Economies of size for farm firms in the United States are a traditional interest of agricultural economists (Heady). Continued interest in this topic is related to the implication of economies of size for the size structure of farm firms. The structure issue has the potential to affect not only current farm firms but also agricultural marketing firms, rural communities, and consumers of agricultural commodities (Krause and Kyle). In the past, the relationship between economies of size and farm firm growth was the basis for research. More recently, the relationship of economies of size to public policy issues has gained attention (Bardnam, Hall and LeVeen, Seckler and Young).

As farm sector prices continue to increase at rates higher than any since World War II, attention is being given to the cause of the price increases and their structural impacts on the farming sector. Land, a major component of farm assets, has been the focus of many studies examining the effects of inflation. Melichar showed current increases in land prices to be consistent with productivity gains. Lee and Rask illustrated that even though current levels of land prices may be justified, firms may have negative cash flows, especially if loans are repaid on level repayment plans. Current inflationary conditions led Robison to conclude that though current land prices may be justified, the benefits and costs are unequally distributed and that, increasingly, persons who in earlier years made land purchases are more able to afford to purchase more, thereby accelerating the trend toward fewer and larger farms.

Current income tax provisions bear little resemblance to those enacted by the original law, the Revenue Act of 1913. Because of the progressive nature of the federal income tax, a need for special provisions for capital gains was recognized. In 1921, gains from the sale or disposition of capital assets and certain other capital items were identified and taxed differently from income from other sources. The capital gains provisions resulted in the separation of ordinary and capital gains income.

Gains and losses from the sale or exchange of a capital asset and other capital items are classified as either short- or long-term, depending on the period of time the property is held. Income from items held for less than the required period is taxed as ordinary income. Income from items held for longer than the required period receive preferential treatment only if the net long-term gain exceeds the net short-term capital loss. If long-term capital gains are realized, 60 percent of the excess gain is claimable as a deduction; the remaining 40 percent of the net gain is taxed at the taxpayer's ordinary tax rate. If the net short-term capital gain exceeds the net long-term loss, 100 percent of the excess is taxable at the normal rate.

Changes which have occurred in the U. S. agricultural and economic environments over the past few years have important implications for the financing of agriculture. Increased dependence on purchased inputs, coupled with inflation in all areas, has placed added emphasis on the need of farmers to secure capital to fund their operations. A parallel concern is the ability and willingness of financial institutions to supply adequate financing.

Commercial banks have a dominant position in the total agricultural market and as a result farmers are dependent on them (Melichar and Waldheger). Because of this dependence and for the health of the agricultural economy, commercial banks must continue to supply adequate amounts of funding. If banks are to do this, they must continue to perceive agricultural lending and relationships with agriculturally oriented customers as being consistent with their own profitability goals. Our research results indicate the relative importance and profitability associated with agricultural customers in comparison with other customers.

In spite of the economic benefits of insecticides to farmers and consumers, growing concern about the potential health and environmental hazards of some insecticides has resulted in the investigation of many insecticides by the Environmental Protection Agency (Boraiko). The use of several insecticides has already been banned. Others are under review and their use may be banned or restricted in the future.

The Environmental Protection Agency must evaluate, monitor, and regulate a wide range of chemical compounds. To do so requires the collection and analysis of information on the environmental, health, and economic impacts of the use of many diverse chemicals. Though regulatory action by the Environmental Protection Agency may reduce health and environmental risks, such action can also alter the profitability and performance of a farming operation.

One of the more significant changes in the U. S. agricultural industry in recent years has been the increased use of credit to finance production and capital expenditures. Since 1970, outstanding farm debt has more than doubled, rising at an average annual rate of 9.3 percent. However, because net farm income has not increased as fast, the debt burden for farm operators has become relatively higher (Melichar and Waldheger).

This increase in debt load has made financial evaluation more difficult for lenders. Narrow profit margins and increased average loan size have made financial institutions more aware of the need to determine, for their loan portfolio, how borrower and agricultural business characteristics relate to debt repayment ability and loan quality.

Climatic conditions in semiarid regions like the Oklahoma Panhandle result in wide fluctuations in rainfall, dryland crop yields, and returns to agricultural producers in the area. Irrigated crop production increases peracre yields and significantly reduces fluctuations in yields and net returns.

Irrigated production of food and fiber in the Oklahoma Panhandle has developed rapidly during the past three decades, increasing from 11,500 to 385,900 acres since 1950 (Schwab). The primary source of irrigation water in the area is the Ogallala Formation, an aquifer underlying much of the Great Plains region. Until the past couple of years, the presence of relatively low cost natural gas led producers to expand irrigated production and apply high levels of water to crops irrigated in the area.

One of the most important concepts of production economics, the linkage of costs of production (expressed in terms of output) to the production function, is poorly treated in most intermediate level microtheory and production economics texts. In several texts the linkage is so sketchy it is of limited pedagogical value (e.g., Gould and Ferguson; Heady; Leftwich). The best available treatments are those of Doll, Rhodes, and West, Buse and Bromley, and Goodwin, all of which are in introductory texts. Certainly most students are not ready for abstract, analytical geometries in a first course. However, many upper-division students not only do not understand the input side — output side linkages and the resulting consistency of the input profit-maximizing conditions and the output profit-maximizing conditions, but also become confused as to the meaning of and relationship between marginal revenue and marginal value productivity and between marginal cost and marginal factor cost. Treatments like Goodwin's Figure 9.6 (p. 145) must be reinforced and more fully developed at the intermediate level.

