The opportunity to present a presidential address provides a rare and unique opportunity. It is perhaps the only time one gets to speak to the profession without your material either being reviewed and corrected before its presentation, or reviewed and corrected by a discussant after your presentation. Indeed the freedom that a presidential address offers takes a little getting used to, but it provides a wonderful opportunity to express one's biases. To you, the members of the profession who took the risk to allow me this opportunity, let me say thank you. I have chosen to use this opportunity to address a topic that I think provides one of the most exciting and potentially productive challenges our profession will face in our lifetimes, that is “The Dawning of the Age of Dynamic Theory.”

This paper provides an economic analysis of the historical agricultural price and income support policy, a policy of market-determined prices and income, and a policy linking market-determined prices with sector-wide farm income stabilization in years of economic disaster. The analysis compares commodity prices, net farm income, and government expenditures over the period 1970 through 1982 based on estimates generated by USDA's Food and Agricultural Policy Simulator (FAPSIM). The historical policy generates the highest income and most stable prices. Market-determined income is lowest and has the greatest variability. Stabilization minimized income variability at intermediate income levels.

During the past few decades, U. S. agriculture has experienced remarkable gains in productivity and efficiency. While the number of farms has declined, the economic activities supporting production agriculture continue to comprise a major sector of the U. S. economy. The value-added food and fiber complex serves as an important link between production agriculture and the larger U. S. economy. Value-added products from agriculture have a retail value of more than $700 billion annually and engage about 20 percent of the U. S. labor force (ESCOP).

This study analyzed supply functions for agricultural output and demand functions for factors of production for Georgia. These relationships were derived with duality theory from a normalized quadratic profit function. Land has been included in other duality studies as a fixed factor as opposed to an endogenous factor. In this study, the system of supply and demand equations was augmented with a supply equation for land, which allowed land rents to be an endogenous factor. Consequently, it was possible to measure the impact of output and input prices on land rents.

Agricultural lenders have a stake in and are in a position to influence their borrowers' management decisions. Risk management practice adoption is an area in which lenders might want to exercise this influence. This study employs logistic statistical models to estimate lenders' influence on crop producers' decisions regarding use of three alternative risk management practices: federal multiple-peril crop insurance, crop hail and fire insurance, and forward contracting. Results suggest lenders can exert significant influence on these decisions but that poor communication between lenders and borrowers likely reduces this influence.

The purpose of this study was to describe an LP/IO model for evaluating the economic impacts of alternative farm policies on rural communities and demonstrate its capabilities by analyzing the impacts of three farm policies on a rural community in Texas. Results indicate that in the noncrop sector, two groups of industries are most affected by farm policy. The first group relates to production directly (agricultural services, banking and credit, and nondurable manufacturing) and the second group relates to households (retail trade and services). Farm policies which reduce production but increase net returns cause losses for the first group while benefitting the second group. Both groups are made worse off by farm policies which reduce agricultural production and the value of output.

At least 22 states have established agricultural value-added programs to provide new employment opportunities in rural areas and to create additional demand for agricultural products (Greene, p. 15). These value-added programs are a subset of a broader range of state-sponsored economic development programs that attempt to alter the rate of regional economic growth by identifying and assisting local entrepreneurs, by establishing institutions for the commercialization of new technologies, and by creating non-traditional sources of business finance.

In this paper, consumer demand for food diversity is measured by the entropy and Simpson indices for budget shares. Results show that consumer demand for food diversity is related to total food expenditures and house-hold size and composition.

This study developed an intertemporal profit function to determine optimal conservation adoption strategies under alternative scenarios with respect to crop prices, relative yields, discount rates, and other assumptions. Special emphasis was placed on determining from the analysis when the switchover from conventional to soil-conserving practices should take place. Technological change was incorporated by allowing crop yields to vary over time. Our analysis thus provides a new, more precise measurement of the cumulative net benefit differential. The optimal period for switchover from conventional to soil-conserving practices was found to vary depending on the assumptions made about corn prices and discount rates. Empirical results were based on an erosion damage function (EDF) for Western Kentucky corn production.

For decades this society has underinvested in the social sciences relative to the biological and physical sciences. In partial consequence, today the changing agenda of problems of the society falls increasingly into the domain of the social sciences. Ironically the cumulative effect of this underinvestment is now creating a unique window of opportunity for the social sciences.

The Southeast is a net importer of milk and milk products. Milk must be imported from other regions at certain times of the year. Reverse osmosis (RO) is a new processing technology which could significantly reduce milk transportation costs between regions by removing half the water from raw milk prior to shipment. A network flow algorithm, which incorporates federal milk orders and solves for the least cost procurement pattern, was used to assess the impact of RO on southeast milk marketing orders under alternative raw product pricing scenarios.

I very much appreciate the invitation to participate in the meetings on this special occasion, the twentieth anniversary of the Association's founding. It is always a pleasure to return to the South and especially to participate in the work of the SAEA, for which I have strong interest and affinity.

Self-employment taxes, “effective” marginal tax rates, and discounting schemes which allow for alternative purchase and disposal dates of machinery are incorporated into the traditional optimal replacement interval model. Empirical results indicate that these alterations decrease the optimal replacement intervals by up to three years from those obtained with traditional modeling assumptions. Inclusion of self-employment taxes decreases both the penalty attached to early replacement and the net present value (cost) of tractor ownership.

The 1985 Farm Bill departs from recent farm bills in moving toward more restrictive acreage control. The change from a two- to a five-year average in calculating base acreage and enforcement of limited cross-compliance appear to significantly alter crop mix decisions on representative Alabama cotton farms.

A sequential decision-making model was developed, and data from farm-raised catfish production were used to demonstrate its use. Outcomes of sequences of decisions which satisfied chance constraints on ending cash balances were traced through a specified time period. Discrete choice variables were specified due to the fixed nature of pond facilities. Recourse actions specified were sale of production in excess of endogenously determined transfer levels or purchase of inputs to supplement needs of the next production stage. Production activities cannot be changed during the planning period. Only yield variability was considered due to its impact on relative competitiveness among growth stages. Deviations were calculated from endogenously determined target levels based on goal and probability limits.

E-V studies traditionally have relied on historical data to calculate returns and variance. Historical data may not fully reflect current conditions, particularly when decisions involve government-supported crops. This paper presents a method for calculating mean and variance using subjectively-estimated data. The method is developed for both government-supported and non-program crops. Comparisons to alternative methods suggest the approach provides reasonable accuracy.