extension: Grants, Votes, and Reapportionment

AbstractThis paper seeks to identify the economic and political factors that produce state financial support for agricultural research and extension. State demand for research and extension services is found to be influenced not only by the level of farm income and population but also by measures of intergovernmental influence and the political effectiveness of farmers. Federal grants have “price” effects which stimulate state spending; the reapportionment of state legislatures mandated by the U.S. Supreme Court had a negative effect, while the ability of farmers to elect other farmers to the legislature increases state support for research and extension.

Un modèle économétrique de l'agriculture française (MAGALI)

MAGALI is an econometric model for French agriculture designed for mid-term agricultural policy analysis. It provides explanation for supply of 27 agricultural products, their corresponding inputs and farm accounts, in order to determine farm income level. It also describes structural change of the agricultural sector through demography and investment. The main characteristics of the French farm sector evolution are well-known. The sluggish growth of the seventies has resulted in low investment, slow growth of individual income, and even decrease of total farm sector income, since 1977. Several explanations can be put forward : general economic conditions, worsened by weather accidents, or structural unfitness of French agriculture to market et requirements. Trough dynamic simulations on the past, MAGALI can try to distinguish these various effects. These simulations should clearly point out that MAGALI is mainly built for agricultural policy analysis (in the past or future), particularly through exogenous prices. They also confirm the high sensitivity of French agriculture to price changes and particularly to the « terms of trade » with the non-farm sector.

A Systems Approach for Agricultural Land Management and Water Quality Control

ABSTRACT A distributed parameter hydrologic model was used to estimate the average annual sediment yield from subareas of an agricultural watershed under spatially distinct land management strategies. The sediment yield output from the hydrologic simulation was used to estimate activity coefficients for a linear programming model to identify the management strategy with the least sediment yield at acceptable farm income levels. The analysis showed that substitution of conservation management practices could be highly cost-effective if they produce profit levels near those of conventional, more erosive practices.

Current Macroeconomic Policies and U.S. Agriculture: Discussion

A decade ago American grain became an international commodity, its price no longer determined by its value within the United States or by federal price support programs. American buyers, accustomed to stable prices and unlimited supplies of grain, faced new realities: the competition of powerful foreign buyers, uncertain supplies, and unstable prices. For some American buyers, the stress of having American grain internationalized was too much. The American baking industry, for example, forecast dollar a loaf bread in the spring of 1973 in an attempt to pressure the government to limit the outflow of grain from the United States. In a perverse turn of events, the threat worked but not for wheat: exports of soybeans were temporarily limited until the supply picture came into better focus, much to the consternation of American farmers and the Japanese government. Now, a decade later, the commodity over which the nation anguishes is not wheat or corn or soybeans but rather money, or more specifically the dollar. As happened a decade earlier with agricultural commodities, the dollar has taken on and maintains a price that, in the past, reflected more its value in less developed countries, or in countries with unstable governments, or in rapidly developing countries with high rates of return to additional quantities of capital. And, like the bakers of a decade earlier, dollar users are anguished at the uncertain supply and far higher price they must pay. This national anguish, and our national inability to understand why high interest rates continue despite lower inflation, is the issue that draws us together today. We come together for good reason: high interest rates are stifling American agriculture, along with the auto industry, the housing industry, and the rest of the U.S. economy. All need the assistance of the nation's trained economists. We are fortunate this morning to have the benefit of the insights of two of these economists. There is much information in their two papers. One might question whether they explain the central issue of the day, which is high interest rates, in case anyone needs to be reminded. But the information in the two papers lays a good foundation to carry on such an inquiry. Starleaf illustrates with a few equations why American farmers have been over-occupied with farm commodity prices. As he states the case, almost all of the year-to-year variability in nominal farm output has been due to changes in the farm output price level, rather than changes in real farm output. Stated in more straightforward language, farm prices are more important than farm output in determining the level of farm income. It is reassuring to have my distinguished former colleague illustrate that the fifty-year effort by American farmers to use government to improve the prices they receive was not a misguided effort. One might question, however, whether more export-oriented policies at an earlier period might not have been at least as beneficial to American farmers. Starleaf also illustrates to his and my satisfaction that, as agricultural economists have long maintained, the nominal value of farm outputs is more variable than nonfarm output, a fact that has also been used to justify federal farm programs. He further shows, as we have also maintained, that general economic policies of the nation are important to American farmers. For this reason, some of us have long maintained that there should be a farm representative on the Federal Reserve Board. We have been unable, however, to convince farm organizations that this was a high priority use of their limited political capital. He concludes by noting that macroeconomic developments and exchange ratechanges have had a substantive influence upThe author is Associate Administrator, Foreign Agricultural Service, U.S. Department of Agriculture. He expresses appreciation to George E. Rossmiller for his comments.