Under new federal programs, soil and water conservation practices are relied upon to make a major contribution to the control of nonpoint sources of water pollution. Economic efficiency is to be considered in selecting these practices. Although only an experimental program funding of $50 million has been appropriated, $400 million of Rural Clean Water Program funds in 1980 were authorized. The program is to be administered by the Secretary of Agriculture with the concurrence of the Administrator of the Environmental Protection Agency. Because its implementation may eventually necessitate major land use changes and capital investments as part of 5- to 10-year contracts with farmers, we examine how soil conservation plans can incorporate potential changes in market prices of crops.

Among agricultural economics faculty in the Southern region of the United States, awareness of research productivity, teaching loads, and faculty rewards is growing. Studies on research productivity have included classifications of contributors to this journal (Oursbourn, Hardin, and Lacewell), the Journal of Farm Economics (Holland and Redman), and major economic journals (Opaluch and Just). The findings generally indicate that agricultural economics faculty of universities in the Southern region have not ranked very high as contributors to major economic journals (Holland and Redman). Opaluch and Just found only two universities in the Southern region among the top 20 universities contributing papers to the American Journal of Agricultural Economics. Among universities contributing to major national economic journals, only one of the top twelve was in the Southern region.

In their article entitled, “A Model of Weekly Price Discovery for Florida Celery,” Shonkwiler and Pagoulatos provide an analysis of the pricing power of the Florida Celery Exchange, a marketing cooperative that represents all of that state's major celery producers. In their description of the activities of the Exchange, the authors cite several factors which indicate that Florida celery producers may have the ability to raise prices above levels that would prevail in a competitive U.S. celery market. Such factors include a market share of approximately 40 percent and a marketing allotment program which has prevented other producers from entering the industry since 1965. Shonkwiler and Pagoulatos then proceed to estimate the weekly demand faced by the Exchange and conclude, on the basis of the point estimate of an own-price elasticity, that the prices charged over the period 1972-1978 are inconsistent with those that would have been charged by a profit-maximizing monopolist. This conclusion leads them to state that the Exchange is socially beneficial because, they claim, it has provided price stability and market information without raising prices much above competition levels.

Containerization of transoceanic general cargo shipments was pioneered in 1966 when Sea-Land Service, Inc. initiated a containership service from the U.S. East Coast to Europe. Shipping of cargo in uniform-sized sealed containers of truck-trailer size revolutionized the marine transportation industry during the 1970s. The intermodal container enables the shipper to pack his cargo in the container at his own premises and deliver the cargo to a port to be transferred to an ocean vessel and delivered overseas to the foreign consignee, without the contents of the cargo being handled at each stage of the journey. Initially, the container was moved to an ocean port by rail or truck, but recently this leg of the movement has been adapted to inland river movement via the container-on-barge.

Nelson Updaw raises several issues concerning our study of weekly price discovery for Florida celery. His comments require some clarification and correction so that his criticisms can be allayed.

First, there appears to be some confusion surrounding the intraseasonal (semiweekly) operation of the Florida Celery Exchange and interseasonal acreage allotments. During the time period of our analysis (the 1972–1977 seasons) no marketing allotments were imposed by the Exchange as Updaw suggests; rather, the Exchange practiced only semiweekly price-setting activities, and acreage allotments were applicable on an annual basis only.

Farm machinery energy accounting has taken basically three approaches.

The first approach is concerned with the energy embodied in farm machinery on a national basis. Two studies have attempted to show the aggregate amount of energy embodied in the manufacture of farm machinery. Using input-output analysis, Bullard et al. provide estimates of the energy costs of goods and services for 1967. Measured in BTUs per dollar of final product, the energy cost of farm machinery at 1967 price levels is given as: coal, 34,478 BTUs; natural gas, 24,794 BTUs; refined oil, 12,541 BTUs; and electricity, 5,396 BTUs.

In a recent article in this journal, DiPietre, Walker, and Martella presented the derivation of the Total Requirements Tables for the 1972 U.S. input-output study. As this same derivation is available from the Bureau of Economic Analysis, it is unfortunate that the article contains a minor algebraic error.

The error is made in the derivation of equation 7 in the article and is carried through equations 8 and 9.

The attraction of new industry is an ongoing concern for most local officials. Generally, local officials are aware of the private sector benefits of new jobs and income. Attention is beginning to be paid to secondary private sector impacts such as the effect of new industry on local wage rates and the problems associated with in-migration of labor to fill new jobs. Borts and Stein (Chapter 9) give a theoretical discussion of these issues.

In addition researchers and policy makers are interested in the development of models that estimate the impact of new industry on local government expenditures and revenues. Many computerized versions of local fiscal impact models are reviewed in a recently published text (Burchell and Listokin, pp. 345-59). The popularity of these models is understandable because of the potential benefits to be derived from accurate forecasts of local fiscal impact. For example, a community can determine the magnitude of a tax incentive it can offer to industry and still maintain a positive fiscal impact for local government. Zoning laws can be written to encourage land use patterns that will be efficient from the public sector's perspective if the public expenditures and public revenues associated with alternative land use patterns can be predicted. Finally, local areas may be able to demonstrate to state government that a large-scale industrial project will benefit the fiscal position of the state but be a burden to the local fiscal balance.

Farmers and other business people commonly consider multiple goals or objectives in their-decisions, especially investment or other long-run decisions. Various techniques, such as discussed by Keeney and Raiffa, have been developed to incorporate multiple goals or objectives in decision making. These techniques differ in how the decision-making process is viewed, empirical data required about goals, and solution algorithms. Considerable emphasis has been given to development of alternative models and solution algorithms, but problems (Willis and Perlack), of quantifying farmers' goals for use in these models have received relatively little attention.