George D. Irwin

Flow-of-Funds Social Accounts for the Farm Sector

Flow-of-funds accounts and component sources-and-uses-of-funds statements relate changes in balance sheet accounts to income statements, describing movement from one balance sheet to the next. While the Federal Reserve System compiles a farm business sector sources-and-uses-of-funds statement consistent with and part of the national flow-of-funds accounts, the statement is not definitionally and conceptually consistent with published farm income and balance sheet accounts. An alternative farm sector sources-and-uses-of-funds statement is proposed that contains these features, and its potential applications and extensions are delineated.

Modeling and Simulation of the U.S. Economy with Alternative Energy Availabilities

The acute energy shortages of 1973–74 accentuated the pervasiveness of energy utilization in the U.S. economy and underscored the complexity of the system interrelationships. It was also revealed that little is known about these interrelationships. This article reports on a systems analysis of the short-run economic effects of alternative situations involving reduced energy availability. The impacts of several different energy availabilities are analyzed. Specifically, the situations considered are a 2% quantity reduction in domestic coal supply, a 1.0 and a 1.5 million barrel per day reduction in crude petroleum imports, and a 10% quantity reduction in natural gas supply.

Tailoring Farm Account Projects to Answer Aggregate Questions

CONOMIC illiteracy has long been of concern to agricultural economists. In particular, some have doubted whether farmers understand aggregate industry-wide implications of individual farm and consumer actions [1]. From an educational viewpoint, this situation is not too surprising. Emphasis on the farm firm is an outgrowth of the development and evolution of the agricultural economics profession. The micro approach has been reinforced by the close ties of extension programs to account projects having the objective of helping the individual-farm operation. Further, many questions relating to interfarm economics are still in the embryonic research stage. Methods for studying and hence explaining these issues are not well understood by researchers and educators themselves. Researchers have not found data from existing farm account projects very satisfactory in studying aggregate relationships. In fact, data have not generally been collected with any thought given to aggregate needs. To our knowledge, even the general nature of these aggregate needs has not been spelled out. With no better alternative sources, researchers have continued to use these data. And since researchers have not offered positive and feasible suggestions for improvement, extension personnel have continued to collect farm account data to meet their micro needs.

Condition of Rural Financial Intermediaries

Financial institutions serving agricultural areas are experiencing impacts of severe financial stress among farmers for the second time in this century. In both instances, stress resulted mainly from the burden of large amounts of debt-financed land purchases and other farm investments, based on price and income expectations that were not realized. In the current episode, a large rise in interest rates also reduced the optimal degree of financial leverage. Consequently, many indebted farmers needed to adjust the financial structure of their businesses. Some have been able to do so, while others cannot. While total farm debt apparently peaked in mid-1983, it had dropped only 2% by the end of 1984. At some financial institutions serving farmers and agribusinesses, a large proportion of farm debt is owed by customers who require partial or total liquidation at a time when asset prices and markets are refltiecting sharply reduced expectations. The resulting loan delinquencies and losses far exceed risk premiums incorporated in interest rates, eroding loss reserves and threatening capital positions. The impact is multiplied by the normally high degree of leverage of financial institutions themselves.

Energy, Government Policies, and the Structure of the Food and Fiber System

It has become almost trite to suggest that the United States and the world are presently in a fundamentally changed economic situation requiring new diagnoses, prescriptions, and treatments. However, many have reached that conclusion after an assessment of recent economic events, including two devaluations of the U.S. dollar, formation of price-raising raw material-producing country cartels and threats of others, wage and price controls, and their lingering distortions, stagflation, U.S. balance of payments-inflow of petrodollars, expanded U.S. trade in agricultural commodities-detente with new trading partners, growing obsolescence of U.S. manufacturing plant and equipment relative to major trading nations of Europe and Japan, decline in the rate of U.S. technological innovation relative to the rest of the world, slowed growth rate of the U.S. labor force, environmental impact regulations, and more energy conscious consumers and producers. Taken individually, the economic system would likely respond to these shocks in traditional ways. Interacting together, however, they strain our ability to sort out past impacts and to predict future changes. Many of these events are new and hence, data are not organized for analyzing them, which contributes to greater uncertainty. The economic units of the system are having difficulty in formulating expectations upon which to base decisions. Our purposes in this paper are to evaluate the energy-environment component of this confluence of forces, giving special attention to government policies as both a source of and solution to problems of uncertainty and to discuss important potential impacts of uncertainty forces in general on the organizational structure of the food and fiber system. The initial focus is on economic units directly affected by recent economic events, but the ultimate concern is with the likely effects on the growth rate of our domestic economy, on the economic organization of production, on our ability to compete in world trade, and on our role in reducing world hunger. Economic growth in excess of the rate of population growth has been the formula by which the United States has developed the highest standard of living in the world. Labor-saving technology has permitted the economic pie to yield an ever larger slice to each person. Growth has been viewed as subject only to the constraints of the rate of technological advance, the rate of saving and capital formation available to finance new technology, and the rate of growth of the labor force. Two new kinds of apparent constraints have now entered the growth equation: environmental and natural resource considera-

The Middle Sized Farming Operation: A Goods-and-Services Firm?

Traditionally, the economics of farm number adjustments have been inferred from the relative positions of firms on a longrun average cost curve. The steep slope of the left portion of the commonly drawn curve suggests demise of the smaller units as fast as off-farm and inter-farm markets can absorb their labor and land resources. On the less steeply declining middle portion of the curve, insufficient volume of output (income) is suggested as a cause of firms quitting. The argument is supported by the fact that most empirical estimates do not show the long-run cost curve rising at large outputs. This places downward pressure on product prices, reducing per unit margins, and creating income problems for the middle group of firms. Adjustments in the farming sector are then viewed as constrained by the limitations of factor and product markets, as well as by values and traditions of farm people.

PART-FARM GENERAL CROPLAND RETIREMENT: EFFECTS OF SOME ALTERNATIVE PROGRAM SPECIFICATIONS

The impact of technological advance in reducing the need for agricultural land has been more or less recognized since at least the early 1950s. After experiments with general cropland retirement in the 1956-60 Conservation Reserve Program, U. S. farm policy turned to annual acreage adjustments, commodity by commodity. Now farm policy proposals once again include the general cropland retirement approach, either alone or in combination with annual commodity programs.