The historical development of Agricultural Economics as a field of applied economics has been well-documented in books and journals by scholars within the profession. The relationship of Agricultural Economics to other social, biological and natural sciences has changed as the discipline has emerged and as forces of science and technology have been brought to bear on problems of our society.

The objective of this paper is to define or establish the parameters of Agricultural Economics but offer personal views on how economic forces within our economy have influenced program development in research involving many disciplines. In this process I will emphasize some of the areas where Agricultural Economics has made a major contribution and, in my judgement, can play an important role in the future.

In the past 25 years, agricultural economists have made significant progress, but have experienced substantial turmoil and great anxiety. These years have been a period of great introspection during which we have asked: “What are the fundamental purposes of our profession?” During this quarter century, rural America's practical problems important to our profession have changed rapidly. This rate will likely quicken in the future. Increasingly, we and our institutions will be challenged to “keep up” and to adjust. How well we respond and serve society will depend greatly on (1) our ability to preceive and to anticipate important issues, and (2) the flexibility of ourselves, our discipline, institutions and funds to accommodate to continual and increasing change.

A philosopher once said that history should be studied because the past repeats itself, but I prefer the statement that those who do not sudy history are condemned to repeating it. I also like the quote at the National Archives: The past is “prologue.” When a tourist asked what this meant, a Washington taxi driver said, “It means you ain't seen nothing yet.” That was in 1950. He was right. Who in 1950 expected to see sputniks, satellites, and men walking on the moon?

We entered the 1950–1975 era thinking that agricultural economics consisted of: (1) production economics, (2) marketing, (3) price analysis, (4) agricultural policy, and (5) land economics. We are leaving it thinking that it covers: (1) commercial agriculture, (2) natural resources development, and (3) human and community development.

In recent history, many agricultural economists have tended to view work on cost and return budgets as a pretty dull thing. They gave it very low priority. However, the attention given to production costs by the 1973 farm legislation, together with recent acceleration in cost of farm inputs, have somewhat reversed the significance attached to this subject. A casual review of articles in the AAEA Journal over the past three years shows little attention to cost of production per se, but I predict that in the next two years there will be a big increase.

About two years ago, the term “cost of production” was just coming into use as a rallying cry by farm organizations, prior to the big jump in farm prices. This concern probably was a prime reason for the focus on costs in 1973 legislation. However, the issue was temporarily forgotten when farm prices increased sharply during the 1972–73 period.

The Economic Research Service of USDA has initiated a systematic approach to the development and maintenance of farm enterprise budgets. This paper will describe this system, our expectations for it, and planned uses of the data.

Many are familiar with regional adjustment studies such as S-42 or GP-5, where the objective was to estimate supply functions using linear programming on representative farms. Those who worked on these projects recall the tremendous effort needed to develop enterprise budget data.

Many are also familiar with the National Model work during the 1960s in ERS. In that project, estimates were made of year to year changes in crop production, using an LP model.

Our colleagues have presented three useful papers. Lampher points out that farm enterprise budgets have been an essential component in the Extension Agricultural Economist's kit of tools for a long time. Researchers have tended to blow hot and cold in development of enterprise budgets. During the heyday of the regional adjustment studies, we had them coming out our ears. Most Extension Economists found this flurry of budget building to be of little value. As I look back, I think the main value that accrued was the number of my friends and colleagues who earned Ph.D.'s working on these projects.

These remarks relate to papers presented by Lampher, Krenz and Kletke. Budget development, distribution and use has always been a perennial concern of farm management personnel. However, as Lampher pointed out, many agricultural economists gave low priority to cost and return budgets in recent years. This is clearly a case of professionals abandoning one of the basic tools of their trade, thereby shortchanging agriculture and the profession. Fortunately, a return to the fold is in evidence with all the interest in cost of production.

The three papers indicated that there are major problems associated with developing cost and return budgets. Data input will always be a problem but it is not insurmountable. The problem, then, really involves defining procedures and techniques that minimize difficulties associated with data input.

Economists have shown an increasing interest in systems theory and simulation. The recent reviews by Anderson and LaDue and Vincent indicate the literature is repleat with models of business and farm firms developed by researchers from several disciplines. A smaller but no less sophisticated group of models is focused on simulated physical or biological processes. An even smaller segment of the literature deals with economic applications of models which simulate physical and biological phenomena.

Economists have become interested in models simulating physical and biological phenomena because of their experimental value. When a satisfactory approximation of reality can be created within the context of the model, experiments can then be conducted to determine the effects of changes in exogeneous factors on outcomes predicted by the model.

In recent years, several studies have examined acreage response of major crops to various economic, technical, and institutional stimuli. These studies focused primarily upon the influence of government farm programs on producers' production decisions. While the influence of government programs has recently diminished and market forces are more direct determinants, this less stable situation has likely increased informational needs on potential production response. Previously developed response models require updating, additional refinement, or reformulation for continued usefulness in the current situation.

Commercial agriculture is undergoing a major structural change in the form of decreasing numbers and increasing sizes of farm units. This structural change results in farm firms constantly experiencing expansion and survival problems. In some cases, expansion and survival are related: growth in size is necessary to incorporate cost-reducing technological improvements to maintain income levels. In others, these problems are separated: expansion is desired to increase income-earning capacity, or survival may be a primary objective for the firm when expansion is unlikely. This paper develops an analytical framework, incorporating the dynamics of expansion and survival, and explores their interrelationships. Stochastic relationships are incorporated for use in conceptualizing simulation studies of firm growth. Its empirical relevance is demonstrated with an analysis of the interaction between managerial ability and leverage in the process of expansion and survival of a representative farm firm in South Central Georgia.

