Strong support for the biofuels program in the USA is expected to influence dedicated biomass crops production. Their production is expected to compete for resources with traditional crops and in turn influence commodity prices, economic surplus, and trade balance. Implications of dedicated biomass crop as bioenergy feedstock, alternative energy policies, and government initiatives on agricultural producers and consumers are evaluated using a national quantitative model, AGSIM. Economic impacts include effect on cropping patterns, crop prices, fertilizer prices, consumer and producer surplus, and trade balance. Economic analyses based on alternative assumptions related to marginal lands currently in conservation use returning to crop production as well as biomass crop yields are conducted. Results indicate that present biofuel policies are associated with large costs to consumers in terms of increased commodity prices and negative trade balance. Increase in net farm income is offset by decrease in consumer surplus. The results represent a robust set of economic impacts, which suggests policy makers to consider the unexpected economic consequences of bioenergy policy and warrants consideration of multiple alternative energy sources to achieve a sustainable energy goal.

Four articles have been published in this Journal about the historic cattle trial, Pickett v Tyson Fresh Meats, Inc., in which Plaintiff cattlemen alleged that Tyson/IBP—the buyer—used captive (contracted) supplies of cattle to manipulate the cash market in violation of the 1921 Packers & Stockyards Act (PSA). The first article gave a Trial's eye view by David Domina who served as co-lead counsel representing Plaintiff cattlemen. Domina's article led to a published comment by Thomas Green who was the lead attorney representing Tyson during the Trial phase of lengthy legal proceedings. Green alleged that Domina's article was "littered with rank speculation and baseless opinion." Domina countered that "proof is not litter, and evidence is not rank speculation" and that Green's commentary was "abusive." The adversarial exchange between Domina and Green was followed by another advocacy article in which William Rosales maintained that Pickett "represents an opportunity for the judiciary to reform the meatpacking industry (and) awaken the (PSA's) intended power to dethrone the economic kings of the meatpacking industry."After a five week Trial in Federal Court, the Jury found Tyson/IBP guilty on all counts and assessed actual damages of $1.28 billion over 2/1994 -10/2002. Justice for Plaintiff cattlemen was short, as the Trial Judge set aside the Jury's verdict—a rare but not unprecedented legal action—and entered summary judgment for Tyson. The Eleventh Appellate Court subsequently sided with the Trial Judge. On March 24, 2006, the United States Supreme Court denied without comment Plaintiff's Petition to rehear the case, thus ending legal activities in Pickett v Tyson and effectively killing similar legal action pending against two other major beef packers, Excel (Cargill) and Swift (ConAgra).This article emphasizes three significant and troubling legal and economic issues from the historic litigation: (1) the Courts' narrow and extreme interpretation of the antitrust rule-of-reason; (2) the Courts' endorsement of a "meeting the competition" defense, and (3) whether the Courts inserted themselves above the Jury as fact-finders in the case, contrary to the 7th Amendment to the U.S. Constitution that establishes the Jury as the only fact-finder in civil litigation.In essence Pickett was filed under the Packers and Stockyards Act, tried under Sherman and Clayton antitrust law, and overturned, in part, under the Robinson-Patman Act.

Agricultural policy objectives provide green payment incentives for farmers to initiate practices with environmental benefits. Velvet beans planted as a cover crop offer an alternative for southeastern peanut farmers to control nematodes without chemicals, while increasing soil fertility. Commodity programs provide government payments that are essential to rural economies of the southeast.

Switchgrass has been identified as an attractive biomass crop, but only a limited amount of research has been conducted on commercial production, processing, and delivery of this crop to processing...

Linear programming and enterprise budgeting were used to analyze rotation options, including an energy crop (intercropped grain sorghum and velvet bean), for a representative south Alabama farm. The energy crop was priced beginning at $30.00 per ton, at which price it did not enter the solution. At prices of $41 per ton or higher, the energy crop was produced.

The textbook monopsony model implicitly assumes that the monopsonist "lets" competitive suppliers move out their marginal cost curves and that the price for a given quantity is thus equal to industry marginal cost, presumed to be at or above average cost. It is obviously desirable, however, for the buyer to pay the lowest price possible for a given quantity. A single buyer, unlike competitive buyers, could use dictatorial market power to force suppliers into an all-or-nothing decision in which their alternative was to supply the dictated quantity at the stated price, or supply nothing at all. Exertion of such buyer power can be seen to force competitive suppliers off of their usual (marginal cost) supply curve and down to the average cost curve, which Friedman defined as the all-or- nothing supply curve. This article extends the textbook monopsony model to account for the all-or-nothing supply curve, and also revisits the textbook case for a U-shaped average cost curve. Resource allocation, distributional, and social welfare consequences of each case are graphically developed. Compared to the competitive norm, the traditional textbook monopsony shows a net social welfare loss, higher final consumer prices, and lower (but generally positive) profits in the competitive input industry. In contrast, a monopsonist's exploitation of the competitive industry's all-or-nothing supply is shown to lead to a competitive allocation of resources; however, the monopsonist expropriates all of the profits in the competitive supply industry. To the extent that the competitive market allocation of resources and income is used as a standard for social welfare, as in some antitrust law, the exploitation of the all-or-nothing supply by the monopsonist results in an efficient allocation of resources, but the allocation of income is unfair.

