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.

Varying degrees of criticism have been leveled at the U.S. higher education system. The increasing money costs to obtain the bachelor's degree, and degree recipients who are noncommunicative, non-decision makers, and not exposed to the liberal arts have been voiced as deficiencies of the system. The Carnegie Commission has recently recommended reevaluation of our universities’ curricula and philosophies and U.S. Secretary of Education, William Bennett, has crusaded for education overhaul.

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.

Since I have no quarrels with Dr. Koch's excellent and vivid synoptic view, my comments will address the workshop that Bob and I attended at Colorado State University from my vantage point and I will attempt to show parallelisms to Glenn Johnson's views on research methodology as presented in his 1986 book on “Research Methodology for Economists.”

This study constructs a simulation model to evaluate the potential for conflict among residential and agricultural users of water in southern Rhode Island. The model estimates the profitability of irrigation of turf farms and projects the total use and the economic value of irrigation water. The results indicate that the economic value of irrigation water compares favorably with current residential water prices in the area. In addition, substantial demand for irrigation water is projected. Given current rates of growth in turf acreage and residential water use, there appears to be a significant potential for conflict, particularly given the absence of well developed institutions for allocating water among users.

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.

A spatial equilibrium model is used to quantify the effects of a severance tax on the Pennsylvania coal market. Two regions are identified: the Pennsylvania Market Area and an import/export region. The impacts on prices and quantities of coal supplied and demanded are found to be small. Little of the tax is exported from Pennsylvania, with a high proportion of the tax being passed back to Pennsylvania coal producers. Although the tax revenue exceeds the welfare losses in Pennsylvania, this result is very sensitive to the magnitude of the Pennsylvania own-price demand elasticity.

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?

Recent efforts to refine the concept of existence value and to empirically measure it has led to an unnecessary narrowing of the concept of existence value. This paper uses the literature on public goods to argue that existence value is a much broader concept than proposed by several authors. Two commonly used but different empirical approaches to measuring existence values are compared and shown to lead to statistically different decompositions of total value between use and existence categories.

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.

Specification of the variance-covariance matrix holds continuing interest for agricultural economists considering risk programming applications. This research examines alternative expected value-variance (E-V) frontiers constructed using contemporaneous and non-contemporaneous data and two statistical assumptions concerning crop prices and yields. Empirical examples from two locations for different crops illustrate the various assumptions. Considerable differences in the E-V efficient frontiers occur in both empirical settings.

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.

Gauging the impact of recent policy changes, this article analyzes production characteristics and the impact of the dairy assessment for northeastern dairy farmers as compared to other major production regions. Employing a restricted translog variable profit function, returns to size, shadow prices, supply elasticities for milk and livestock as well as demand elasticities for concentrate were estimated. Northeastern, just as midwestern farmers, were less responsive in milk supply and concentrate demand, more responsive in livestock production, and less efficient than their California and Texas counterparts. The dairy assessment affected profits of northeastern farmers later than those of other regions. Negative shadow prices indicated overinvestment into fixed factors.

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.

Uneven monthly milk production (seasonality) is a major problem to the New York dairy industry. This article estimates expected monthly milk production response to a set of hypothetical seasonal price differentials designed to reduce the degree of seasonality. The analysis is based on a random mail survey and farm record data. The results indicate that a seasonal price differential of $1.12 per cwt. (over three times the current differential) would be necessary to completely balance spring and fall production in New York, based on the perceptions of farmers surveyed. Also, producers with better managerial skills are shown to be able to reduce their seasonality at a significantly lower price differential than less skilled farm managers.

The investment potential of warm-season grasses is compared with that of cool-season grasses, with special emphasis on hill-land beef production. In addition to evaluating relative costs and returns for various grazing systems, a sensitivity analysis is conducted. The results are then illustrated for a representative hill-land farm in West Virginia, and both an optimal and a set of quasi-optimal solutions are generated within the linear programming framework. In general, warm-season grasses are found to be a superior investment alternative for hill-land beef producers.

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.

With the passage of the Dairy and Tobacco Adjustment Act of 1983, dairy fanner investment in product research, nutrition education, advertising, and promotion in the United States increased from $60 million to $200 million annually. A key decision faced by boards managing these funds is how best to allocate available advertising funds among the various dairy products. In this paper an economic model is developed that shows the allocation of funds among products that would maximize sales in a given market. The model is applied to the New York City market with results suggesting that over the study period diverting funds from fluid milk to cheese advertising would have enhanced milk-equivalent sales in the market by as much as 1.17% or 8.21 million gallons annually. Alternatively, the model suggests that the same sales level could have been achieved with a different allocation of funds resulting in an estimated 14.6% savings in the amount spent advertising the two products.

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).