THE DEMAND FOR FERTILISER IN THE UNITED KINGDOM

Among the policy alternatives for limiting fertiliser use, a tax on chemical fertiliser is administratively the easiest option. Its efficacy depends partly on the responsiveness of fertiliser demand to price changes. This paper reviews the empirical methodologies available for estimating the price elasticity of a derived demand and presents the results of several econometric models. The econometric analysis shows that the response of UK fertiliser demand to own-price changes is greater than has been assumed on the basis of programming studies of arable farms. This result establishes a necessary but not a sufficient condition for an effective fertiliser tax. The full impact of a fertiliser tax over the longer term depends on the extent to which technical change is driven by trends in relative prices.     

DYNAMIC INTERRELATED DEMAND FUNCTIONS FOR FACTORS OF PRODUCTION AND THE AGGREGATE PRODUCTION FUNCTION IN UNITED KINGDOM AGRICULTURE

Taking the price situation as given in product and factor markets, a non-linear differential equation model of gross output, employment, capital accumulation, and gross input for united Kingdom agriculture is derived by incorporating internal adjustment cost functions into the representative decision-maker's objective function, and estimated using a discrete approximation. The results are consistent with efficient use of resources, but further incentives for capital investment and a greater exodus of labour could upset this. Adjustment costs as estimated account for 2.6 per cent of the value of output; those associated with net investment for 1.8 per cent, and those associated with employment and gross input for 0.57 and 0.23 per cent respectively.     

THE DEVELOPING FRAMEWORK FOR THE ECONOMIC EVALUATION OF FORESTRY IN THE UNITED KINGDOM*

This paper evaluates the economic worth of forestry projects in the United Kingdom by using two different public sector investment appraisal criteria; the traditional discounted cash flows and the recently-established sum of discounted consumption flows. In the latter, in view of the intergenerational distribution aspect of government projects, the conventional rules are modified, enabling the decision-maker to treat all generations, present and future, in an equitable manner. Forestry is an excellent example to highlight the issue that many public sector investment projects re-distribute income between generations. Its long gestation periods make it obvious that there is more than one generation involved in the venture. In this analysis a one hectare plantation of Sitka spruce, class 20, is considered for a single 50-year rotation. Three different interest rates, 10 per cent test rate of discount, 5 per cent required rate of return, and 3 per cent forestry target rate are used under 4 different assumptions regarding the future price of timber.     

THE ECONOMIC SURPLUS OF AGRICULTURE IN THE UNITED KINGDOM*

The economic surplus of an industry is defined as the difference between its real product, and the real income accruing to it. The surplus from U.K. agriculture measured at 1964/65–66/67 prices is estimated to have risen by about 20 million per year in recent years. The absorption of this surplus by other sectors is identified and an approximate indication is given of the equivalent surpluses and deficits of other industry groups. The economic surplus from agriculture is transferred principally through changes in relative prices, the necessity of which tends to create an unavoidable minimum rate of inflation. There is an international equivalent of these transfers of real income through price changes, but without the institutional constraints on the market which in the domestic economy preserve some measure of equity in the distribution of income.     

ANOTHER LOOK AT ECONOMIES OF SIZE IN CATTLE FEEDING*

This article is an outgrowth of a study that failed to find any economies of size in total cost of feeding cattle. It examines a number of cattle feeding studies that reportedly found economies of size and explains why the author is not willing to accept their findings. This article is not concerned with the external economies of size that may or may not exist in cattle feeding Cet article est le résultat ?une recherche qui n'a pas réussit à trouver de grands économics dans le prix total de ?engraissement de bétail. II examine un certain nombre ?étude sur ?engraissement de bétail que rapporterent (dit-on) de grands economies el il explique aussi pourquoi ?auleur n'est pas prêt à accepter leurs conclusions. Cet article ne se concerne pas avec les economies de grandeur extérieur quipeuvent ou nepeuventpas exister dans ?engraissement du bétail.     

