Three excellent papers addressing the future of commodity programs were presented at the SAEA Annual Meeting in February 1980. Each has some very important strengths. “Commodity Policy Issues for the 1980s” by Erickson and Johnson is almost encyclopedic in its coverage, while at the same time being issue-oriented and presenting some very pertinent data. Pasour's “A Critique of Federal Agricultural Programs” is an effective assessment of commodity programs as they existed in the past. Goodwin and his colleagues do yeoman's work in attempting to defend current programs in “The Future of Federal Programs for Southern Commodities.” I assume the contrast between that paper and Pasour's was intentional. Certainly the two of them together help to focus the issues.

The thesis of this article is that food and agricultural policy in the 1980s will be shaped by emerging economic, social, and political realities that are different from the realities which gave rise to policies and programs of the 1920s, 1930s, and 1940s and which, modified, continued through the 1970s. The characteristics of this new policy environment include:

1. – A changed economic structure and character of United States agriculture, and thus a changed constituency with changed policy needs.

2. – The internationalization of U.S. agriculture with its favorable and unfavorable implications, but which imposes certain constraints and disciplines on domestic agricultural and food policy.

3. – The prospect of a new supply and demand “equilibrium” and the end of 60 years of adjustment to supply growing faster than demand.

4. – The new, broadened context within which agricultural policies and programs must be considered.

On March 12, 1979, Secretary of Agriculture Bob Bergland issued a call for a full-scale national dialogue on the structure of American agriculture. According to USDA, “Reaction to the speech has been widespread and, in the main, highly positive.” The main factor contributing to this “widespread highly positive” response has been the ambiguity of the subject matter. Farmers, along with special interest groups of all types and persuasions, have eagerly jumped on the structures bandwagon to blame/praise one or more particular aspects of agricultural structure for all the evils/blessings currently within their fields of vision. This broad range of comments and opinions on structure can be attributed to the extreme extent to which the structure of agriculture pervades and is interwoven with the national economy and society in general. Unfortunately, some unreasonable expectations apparently have also emerged concerning which of agriculture's ills can be alleviated via a structures policy. The aim of this article is to attempt to give some perspective to the structures issue.

The assumption of nonstochastic parameters has long been recognized as restrictive to the solution of many marketing problems and to economic modeling in general. Parameter variation historically has been treated with the use of nonstochastic adjustments through interaction variables and the use of proxy dummy and trend variables. Though these empirical techniques in many cases give reasonable results, they presuppose that the researcher can specify the nature of the parameter change. In fact, it may not be obvious that random parameters are part of the estimation problem. Furthermore, specification of structural shifts in parameters is usually difficult. Comparison of parameter changes through techniques such as grouping of data and using various F-tests is most often dependent on the criteria for grouping (Maddala, p. 390–404). Also, the procedure fails to identify the dynamic path of adjustments that must have occurred when various F-tests indicate that parameters have changed. Other approaches to determining structural shifts in parameters may require elaborate search procedures. To limit the extent to which the search is required, restrictive assumptions about many of the parameters are sometimes made (Simon).

In 1970 a marketing order, made possible by a 1968 state enabling act, was formed for South Carolina fresh market cucumbers. This legislation is similar to current federal legislation, but South Carolina has no federal marketing order for cucumbers. Order provisions that affect price formation are the subject of this article. Price posting and adoption of statewide USDA inspection requirements are the order provisions that yield the largest and most direct price impact (S.C. Cucumber Board.) The apparent goal of these provisions is higher and more stable prices.

The objective of our research is to investigate the success of the South Carolina marketing order in achieving its goal of higher and more stable fresh market cucumber prices.

National food, agriculture, and trade policies operate in part through commodities. In our view, commodity policy encompasses the actions policymakers direct toward individual commodities in their attempt to influence supply, demand, price, farm income, and resource use. The instruments or provisions Executive branch policymakers use are granted by Congress through legislation. In this article we consider commodity-related developments that could occur in the 1980s and relate those developments to issues that policymakers will confront. We examine the economic pressures likely to affect producers, the instruments that policymakers may seek, and the legislative response.

Industrialization is an integral part of many rural community development programs across the country. Interest in attracting industry is often based on an ex ante assessment by local groups and officials of the positive benefits accruing to the community or area from industrialization. Obvious benefits to a local economy include increased output, income, and employment. Benefits occur in the form of purchases of labor and inputs by industry from endogenous sectors and the resulting local trade. A complete understanding of these benefits by local groups and officials in rural economies is essential for the planning of effective industrial development programs.

