Production agriculture in the Northeast represents a declining share of national agricultural production. Some of the characteristics of Northeast agriculture that affect its future are (1) an unfavorable resource base; (2) proximity to population centers; and (3) a diversity of enterprises. Major issues affecting the future include changing technology, changing structure, competitive advantage, regulation, and labor supply and demand. The role of specialty crops in Northeast agriculture was examined. Pesticide regulation and the labor requirement for specialty crops are serious constraints to widespread adoption.

Food marketing and distribution encompasses a vast array of economic and regulatory activity. In the most recent product of NC-117, the authors argue that: “The food manufacturing and distribution industries are the primary orchestrators of the food system. Not only do these industries perform essential tasks themselves, but they also have significant influence over the rest of the food system: backward on agricultural production and forward on consumers.” (Marion, p. 432) It is tempting to draw a more complete path diagram with which to emphasize ways in which consumers, farmers and other entities, including regulators, influence and are influenced by these “primary orchestrators”. I will, however, follow the lead of the NC-117 committee and concentrate on these “primary orchestrators” in the Northeast.

Rural America can only be defined as non-urban America. It includes nearly all of America's land area and is home for over one-fourth of the nation's people. Although some rural areas are very prosperous and even in the not-so-prosperous regions, some individuals and families have succeeded in their economic endeavors, there seems always to have been an inordinate amount of poverty and a slow erosion of opportunity-generating activity in many or, more likely, most rural regions.

The issue of a rural policy—whether or not we have one, what one should look like, should we have one—has been discussed more specifically in the mid-1980s. This is a result of the general economic crisis that has affected rural areas, and the realization that agricultural policy has only a limited impact. Professor Barkley has provided us with a valuable and interesting context within which to examine the need for and content of a rural development policy. His paper should force us to raise such questions as:

1. 1. Have the ways we dealt with rural problems, i.e., our rural policy, changed in any substantial way?

2. 2. Have we had any successes, and substantially affected rural problems?

3. 3. Or, do we continue to propose the same solutions to the same problems?

Consumer's surplus has played an important role in evaluating agricultural price support programs as well as in other applications. Gardner and Wallace provide examples of the use of consumer's surplus in theoretical models, while numerous empirical studies (for example, Anderson, Sedjo and Wiseman, Johnson and Norton) have used the concept to measure welfare costs. Since its introduction by Dupuit and Marshall, the interpretation of consumer's surplus has been subject to change and controversy. In an important paper, Willig demonstrated that consumer's surplus is bounded by compensating variation (C) and equivalent variation (E) and derived rules of thumb showing how closely consumer's surplus approximates these appropriate welfare measures. These rules are compact and readily understandable to researchers doing applied welfare analysis.

A conceptual model is formulated that shows that a downward sloping supply function may exist for a profit maximizing firm facing a cash-flow constraint. The necessary requirement is that at least one factor must be a non-cash input. The model is tested using analysis of variance on two groups of producers from farm record data, one group facing a binding budget constraint the other group not. The results indicate that farms facing a cash flow constraint increase output more than farms not restricted by a cash flow constraint in response to a price decrease.

This study shows that the price-yield correlation is a major influence in determining the skewness of revenue. Therefore, normality for revenue may not be rejected even if the price and/or yield distributions are significantly skewed. Analysis of cotton revenue for Mississippi shows that this can be the case empirically when the correlation between price and yield is moderately negative and the relative variability of yield and price is not too high. Hence, for crops produced in their major production regions where negative correlations between prices and yields are the greatest, revenue distributions may have a greater tendency toward normal.

The Conservation Compliance provision of the Food Security Act of 1985 requires all farmers who farmed highly erodible land prior to the passage of the Act to have a locally approved conservation plan fully implemented by 1995 or lose eligibility for numerous farm programs. Soil loss estimates of various crop, tillage practices, and conservation practices, however, are stochastic in nature. A farm planning model is suggested that allows for stochastic soil loss estimates. The model is compared to other models used in farm level soil conservation studies. The model shows promise as a more acceptable tool in that the farm plans are more likely to be acceptable to the farmer.

Contamination of groundwater by agricultural practices presents a dilemma between protecting a vital resource and maintaining a valuable part of the economy. Policies to balance these objectives are presented. In addition to an historical baseline, policies that ban certain pesticides, taxes and subsidies, and control cultural practices are also considered. A model is developed to reflect the current state of agriculture in Eastern Suffolk County. This model consists of a recursive programming component, which has input for it generated by a stochastic model of Colorado potato beetle pest dynamics and management strategies to control those pests. While income is reduced by banning pesticides, the reduction is small when compared with the improvement in environmental quality. Further efforts to reduce pesticide use resulted in a reduction in potato acreage and incomes, as well as yields. Analysis concludes that improvements in both farm income and environmental quality could be achieved through the adoption of subsidies for low-input conservation crops.

Farm management decision making would be enhanced if solutions to farm problems were offered as a set of feasible alternatives, rather than as a single “best” solution for achieving favorable results. A farm manager could evaluate an array of alternatives against the farm's unique characteristics, which frequently are difficult to quantify and model, and select the most efficient action for the farm. Often, when agricultural economists use optimization, a single optimal solution is presented, with the corresponding best method for implementation. If the optimal solution is not appealing, the farmer does not move toward more efficient practices because alternatives are not offered. It is possible, however, to eliminate black-and-white solutions and increase the choices offered to operators. Two techniques for this are the examination of nearly optimal solutions (NOS) and modeling to generate alternatives (MGA).

This study illustrates the differences in empirical results due to data measurements and estimating procedures when applying the single index market model in agriculture. Gross and net return betas along with systematic and unsystematic risk proportions are estimated and found to be different. The stochastic coefficients model is used to show the difference in beta-risk estimates compared with the traditional fixed coefficients OLS procedure. A third estimating technique, weighted least squares/Prais Winsten method, is also proposed.

While the use of gear restrictions to regulate fishing activity seldom has the objective of improving economic efficiency, it is capable of achieving that result under some conditions. It can also reduce economic efficiency. This paper explores the way several factors affect the sign and magnitude of welfare gains from fishing gear restrictions. These factors include, among others: the fixity or variability of the price of fish and the presence or absence of diminishing short-run average product of effort. Some generalizations are offered regarding the characteristics of fisheries in which gear restrictions are most likely to produce welfare gains.

Logit regression models are estimated to identify factors affecting decisions to enroll farmland in New York's agricultural districts program and participate in the use-value assessment program. The results suggest that the districts law is consistent with preserving the best farmland at the rural-urban fringe and that the decision to enroll in agricultural districts affects in a recursive fashion the decision to participate in the use-value assessment program. Short-term monetary gains are the overriding considerations in applying for use-value exemptions. This may lead to additional erosion of the tax base via tax preferences for agricultural land.