A FURTHER STUDY IN THE DEMAND FOR FATSTOCK*

This paper has been prepared in an attempt to interpret some of the price-supply complexities in the Pork, Beef and Bacon markets. Previous writers have tackled the subject working out price flexibilities on a three monthly, half-yearly or annual basis. It appeared that the price-supply relationships could, with advantage, be examined on a monthly basis-the statistical significance of the results would not be as high as with previous work, but it was felt that the contribution would be worthwhile so long as the conclusions were supported by circumstantial evidence. The pork market has been examined in detail and evidence found suggesting that during the period 1955 to 1965 there have been two shifts in the demand curve, both appearing to result from a coincidence of a period of high pig numbers with one of low beef supply. The beef analysis did not reveal anything of note in the way of shifts in the demand curve, but there was a very marked seasonal pattern of prices in the period 1955 to 1960 with some of the months of high prices having a temptingly low price flexibility suggesting scope for profitable expansion of supplies during these months. The main months when this occurred were after the peak period of fattening stock from yards and before grass fed stock come on the market. Supplies have increased rapidly in this period and moved away from the last three months of the year when price flexibility was large and prices relatively low. The bacon analysis has been done at the wholesale level rather than at the farm gate. Price flexibilities are high and in practically every month of the year expansion in supply results in a decrease in total value of sales. Unless a change in demand can be brought about there would appear to be little scope in expanding total supplies of bacon. The best course for the home producer would appear to be to attempt to expand the U.K. share of the market.     

MODELLING FERTILISER DEMAND IN THE REPUBLIC OF IRELAND: A COST FUNCTION APPROACH

A translog cost function was used to obtain estimates of the own- and cross-price demand elasticities for nitrogen, phosphorus and potassium. The results indicated a mean value for the own-elasticities of —1.0, —0.6, —0.5 for N, P and K respectively. A test of the hypothesis of nutrient substitution was attempted. The test indicated that P and K were substitutable for N but not for each other. This result was corroborated by a zero elasticity of substitution estimate between phosphorous and potassium. A corollary of the results was the rejection on empirical grounds of the Cobb-Douglas specification for the input demand functions. The latter function has traditionally been used in analyses of this nature.     

METHODS OF ASSESSING AGRICULTURAL DEMAND FOR WATER IN THE PRAIRIES*

It is vital that policy makers have good evluations of society's needs for water development and regulations. However, in order to make valid normative assessments, there must first be more adequate forecasts of attainable water use patterns. Conditional forecasting is suggested as being most appropriate. In this paper an outline of factors affecting agricultural water use is provided. A discussion is given of three approachs to conditional forecasting: extrapolation of production requirements, fitting production functions by regression, and programming. Advantages and disadvantages of each are discussed with attention to methodological details. Precautions are outlined for aggregation procedures and the evaluation of results. Recommendations are made on some basic issues affecting water researchers, and an attempt is made to identify iterhs needing priority attention. II est, essentiel que les planificateurs s'occupant de ?aménagement el de la règlementation d, es eaux aient unc bonne évaluation des besoins de la société. Cependant, afin de produire des évaluations valables nous devons avant tout oblenir des prévisions adèquales des systèmes accessibles de ?ulilisation des eaux. Les prévisions conditioners sont suggéreés comme étant les plus appropriées. Dans cetie étude, nous fournisons les données générates sur les différents facteurs affectant Ǐulilisation des eaux en agriculture. Ensuite, nous donnons une discussion de trois méthodes sur la calculation des pronostics condilionnels, lesquelles sont ?extrapolation des exigences de la production par régression el la programmation. Les avantages el désavantages de chaque méthode sont discutées avec attention aux détails méthodologiques. Des mises en garde sont données sur les procéd is ?assemblages el de ?évaluation des résultats. De plus, des recommandalions sont faites sur des issues fondamenlales qui affectent les chercheurs dans le domaine de ǐutilisation des eaux et un effort est fourni afin ?identifier les details demandant une attention prioritaire.     