Criticism of current agricultural programs is coming from within and outside agriculture. Secretary Bergland in recent “grassroots hearings” has called for new approaches in agricultural policy in which recipient benefits do not hinge on size of farming operation. Hjort suggests that despite widespread agreement on the objective of encouraging the family farm, “the cumulative effect of our farm programs may well have been to hasten the concentration of the farm sector….” (Hjort, p. 748). Producers of flue-cured tobacco voted overwhelmingly in December 1979 to continue a program but are upset about high quota rental prices. Outside agriculture, consumers are unhappy about the effects of farm programs on prices of milk, sugar, and other products. Students of the political process are concerned about the effects of the use of state power by small, politically powerful groups to secure economic gains.

Insured farm loans have evolved to be an important component of the federal role in the agricultural credit subsector. Currently, agricultural credit is supplied by three sets of institutions: (1) private firms and individuals, (2) the quasiprivate cooperative Farm Credit System, and (3) the federal public programs of the Farmers Home Administration (FmHA) and Small Business Administration. Statuatory authority currently limits federal programs to a residual role of lending to borrowers who cannot receive credit from the other segments. Though a large component of public programs consists of emergency loans in areas of economic disaster, the FmHA also makes farm operating and real estate loans to farmers who meet the statuatory requirements. The source of funds for some FmHA loans is federal appropriations and money market certificates. However, guaranteed loans have become an important component of FmHA programs. These loans are made in cooperation with other agricultural finance agencies. The public agency insures or guarantees repayment of the loan. The cooperating firm negotiates the loan and provides the funds. Usually the interest payment is below the current market interest rate structure.

The title assigned for this article suggests that a group of bureaucrats can accurately predict the actions of both the legislative and executive branches of government. Though the compliment is appreciated, it must be recognized that both the legislative and executive branches of government are subject not only to periodic changes in personnel, but also to abrupt changes in the attitudes exhibited by given personnel. Probably the most dramatic recent example of abrupt change in legislative and executive attitude in the area of agricultural policy is the series of events that occurred immediately before, during and subsequent to the January 4, 1980, announcement of the suspension of trade with the Soviet Union. Thus, it is unlikely that any analyst — be he bureaucrat, academic, or businessman — can accurately predict either legislative or executive decisions over the next 30 days, let alone over the next 30 years. Therefore, in analyzing the future of federal programs for Southern commodities, one is to some extent limited to an examination of whether such programs have in fact accomplished their stated purpose, and secondarily to an examination of whether the conditions and circumstances that originally created the need for these programs persist to a degree that justifies their continuation with or without any necessary modifications.

Much of the beef produced and sold in the United States before World War II was from grass- or limited grain-fed cattle. However, development of the modern large-scale cattle feeding industry in the 1950s and 1960s greatly increased supplies of grain-fed beef and, by the early 1970s, many American consumers found only USDA Choice beef from heavy, grain-fed cattle in supermarkets. Consumers soon became conditioned to the flavor, juiciness, and tenderness of high quality, well-marbled beef. Proponents of forage or limited grain finishing systems found little support at any marketing level.

Though agriculture in the United States has been looked upon as being technically efficient in terms of output per unit of labor, it is not nearly as efficient in terms of output per unit of liquid fuels consumed (Debertin, Pagoulatos, and Boadu; Pagoulatos and Timmons). In this article, we examine the potential for substituting other inputs for liquid fuels in the agricultural production process. Studies of elasticities of substitution between energy and other inputs are reviewed. On the basis of these studies, we suggest possibilities for using other inputs instead of liquid fuels in agriculture. We present recent research results relating fuel use to tractor prices and horsepower. We compare Kentucky counties in terms of their energy use in relation to their mix of agricultural enterprises and mechanization levels. Finally, we speculate on the potential impacts of significant increases in real fuel prices on the major agricultural enterprises in the South.