The impact of rapidly escalating input prices of farm income, agricultural production, production adjustments, the general price level, the cost of living and capital requirements in the agricultural sector is a source of increasing concern to farmers, suppliers of capital to agriculture, and consumers of agricultural products. Record prices for agricultural commodities, such as feed grains and soybeans, partially masked the effects of a 52 percent increase in the index of prices paid for production items on net farm income during the period 1971–74. As agricultural machinery and farm buildings are replaced, world stocks of agricultural commodities are replenished, and domestic prices begin to decline, the magnitude of these cost increases will become more apparent.

During the last three years agriculture has exhibited characteristics that parallel those of a manic depressive. The livestock sector was flying high during 1973 and in the depths of despair in 1974. The crop sector was elevated from two decades of despondent but stable economic health to a state of price elation in 1973 and 1974. Over the last couple of years consumers, who enjoyed excellent food budget health for years, have slipped into a state of belligerent depression. Each group views the future with anxious dismay. Livestock producers fear that the feed prices will remain high, crop producers fear they will not. Neither livestock nor crop producers have a sound basis for making short or longer term production plans.

Economists have demonstrated considerable concern with the appropriateness of profit maximization as a sole firm objective. Agricultural economists have adopted suggestions of economic theorists in writings on production economics; for example, Heady relaxed the objective of profit maximization to incorporate preferences for family consumption and risk aversion. Production economics research has supported the theoretical reasoning for multiple firm objectives; in a recent article, Lin, Dean, and Moore state “… empirical studies explicitly employing the profit maximization hypothesis … have generally provided results inconsistent with observed or plausible behavior”. Previous studies incorporating multiple objectives in analysis of agricultural production have largely been concerned with the general theoretical categories suggested by Heady. Lin, Dean, and Moore considered profit maximization and risk aversion. Patrick and Eisgruber considered accumulation of net worth, annual net income for consumption, leisure, and risk-taking; Hatch, Harmon, and Eidman included eight similar goals in their analysis. These studies have followed the tradition in micro-economic theory of separate production and consumption decision-making. While previous analyses have departed from the perfect knowledge, static basis of conventional micro-economics, the major interaction between production and consumption decisions concerns the level and variability of income available for consumption.

Planning a season's planting is a complex problem facing Florida's chrysanthemum producers. Planting must be carefully timed to assure adequate supplies of flowers during peak marketing periods. Also, widely varying labor requirements of the crop should be considered. Finally, even the best-laid plans may be ruined by crops coming in too soon or too late due to unexpected weather variations. In this paper, a dynamic linear program is developed as a planning aid for chrysantheum production. The model parameters are then estimated with sufficient accuracy to demonstrate the model's workability, and an application of the model is suggested.

Chrysanthemums (pompons) may be grown as either a single-stem or pinched crop. In single-stem production, a cutting is planted and harvested as a single stem of flowers that is sold in a bunch of six or seven stems.

To fill domestic and foreign demand requirements in 1985, the U.S. is expected to produce 17% more wheat than it did in the 1970–72 period; also 30% more corn, 42% more sorghum, 20% more citrus, 32% more vegetables, 73% more soybeans, and 26% more cattle. These are a few of the baseline projections recently developed by ERS. The purpose of this report is to make available recent ERS projections of U.S. production and acreage needs with special emphasis on four Southern regions and the part they will play in producing the expected increase.

The Economic Projections Program Area was established under a recent reorganization in ERS, USDA, and given responsibility for coordinating all ERS projections of commodity production. The program area is now preparing projections through the year 2000 in a set of publications titled “Agriculture—The Third Century.”

Texas Gulf Coast areas near Houston have been affected to an increasing degree by land subsidence in recent years. Sinking of the surface has reached critical proportions in many areas, and subsidence of as much as nine feet has occurred since 1943. Physical effects have been extensive, affecting over 3,000 square miles, and economic effects have been aggravated by the approximity of much of the area to bay waters. Subsidence has resulted in significant damage and property loss, from both permanent salt water inundation and temporary flooding due to storm-related tides and rains.

Industrial, municipal and agricultural demands for water have increased sharply in recent years. Engineers.have linked subsidence to the decline of subsurface water levels due to heavy groundwater withdrawals. An alternative water source, the importation and treatment of surface water, has been introduced, but relatively high prices have slowed its acceptance.

Congress and the majority of coastal states have recognized the complexity of public decisions concerning growth in coastal areas. The preponderance of common pool resources and regional goods in coastal areas has prompted lawmarkers to pass coastal zone management legislation prior to a national land use bill. New state level institutions have been fostered by the Office of Coastal Zone Management. However, it is at the local level where resulting institutional rules represent self-imposed natural resource barriers to growth. Communities face the task of improving income streams from expansion of existing business activity or opting for new industries. Local governments have scurried to consultants and universities for solutions of community development and natural resource problems. The study described here represents one type of response. Although an Oregon county was the researcher's focus, it involved the pith of local economy growth—income generation and natural or self-imposed resource barriers.