THE PROBLEM OF THE SIZE OF THE MILK INDUSTRY IN THE UNITED KINGDOM

The Paper seeks first of all to examine statistically the “desirable size” of milk production in the U. K. under the policy laid down by Government of confining the industry to a narrowly defined liquid market. A basis analysis of trends and seasonality in monthly milk output is presented demonstrating the changes in seasonality over the years and its irregular variations. An analysis of variance of liquid sales and total output between weeks in the trough months forms the basis for calculating liquid trough requirements over and above average daily sales. From the trough requirement an annual requirement is calculated from the trend analysis suggesting a need for 2,285-2,416 m. g. to satisfy the market in all circumstances. Finally, certain major assumptions of the analysis which themselves are considered topics for further research are spelt out and some consideration given to the concept of the desirable size of industry itself     

THE DEVELOPING FRAMEWORK FOR THE ECONOMIC EVALUATION OF FORESTRY IN THE UNITED KINGDOM — A COMMENT

The application of Kula's sum of discounted consumption flows method to forestry investment gives a more favourable result than NPV, but leads to some curious consequences. In particular, the immediate future generation may not be provided with a timber resource by the present generation, while being expected to provide such a resource for its own successors. The method does not in fact treat future generations equitably: downward revision of the social discount rate, possibly to zero, is a better means of achieving this objective.     

WEAK SEPARABILITY AND A TEST FOR THE SPECIFICATION OF INCOME IN DEMAND MODELS WITH AN APPLICATION TO THE DEMAND FOR MEAT IN AUSTRALIA*

Most studies of the demand for meat in Australia have used some measure of total income or expenditure, but two recent studies have assumed weak separability of a meat group and used expenditure on the meat group instead. These specification differences are of interest to the extent that they affect the economic interpretation, goodness-of-fit, elasticity estimates, predictive performance or hypothesis tests in empirical demand equations. In this paper, non-nested hypothesis testing procedures are used to test the alternative specifications of the income variable and the hypothesis of separability. The results favour the use of the expenditure variable implied by separability but are mixed concerning whether separability holds.     

PRICE TRANSMISSION IN THE UNITED KINGDOM YELLOW FATS MARKET IN THE PRESENCE OF IMPERFECT COMPETITION

The yellow fats sector comprises butter, margarine and a number of newer dairy-and low-fat spreads. In analysing the transmission of policy prices (e.g. the intervention price of butter) in this sector, which is characterised by concentrated processors and retailers, it is unrealistic to assume that marketing margins are competitively determined. The empirical estimates in this paper suggest that, since the mid-1980s, processors and retailers of margarine take into account the price of butter when setting margarine prices, which they can only do if they possess market power. This implies that the benefits of CAP reform (in the form of lower butter prices) may be seriously underestimated if the resulting fall in margarine prices is ignored; the increase in butter consumption would be overestimated.     

RELATIVE PRICE VARIABILITY AMONG AGRICULTURAL COMMODITIES AND MACROECONOMIC INSTABILITY IN THE UNITED KINGDOM

This paper develops measures of relative price variability among agricultural commodities in the UK farm sector for the period 1956-88. Econometric tests of the hypothesis that relative price variability is positively correlated with instability in the macroeconomy are carried out. The results indicate that UK agricultural commodity prices become more volatile relative to one another when the economy-wide inflation rate increases and when aggregate output becomes more variable. These findings suggest that UK producers and consumers of domestically grown farm products experience increased risk and uncertainty in their production and consumption decisions during periods of macroeconomic instability. The effects of UK entry into the European Community are also examined; no evidence is found to suggest that adoption of the Common Agricultural Policy reduced year-to-year relative price variability among agricultural commodities.     

TESTING FOR CHANGES IN THE STRUCTURE OF THE DEMAND FOR MEAT IN AUSTRALIA

Quarterly data from 1962 to 1983 for beef, lamb, mutton, pig meat and poultry were used to test for constancy in the structure of meat demand in Australia. The cumulative sum, cumulative sum of squares and Farley-Hinich tests were applied to a range of models to ensure that any rejection of stability was not due to an inappropriate functional form or omitted dynamics. Little evidence was found of a marked swing away from consumption of any meat, with the exception of mutton. The results suggest that changes in prices and in total consumer expenditure are far more important than changes in tastes as determinants of meat consumption.