LABOUR SUPPLY AND OFF‐FARM WORK BY FARMERS: THEORY AND ESTIMATION

Off‐farm employment has become increasingly important as an aspect of resource adjustment and a source of income in Australian agriculture. However, it is surprising that there is a paucity of work on this topic reported in the agricultural economics literature. Therefore, we have drawn upon recent developments in labour economics in order to investigate off‐farm employment in Australia. A conceptual model of the allocation of a farmer's labour between farm and off‐farm work is developed and applied to cross‐sectional data from the Australian Agricultural and Grazing Industries Survey. A Tobit maximum likelihood procedure is utilised to test the influences of the life cycle, level of human capital, wealth, non‐wage income and farm income on the off‐farm labour supply of farmers.

An analysis of factors affecting differential assessment legislation

This paper has attempted to identify the factors affecting agricultural differential assessment legislation. State characteristics that were determined to be important in determining the type of legislation enacted were population density, amount of land in farms, level of property taxes, median income, farm income, age distribution, education, and recreational and other personal travel. Discriminant analysis based on these factors allowed correct classification of eighty percent of all states with one of the three types of differential assessment laws. High levels of farm income and education were found to be associated with preferential assessment laws. High levels of property taxes, median income, percentage of the population over sixty-five, and in-state household trips appeared associated with restrictive agreement laws.

An Analysis of Competing Agricultural Land Uses

Several alternative government programs have been used in the past to achieve policy objectives related to the levels of crop acreage and net farm income. Important questions remain relating to the effectiveness of past programs in achieving selected policy objectives. In particular, what is the relative effectiveness of long-term versus short-term acreage diversion programs? One of the major impacts of government diversion programs is in the allocation of land among competing uses. Several studies (Brandow and Learn; Christensen and Aines; Hathaway) indicate that the use of acreage control on single crops rather than on all crops results in less than proportionate reduction in output from a given reduction in acreage. However, only limited information is available on the interrelationships among major competing uses of crop, pasture, and privately owned forest acreage. Studies of these interrelationships (e.g. Dideriksen et al. and Zeimetz et al.) did not consider the influence of government programs. In particular, how do government programs affect these competing uses?

Goals and Aspirations: Effects on Income Levels of Farmers in the Carman Region of Manitoba

Goals and Aspirations: Effects on Income Levels of Farmers in the Carman Region of Manitoba

Technological progress and price variations, and their effect on farm incomes in Belgium, 1954 to 1972

Summary Farm incomes fluctuate considerably from year to year, partly because of variations in the prices of inputs and outputs and partly due to changes in their volume. This article attempts to determine the effect of each of these factors by using chain indices to separate annual changes in the values of inputs and of outputs into quantity and price effects. Although 66 per cent of the increase in the volume of production can be attributed to technological advance, it has had only a minor impact on the level of farm income due to the depressing effect of increased output on product prices. Because of the reduction in the labour force as a consequence of technological change, farm income has to be shared among a diminishing number of persons. Family income per labour unit rose annually by 11 per cent. Of this, 49 per cent can be attributed to a reduction in the labour force, 40 per cent to price changes, and the remaining 11 per cent to the effect of technological advance on the volume of output and inputs other than family labour.

Economic Impact of Federal Marketing Orders — The Florida Winter Tomato Case

Marketing agreements and orders have been used for several decades by various commodity groups in an effort to stabilize and increase the level of farm income. These programs are tools to be used in a “self-help” fashion. They do not automatically solve an industry's marketing problems. For instance, if an industry has continuous interseasonal supply control difficulties, a marketing agreement may actually aggravate the problem it was intended to solve. However, intraseasonal volume controls can relieve short-run imbalances in supply while not adversely affecting consumers. Merging long-run and short-run perspectives is the problem that creates difficulty in program evaluation.

