AN ECONOMIC INVESTIGATION INTO INFLATION PASSTHROUGH TO THE FARM SECTOR

The purpose of this study is to estimate the impact of general inflation on prices paid and received by farmers. Specific objectives are: (1) to test the hypothesis that the farm commodity domestic demand function at the farm level is homogeneous of degree zero in price and income; and (2), conditional on not rejecting the hypothesis in (1), to test the hypothesis that general inflation changes the ratio of prices received to prices paid by farmers because of impacts unevenly on prices and income in the demand function versus the supply function for farm output. Empirical results provided no basis to reject the hypothesis that economic functions determining demand for output at the farm level are homogenous of degree zero in income and prices. A truly general increment in overall price level appears to increase nominal prices received and farm demand in proportion to the general price level but leaves real farm demand and hence real demand price unchanged. This hypothesis could not be rejected based on the domestic components of demand for farm output examined in this study. Given demand and supply functions homogeneous of degree zero in all prices and income, the second hypothesis that general inflation impacts evenly on all prices and income was rejected for the 1963-77 period. In that period, national inflation moved upward the supply curve through prices paid by farmers proportionately more than it moved upward the demand curve and prices received by farmers, contributing to a cost-price squeeze.Agricultural Finance,

AGRICULTURAL AND RURAL DEVELOPMENT IN THE 1980S AND BEYOND

Community/Rural/Urban Development,

IMPACT OF FEDERAL FISCAL-MONETARY POLICY ON FARM STRUCTURE

Agricultural Finance,

IMPACT OF DOMESTIC POLICY ON COMPARATIVE ADVANTAGE OF AGRICULTURE IN THE SOUTH

Agricultural and Food Policy,

THE NEED FOR THE SYSTEMS APPROACH TO RURAL DEVELOPMENT RESEARCH

Research and Development/Tech Change/Emerging Technologies,

THE FOOD AND FIBER COMMISSION REPORT: IMPLICATIONS FOR THE SOUTH

Crop Production/Industries,

Directions of U.S. Farm Programmes under a Freer Trade Environment

For the new round of WTO multilateral trade liberalisation negotiations to be successful, the world will need to be more enthusiastic and flexible about opening markets. Partisans will need to submerge their self-interests, and the U.S. will need to take the initiative for more open markets. This paper makes the case that only modest changes in the U.S. domestic grain, oilseed, and cotton programmes are needed for compatibility with global free trade. The Federal Agricultural Improvement and Reform (FAIR) Act of 1996 and related policy changes in the 1990s brought fundamental reforms compatible with freer domestic and foreign markets. Chief among these were a shift from coupled deficiency payments to decoupled direct payments, an end to supply management, and less engagement of government in commodity stock accumulation and export subsidies. Converting commodity price support to recourse loans while ending all but administrative cost subsidies to crop insurance would go far to liberalise grain, oilseed, and cotton policies. Unilateral termination of commodity programmes including direct payments totalling 42 percent of net cash farm income in year 2000 would appear to be traumatic to producers. However, reduction of direct payments could be offset (for farm income) by rising farm commodity prices and receipts resulting from (1) less farm output attending lower loan rates and crop insurance subsidies, and (2) world farm commodity price-enhancement from freer global trade.

ARE CURRENT U.S. FARM COMMODITY PROGRAMS OUTDATED? ARGUMENTS IN THE AFFIRMATIVE

Farm commodity programs devised over one-half century ago have outlived their usefulness. The structure of agriculture is different today than in 1933. Comparatively little excess labor remains in farming. The industry is capable of adjusting to change likely to develop over the next decade or so. Current problems in agriculture are the result of macroeconomic policies and commodity programs. The paper presents elements of a transition program to lower the government's role in supporting farm prices and incomes.Agricultural and Food Policy,

DOMESTIC FOOD AND FARM POLICY ISSUES AND ALTERNATIVES

Agricultural and Food Policy,

DISCUSSION: ECONOMIC RESEARCH TRADE-OFFS BETWEEN EQUITY AND EFFICIENCY

Research Methods/ Statistical Methods,