Frank Knight made an important distinction between risk and uncertainty—a distinction that continues to be blurred in economists’ writings to this day. At one extreme is pure risk where probabilities can be numerically assigned exactly from objective, physical data. This is actuarial risk. At the other extreme is pure uncertainty, which Knight claimed is unanalyzeable. Random variables for many economic problems appear to fall somewhere between these two extremes, but in the rapidly changing global economic system, random variables appear to be characterized by more and more uncertainty. Yet, methods and methodology typically employed in theoretical and empirical analyses of economic systems were developed for the case of pure risk then imposed on problems characterized by uncertainty. Systems modelers need to better recognize the uncertainty dimension of many problems, including the role of uncertainty in the potential instability of market systems and in Knightian welfare economics. New methods and methodology may be required to properly model uncertainty.

The presentations by Skees et al., and by Ray et al. dealt exclusively with price and yield risk, while the paper by Knutson et al. dealt substantially with risk. Given that this session is titled “Implications of Changing Farm Policy for the South, ” the fixation of these presentations on “Risk,” “Risk,” and “Risk” is somewhat curious and overemphasized, in my opinion. I believe that there are other implications of farm policy changes that are equally as important, if not more important, than price and yield risk to southern agriculture. These include implications concerning: (a) the structure of production agriculture, (b) increased planting flexibility, and (c) the continuing uncertainty about the future of the peanut and tobacco programs. Farm program changes will accelerate the transition of inefficient mid-sized farms specializing in program crops to small/life-style status, to efficiendlurge-size status, to a niche market, or out of farming. Climate and natural resources in the Southeast suggest movement toward a bimodal distribution of farms, with small hobby or life-style farms, and large efficient farms. Farm program changes will accelerate movement toward such a bimodal distribution of farm sizes, thereby increasing the economic efficiency of southern agriculture. Increased planting flexibility will have two major effects in the Southeast. First, it will stimulate the movement of cotton back to the region. With boll weevil eradication, much of the Southeast now has a comparative advantage in production of cotton. Because of this,

AbstractFinite mixture estimation (FME) is compared to estimated generalized least squares (EGLS) in the estimation of economies of size and production cost frontiers for Alabama dairy farms. FME provides several unique insights into the economic forces behind recent changes in Alabama's dairy industry. FME provides estimation of a stochastic average cost frontier with known statistical properties, which it was not otherwise possible to obtain using available stochastic frontier estimation packages.

Economic effects of agricultural policies estimated with deterministic models may be biased because certainty equivalent requirements are not satisfied in the agricultural sector. This article compares numerically estimated expected values of key aggregate economic variables for two levels of target prices (i. e. supported price level) from deterministic and stochastic formulations of AGSIM, which is a large-scale econometric simulation model of crop and livestock production in the United States.For nominal target prices set by the 1990 Food, Agriculture, Conservation and Trade Bill (FACT), the deterministic formulation underestimated the level of deficiency payments (the difference between target price and market price) by a cumulative total of $800 million (6.2%) over the 5 year life of the Bill compared to estimates from the stochastic model. For target prices 10% below the FACT levels, the deterministic model underestimated deficiency payments by $1220 million (36.8%). Much of the economic impact estimation bias can be attributed to price received by participating producers under FACT having a probability distribution truncated at the target price, which is a strong departure from the certainty equivalent requirements needed to have mean outcomes from stochastic models equal outcomes from their deterministic counterpart.Estimated changes in deficiency payments from lowering target prices by 10% were overestimated by $420 million (4.3%) with the deterministic model, which suggests that deterministic models are less biased for estimating the change in deficiency payments than in estimating the level of payments.The bias associated with mean values of other variables, such as crop prices and farm income, was much less in percentage terms than bias in estimates of deficiency payments.

Dynamic programming techniques were used to evaluate the effects of alternative levels of normal flex acreage requirements on a Midwestern corn-soybean farm and a Southeastern cotton farm. Results indicate that increasing normal flex acres from the current level of 15 percent to 35 percent would provide inducement for farmers in both regions to plant more soybeans. In general, the cotton farm incurs considerably higher expected losses from the change. Thus, there are unequal regional consequences of such a policy change.

The research reported here measures the effects on the probability distribution of the present value of after-tax income of several different cropping decision systems in Alberta. Dynamic flex-cropping decision rules generate higher levels of returns and less downside risk than all other alternatives considered here. Dynamic decision models which ignore taxes and the stochastic dynamic nature of prices produce suboptimal results relative to models which consider these factors and relative to a fixed rotation decision rule. This suggests that careful attention must be paid to the factors included in these models if they are to generate rules which will improve the risk-return trade-off for farm managers.

Mixed integer programming and dynamic programming models were used to obtain the implicit economic value of the initial endowment of base acreage on a cotton farm. While low levels of initial base have almost no impact on land value, high levels can be worth a considerable premium, with the implicit value of additional initial base endowment increasing at an increasing rate. This pattern of increasing implicit value can be explained by provisions of the farm program allowing base to be created by a landowner who develops a planting history in a program commodity.

Dynamic programming techniques are used to evaluate effects of uncertainty about continuation of farm programs on planting decisions during the last year of the 1990 Farm Bill. Results indicate farm-level decisions are affected by uncertainty only when the farmer's subjective probability of the continuation of farm programs is very low. The optimal value functions in different versions of the model can also be used to estimate the implicit value of base acreage.

AbstractOptimal crop and livestock mix was determined for a representative Alabama farm using a dynamic programming model. Results indicate that decisions concerning livestock production are highly influenced by the amount of cotton base available on the farm. In most cases, increasing cotton base results in less cattle production. The triple base provisions of the 1990 Farm Bill, however, may give some cotton farmers an incentive to produce more stocker cattle during the winter months. Research results also indicate that the availability of farm programs can alter the optimal enterprise mix on a farm with no beginning base in cotton.

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