TÜRKİYE VE KUZEYDOĞU ANADOLU TARIMINDA BELİRSİZLİK VE EKONOMİK ETKİLERİ

OZET Bu, arastirmada, Turkiye ve ozelliHe Kuzeydogu Anadolu tarimlarinin bitkisel uretim kesimlerini temsilen ele alman muhtelif urunlerin verim, fiyat ve gayrisafi hasila1amufu yildan yila gorulen siddetli dalgala:nmalardan ileri gelen belirsiz· lik ve bu belirsizligin iktisadi tesirleri incelenmektedir,. Elde edilen bulgulardan, gerek Turkiye ve gerekse Kuzeydogu Anadolu duzeyinde yetistirilen belli basli urunlerin verim, fiyat vie dolayisiyle gayri safi hasilalarinin yildan yila siddetli dalgalanmalar gosterdigi anlasilmaktadir. Bu ise, ciftciyi onemli bir teknik ve ekonomik beMrsizlikle karsi karsiya birakmaktadir. Bu durumun bir sonucu olarak; tarim· ~al uretimin rasyonel bir sekilde planlanmasi guclesmekte, kaynaklar etkin olmiyan bilesim 'Ve miktarlarda kullanilmakta, isgucu sermaye yerine ikame ediimek~e ve uzun vadeli yatirimlardan kacimlmaktadir. SUMMARY: UNCERTAINTY AND ITS ECONOMIC EFFECTS ON THE AGRICULTURE OF TURKEY AND NORTH EAST REGION Decision-making withDut complete knowledge is a problem of major significance in the _agricultural economy. Because of lincertainty, productian planning is frequently imperfect. This results in lowt:r incomes for farm people and a mis-alloca~ion of produe.uve resources. This study estimates the degree of variabi1ity in yields, prices and gross incomes associated with varioliS types of crop pm· duction in Turkeyand specifically in the Northeastern Region and investigates the relationships between stability and level of farm income from particular cropping systems. Knowledge of these relationships is prerequisite to rational choices among crops or combinations of crops to .produce. For example, farmers must decide whether to pioduce: a) high income crops with a correspondingly high risk of large losses, b) lower risk crops with tower aver- 22' age iDeome, c) a combination of high and low risk crops. In line with these ge;1eral goals: the specific objectives of this studyare: 1) to estimate absolute and relative variability of product priees, yields, and gross income of major crops, 2) to compare various 'erop diversi· fication systems from the stand. point of variability and level of income in the Northeastern Region, 3) to investigate the effects of uncertainty upon allacative efficiency in agriculture. Variability measures of indi· vidual crops were derived exdusivelyfrom the yield and prke series compiIed by the State histitute of Statics and the gross income computed here as unit prke X yield per hectare for the period of 1948·1970 for Turkeyand 19511970 for the Northeastern ~egion. Variability, in erop produetion stems form the fact that eornputed associated with the individual farrner's view of un. predictable or «randam» variation. In the first, it is assamed that in the eyes of the farmer any deviation from the long-rurn. mean is a randam or unpredictable event and the original series used to compute the «coefficient of variation'} by the fol1owing equation: yields, priees and ineames are influeneed by many variables in an unpredictable or «randam» manner, From the standpoint of the individual farmer, what portion of the total variation in yield priee and income is unpredietable or «random» aiid what portian predietable? In this study, two types of variabiIity measures are Coeffident of variation ----- ...; variance 1948-70 or 1951-70 mean X 100 eaeh series and then deviations from this trend line is used to eompute the «eoefficient of random variation» by the fol1owing equation: In the second, it is assumed that farmers reeognize certain longmn physIcal and eeonomie trends and view the «randoID,) element as a deviatimi from these trends. Thus, a trend Line is fitted to . . ... Standard deviation of regression Coefficient o randoin yanation ='1948-70 or 1951-70 mean X 100 The results obtained on the oasis of the variability measures, cpmputed as described ab'ove, are suinmarized in Table i. Thus : A - Yield uncertainty: Accarding to the coeffieients of variation and random variation, there is a great deal of uneertainty in yields of principal crops of both Turkeyand the speeific region of Northeast, The ranking eorresponds c10sely with eommon kn-owledge cemeerning relative yield variabiIity of crops. ,Yield variability of irrigated crops usual1y is less than for dryland farmed crops. B -- Priee uncertainty: Coefficients of variation on priees are also' high in almost all crops. Thus, farmers who do not aware of the, long-run price trends are faeed with a high deg~ee of priee uneertainty, However, eoefficients of random variation are mueh lower than coeffieients of variation. c - Gross income uneertainty: Gross income variability results from the interaction of yield and price. SInee yIeId variability is higher than priee variabi· lity for almost aU crops, the most iinportant faetor eontribiiting to gross income variability of crops is the variahility of yields. Because of unce~tainty, praduction planning is frequently imperfect. in order to lessen income variabiIity, farmers apply crop diversification, liquidity. and flexibility. This results in a mis~ allocation of productive resources. Some means of lessening uncertainty and its economic effects are: a) credit policy, b) decreas~ ing the dependanceof farming on natural conditions, c) agricultural insurance, and d) forward pric- . ing.