Markowitz developed the theoretical background for analysis of investments in reference to the mean and variance of returns of the portfolio of all investments (E-V analysis). Subsequently, Freund adapted the E-V model to farm enterprise decisions, and agricultural economists have applied this model to various agricultural firm problems. The studies of Kliebenstein and Scott, Brink and McCarl, Heifner, Buccola and French, and Raikes, Sieck, and Miller are examples of applications to farm enterprise organization, farm commodity marketing, and procurement of farm commodities by agribusiness firms. These studies are concerned largely with either production or marketing decisions; applications to joint production and marketing decisions are more limited. Exceptions include Whitson, Barry, and Lacewell's study of vertical integration and Barry and Willmann's analysis of forward contracting. In addition, Lütgen and Helmers and Persuad and Mapp recently analyzed a limited number of marketing alternatives in conjunction with different enterprise alternatives.

Several factors arose during the post-World War II era and particularly the 1970-1980 decade which had a great impact on the U.S. food and agriculture system—including forestry, fiber, and related activities. They include (1) the increasing interdependence among the basic industries of agriculture and forestry and other sectors of the domestic and world economies, (2) the emergence of a technology highly dependent on petroleum and petrochemicals accompanied by increasing dependence of the U.S. on foreign sources of petroleum, the cartelization of major foreign crude oil suppliers under OPEC, and an increased vulnerability to worldwide political unrest, (3) the rapidly expanding export market for farm food and feed commodities and the reliance on farm commodity exports to help offset a growing deficit in international trade, (4) the rapid commercialization and industrialization of the food and agriculture sector, and (5) the increasing social awareness and demands for improved environmental quality and human health that led to public regulations affecting the food and agriculture system.

Responding to the needs of the feeder cattle industry, the USDA (1979) implemented a new feeder cattle grading system which broke from the traditional method of using consistent grade terminology throughout the marketing process. The terms Prime, Choice, Good, etc. were replaced by three frame sizes (large, medium, and small) and three thickness scores (1, 2, and 3). The change from carcass quality terms to production-oriented terminology was deemed necessary because the product characteristics desired by cattle feeders differ from those desired at slaughter by the slaughterer-packer.

Approaches to the formulation of optimal beef cattle management programs have changed significantly since they were first examined in a linear programming context in the 1950s. Models were originally designed to identify feed rations which minimize the cost of providing minimum levels of energy and selected nutrients. Subsequent efforts sought to maximize overall farm or feedlot profits, including identification of optimal feeding weights, daily gains, and ration formulations (Kearl, Harris, and Fonnesbeck; Ladd and Williams). The studies varied in attention to such details as number of head fed, variety of alternative feeds, seasonality factors, animal characteristics, and the manner in which energy requirements and appetite are modeled Wilson, and others cast the California net.

In the last decade, vegetarianism has become more prevalent in the United States, although by no means dominant (Adrian and Daniel). Even households which have not become vegetarian have considered decreasing their consumption of meat. This trend has been due to several factors. First, meat is relatively more expensive than other sources of protein. Second, inflation has diminished consumer purchasing power. Third, recent health reports have focused on carcinogenic agents in meat and the dangers of too much cholesterol. Fourth, concern with ecology and world food supplies has increased. Meat is thought to be less efficient in feeding the masses than grains and other nonmeat protein sources.

Sugarcane has been cultivated since at least 8000 B.C. (Barnes, p. 2) and today is grown throughout the world's tropical and subtropical regions. In Florida, sugarcane has been produced commercially since 1920 (Zepp). Before 1960, however, Florida sugar production was not significant; only three mills were in operation. With the ban on importation of Cuban sugar and the lifting of domestic sugarcane acreage restrictions in 1960, the industry grew rapidly.

Knowledge of the lead-lag relationships among the retail, wholesale, and farm level prices of a livestock commodity is of obvious importance both in econometric model building and in evaluation of packers' and retailers' margins for that commodity. Though the lead-lag relationships for beef prices have been investigated in several previous studies (Barksdale et al.; Franzmann and Walker; King; Miller; National Commission on Food Marketing), the only known previous study of the lead-lag relationships for pork is that made by the National Commission on Food Marketing (hereafter abbreviated NCFM). As that study used data for 1962-1965, changes in the pork marketing system in subsequent years may have in turn occassioned changes in the lead-lag relationships. The changes in the pork marketing system include changes in market structure at the farm, packer, and retail levels, increased use of formula pricing, and the demise of terminal markets, among others. Also, as discussed hereafter, the statistical method used in the NCFM analysis of lead-lag relationships involved certain problems which may invalidate the conclusions drawn in that study.