Foster, Phillips W.

Wichelns, Dennis

English

Research Papers in Economics

SOUTHERN  JOURNAL  OF  AGRICULTURAL  ECONOMICS  JULY,  1981
REPLY:  ENERGY  ACCOUNTING:  THE  CASE  OF  FARM  MACHINERY
IN  MARYLAND
Phillips Foster and Dennis  Wichelns
The  most  important  issue  raised  in  the  com-  roles.  Despite these problems,  this approach has
ment by Bradford involves the problem of how to  the advantage of accounting for all the equipment
handle  the  fact that,  although the  logical  period  presently  on  a  farm-not  only  recently  pur-
for accounting for energy use  on the farm is one  chased equipment.
year,  farm  machinery  is  typically  used  over  a  Similarly,  the  "flow approach"  advocated  by
period of several years.  No solution to this prob-  Bradford is not without its hazards. Farmers tend
lem will be entirely  satisfactory,  and the alterna-  to buy heavily in machinery after financially suc-
tive offered by  Bradford  has its own difficulties.  cessful years  and to postpone purchases  after  fi-
Nevertheless,  the  Bradford  alternative  is  worth  nancially  unsuccessful  years.  If one  were to  re-
trying,  and  this  response  to  the  comment  will  cord purchases  during a year that was affected by
consider briefly  his proposal.  some  such  abnormality,  the  resulting  analysis
Several  questions  were  raised  in  Bradford's  would  be misleading.  This problem  could  be re-
comment,  and  for ease  of comparison  they  will  duced by taking a three-year average of farm ma-
be considered  in order,  using  his numbering sys-  chinery  sales  and  using  that  for  the  analysis
tem.  year. l
Both of the above  methods  are valid. It would
1.  The method used in obtaining the embodied  be interesting to compare the results of the Brad-
energy estimates  for the 20 most important  farm  ford  "flow  approach"  with  the  results  of  the
machines  (Table  1-Foster,  et al.  1980a)  is  de-  "depreciation  approach"  obtained in the  Foster
scribed  in  detail  in  the  publication  by  Foster  et al.  article.
et al.  1980b, Fossil Fuel Energy  Use in Agricul-
ture-A Data Base of Maryland, 1974,  Dept.  of  3.  Some  of the pioneering  work on the energy
Ag.  Econ.,  U.  of MD.,  December,  1980,  avail-  cost of farm  machinery  attributed  all of the  em-
able on request from the University  of Maryland.  bodied energy in  a particular piece  of machinery
Briefly, census data were the basis for most farm  to  the  production  of one  crop,  even  though the
machinery numbers used.  Energy value added at  machinery  was  used  in  producing  a  variety  of
the various stages of production and in repair and  crops (Pimentel  et al.).
maintenance  was  the  basis  for  the  embodied  This method resulted in a higher energy alloca-
energy estimates  per machine.  tion  to  the  production  of  that  crop  than  was
realistic.  To overcome  this type of problem,  the
2.  There  are  two  methods  of handling  the  authors  undertook  to  allocate  energy  embodied
problem regarding  the  use of farm  machinery  in  in machinery  among the  crop  and  livestock  ac-
more  than one  year.  One  way,  which  Bradford  tivities on  which  it  was  used.  The  most reason-
calls the "depreciation approach,"  is to estimate  able  method  was  to  distribute embodied  energy
useful  life,  then  divide  the  machine's  embodied  in  the  same  ratio  that  direct  energy  was  ex-
energy  plus  energy  emobidied  in  replacement  pended.  It  still  seems  appropriate  to  distribute
parts  by  the  useful  life.  As  Bradford  implies,  embodied  energy  among  the  various  crops  and
there are  at least two hazards  in the depreciation  livestock  operations on  which  it is  used.
approach.  First,  one  might guess  incorrectly  on
the useful  life of the machine.  Second,  farm ma-  4,  5.  These  comments  were  related  to  com-
chinery  is often used more intensively during the  ments  2  and  3 above,  and  this  response  so  far
first few years  of its life than in later years.  This  would  cover  the  reaction  to  comments  4  and  5
is  the  case  when,  for  example,  a  tractor  is  re-  also.
placed by a newer,  more powerful,  or more  ver-
satile  model.  The  old  tractor  is  not  usually  At  the  close  of the  Bradford  comment,  a  re-
junked,  but  rather  is  retained  for  specialized  mark  is  made  about the energy  theory of value.
Phillips Foster is Professor and  Dennis Wichelns  is a graduate  research  assistant, Agricultural and  Resource Economics  Department,  University  of Maryland,  College Park.
'A  user of the  "flow  approach"  would  want  to  look  at data  supplied  by  the  Farm and  Industrial  Equipment  Institute,  Chicago,  III.,  and  published  in ImlplemnIt  an11d
Ti-rArtor,  P.O.  Box  12901,  Overland Park,  Kansas,  66212. The Annual  Market  Statistics Edition furnished  yearly sales data by states on a number of farm implements.  A user
of the flow  approach  would  also need  sales data on  spare  parts and replacement tires  sold, plus  some  means of assigning  these  to the type of farm equipment  on which they
were  used.
159At the time of writing of the  Foster et al.  article,  the problem of farm machinery's being used over
price  data to  associate  with the physical  energy  a  period  of  years,  yet  the  logical  accounting
account  data  had  not yet  been  assembled.  The  period  for  energy  use  on  the  farm  is  only  one
development of physical  energy  accounting data  year.  The  results  of  using  the  two  approaches
was  a necessary  preliminary  to  making good es-  should be compared.
timates  of the  dollar  cost of energy  involved  in  If an item  of machinery  (such as  a tractor)  is
agricultural  production.  Price  data  have  now  used in more than one productive  activity on the
been  assembled,  and  work  is  under  way  on  a  farm,  it  is important,  when energy accounting  is
report  that will  show  the  dollar costs  of energy  done,  to  refrain from allocating all of the energy
involved in agricultural production in Maryland.  embodied  in that item of machinery  to only  one
productive  activity,  as that would result in a dis-
tortion of the energy costs of that activity.
SUMMARY  Physical energy accounting is  a necessary  pre-
decessor to estimating the dollar costs of energy
Both  the  "depreciation  approach"  and  the  used in agriculture,  but physical energy account-
"flow  approach"  are valid  methods  of handling  ing  is not a substitute  for economic  analysis.
REFERENCES
Bradford,  Garnett  L.  "Comment:  Energy  Accounting:  The  Case  of Farm Machinery  in Maryland."
S. J. Agri.  Econ.  13  (1981)  No.  1.
Foster,  P.,  J.  Flemming,  and  D.  Wichelns.  "Energy  Accounting:  The  Case  of Farm  Machinery  in
Maryland."  S. J.  Agri. Econ.  12(1980a):189-92.
Foster,  P.,  J.  Flemming,  D.  Wichelns,  and  L.  Roberts.  "Fossil  Fuel Energy  Used  In Agriculture,  A
Data  Base  For Maryland-1974."  Research  Bulletin,  Md.  Agr.  Exp.  St.,  December,  1980b.
Pimentel,  D.  L.,  L. E. Hurd, A.  C. Bellotti,  M. J.  Foster,  I.  M. Oka,  O. D. Sholes, and R. J.  Whitman.
"Food Production  And The  Energy Crisis."  Science  182(1973):443-49.
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REPLY: ENERGY ACCOUNTING: THE CASE OF FARM MACHINERY IN MARYLAND

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