Changes in Farming A Case of Differing Response of Technology

The study is an attempt to investigate the technological impact on farm income levels among three specified groups of the farmers. The farmers were identified as pro- gressive and less progressive under three size groups in relation to income and resource- use by employing discriminant function. The analysis of the results showed statistically significant differences in the sharing of the benefits as among the three size groups and between the progressives and less progressives.

New farm classification in the Federal Republic of Germany

The new farm classification in the Federal Republic of Germany is based on the structure of the potential gross margin. The gross margin of the individual lines of production was determined by deducting the variable costs from the variable output. The potential gross margin per farm is calculated by multiplying the crop areas (excluding forage growing) and the numbers of livestock by the average, standardized gross margin per unit and by adding up the results. The composition of this potential gross margin according to lines of production determines the assignment of farms to the various farm systems. In addition to classification according to economic orientation of the farms, it was decided to have a grouping according to income capacity. The measure of income capacity is the level of the so-called potential farm income. The potential farm income is calculated by deducting from the potential gross margin of a farm the fixed special costs and the overhead costs, having regard to the particular farm category. The socio-economic classification of the farms required for considerations of economic and agricultural policy can be deduced from the grouping according to the level of potential farm income.

Alternative Structural Approaches to Farm Bargaining: A Cooperative Systems Model

TRUCTURAL considerations of organization for bargaining are among the key, yet least understood, determinants of successful negotiating efforts. As structural change in the economic organization of American agriculture points to the prevalence of large-scale voluntary organizations, the structural attributes of various organizational forms and organizational interrelationships become of increasing importance. Basic questions arise about relationships of producer members to their organizations and about the interaction of various organization forms in pursuit of income maximization on behalf of farm operators. At issue is whether these large-scale organizations can provide collective goods to members and whether members are the ultimate recipients of the benefits of group-oriented behavior in these organizations. Farm bargaining, the direct confrontation and interaction of pressure groups and firms (or government) in the determination of prices and other terms of trade, has become the focal point of contemporary farmer movements in the 1960's and is destined to become a working part of farm marketing in the 1970's. Agricultural pressure groups involved in the process of bargaining include cooperative business organizations and professional associations (individual and general farm) that are both single and cross-commodity in nature. Debate over the attributes of the centralized versus federated form of cooperative organizations has been renewed recently in the dairy industry with the evolution of multimarket combines. Spokesmen for the dairy industry conclude that the centralized organization form (with direct membership in the regional or national organization) is most appropriate for bargaining. Structural issues among general farm organizations were not a concern so long as government programs were a major determinant of farm income levels. The federated county-state-national structure was uniquely adapted to lobbying activities with administrative and legislative bodies. With deemphasis of government farm programs and rise in popularity of collective bargaining, professional associations such as the National Farmers' Union, National Grange, and American Farm Bureau Federation have undertaken a reappraisal of their organizational dilemma. To date only the AFBF has initiated structural change, and then only through a parallel federated structure-the AAMA-that re-

THE SMALL‐FARM PROBLEM IN AUSTRALIA*

The nature of the small‐farm problem in Australia is discussed from a welfare point of view. The situation is examined industry by industry where data are available. It is suggested that while the average level of farm income in Australia compares well with non‐agricultural earnings, there are some industries with very significant numbers of low income farms.