THE IAC'S APPROACH TO AGRICULTURAL POLICY*

The main recommendations contained in the IAC's reports on rural references are outlined. The Commission's reasoning on four issues that are widely viewed as important to the formulation of rural policy is examined. The four issues are: assistance to industry; terms of trade; uncertainty and instability; and adjustment policy. Criticisms are made of the IAC's argument on these issues, and some inconsistencies between reports are indicated. It is concluded that the IAC has made a valuable contribution to the discussion of rural policy in Australia even though its recommendations are sometimes sounder than the argument offered to support them.     

THE ANALYSIS OF MEMORY BIAS IN AGRICULTURAL LABOUR DATA COLLECTION: A CASE STUDY OF SMALL FARMERS IN NIGERIA

An analysis is undertaken of daily labour data collected once-per-week for a sample of 129 farm households in Benue State, Nigeria during 1979/80. The purpose of the analysis is to test for the presence of memory bias in these data for which the recall period is up to seven days. The analysis indicates significant between-day differences in hours of agricultural work. This is partly due to the low work input for Sunday but it is also noted that the mean number of hours of agricultural work reported for the day prior to data collection is significantly lower than the means for days further removed from the time of data collection. This finding is taken to be confirmation that a significant level of memory bias exists in the labour data and it is estimated that reported hours of agricultural labour may overstate actual hours of such work by almost 38 per cent.     

SIMULATED MARKETS,FARM STRUCTURE,AND AGRICULTURAL POLICIES*

In this investigation estimated relationships of resource markets for United States agriculture are used in a simulation model to study resource demand and farm income under three conditions: (a) those actually prevailing, including the historic mix of agricultural policies, (b) with technical change in agriculture only half the rate realized, and (c) with a free market. The results indicate that compared with “actual” conditions the environment of slow technical change would have modest effects in slowing the demand for farm machinery and the migration of labor from agriculture. It also would result in greater net farm income in the 1960's. A free market would be accompanied by increased investment in farm machinery and a greater exodus of family and hired labor from agriculture. It also would result in a smaller farm building investment and a considerable reduction of farm income. Since economic conditions are so similar in both countries, the implications of these findings are related to Canadian agriculture on the assumption the same model would show the same outcomes for Canada. Dans cette étude, des rapports estimés des marchés des ressources pour ?agriculture des Etats-Uns sont employés dans un modéle de simulation afin ?étudier la demande des ressources et le revenu agricol net sous trois conditions: (a) celle qui régne réellement, incluant le mélange historique de politiques agricoles; (b) celle qui ne montre le changement technique de ?agriculture qti à la moitié du train realise; et (c) celle qui profite ?un marché libre. Les résultats indiquent que ?enrironnement du changement technique modéré, quand il est compareé avec les conditions réelles, produirait des effets modestes en diminuant la demande pour des machines agricoles et en ralentissant ?exode de la main-?oeuvre de ?agriculture. En outre, cet environment aurait pour résultat un revenu agricole net plus fort dans les années de 1060 à 1970. Vne marché libre serait accompangne de placements augmentés dans les machines agricoles et ?un plus grand exode de la main ?oeuvre familiale et salariée de ?agriculture. Aussi, ceci aboutirait à un investissement moindre dans la construction rurale et à une réduction considérable du revenu agricole. Puisque les conditions économiques des deux pays sont si ressemblantes, les implications de ces conclusions sont rattachées à?agriculture cana-dienne en supposant que le même modéle montrerait les mêmes résultats pour le Canada.     

THE LOW EARNINGS OF AGRICULTURAL WORKERS: A SOCIOLOGICAL APPROACH*

This paper shows that agricultural economists have tended to account for the low incomes of agricultural workers by utilising the economic model which explains low returns to agriculture as a whole. This aproach is called low returns to agriculture as a whole. This approach is called into question by referring to regional data on workers' earnings and farmers' incomes. A sociological approach is outlined which takes account of the degree of choice open to agricultural workers to accept the earnings and conditions of agriculture.     

THE EFFECT OF PRICE REDUCTION AND DIRECT INCOME SUPPORT POLICIES ON AGRICULTURAL INPUT MARKETS IN AUSTRIA

The purpose of this paper is to examine empirically the effects of a shift from price support to direct income policy on agricultural factor markets and aggregate output. By utilising an econometric model for the Austrian agricultural sector, it is argued that the main purpose of this policy change, which is to move producers away from making production decisions in response to income support policies and to facilitate their response to market signals (‘decoupling’), is only partially realised. Switching from price to direct income support would result in little reduction in output, but some positive secondary effects can be observed. Ecological goals could be realised by lessening the degree of industrialisation due to lowering the capital-labour and intermediate input-labour ratios.     

A MICRO-ECONOMIC APPROACH TO THE ANALYSIS OF SUPPLY RESPONSE IN BRITISH AGRICULTURE

Most of the work undertaken on the estimation of supply response in U. K. agriculture has been based on the analysis of time-series data. However, there are a number of problems associated with an analysis of aggregate supply response for British agriculture based on time-series analysis alone. This paper reports on an alternative supply response model being developed at Newcastle in which estimates of aggregate supply levels are built up from optimal programmes for a set of representative farms.     

AN ADAPTIVE CONTROL APPROACH TO AGRICULTURAL POLICY*

It is postulated that some issues of economic policy in general, and of Australian agricultural policy in particular, may be analysed in the framework of an adaptive control model. Policy making is characterized as a rational, sequential decision-making process under conditions of imperfect knowledge in which forthcoming information may be used to learn about the uncertain terms as decision periods pass. Emphasis is given to the linear-quadratic control problem. The paper provides a review of the formulation of a policy problem in the framework of an adaptive control model and of derived policy strategies. An illustrative example is reported.     

AN APPROACH TO THE ECONOMETRIC ESTIMATION OF ATTITUDES TO RISK IN AGRICULTURE*

A simple model is developed relating the debt and asset portfolio of the farm to the production decision, which leads to a small non-linear system of equations. The system is estimated with time-series cross-sectional data from Australian broadacre agriculture using non-linear three-stage least squares. This gives a new method of estimating risk aversion coefficients by using actual behaviour of farmers in a realistic economic environment, rather than games played in artificial situations. Australian farmers are found to be risk averse, and the partial coefficient of risk aversion decreases with wealth and increases with income. The results are consistent with the results of studies by Binswanger in India and elsewhere using a completely different method. This consistency suggests that the partial risk aversion coefficient is a relatively robust measure of attitudes to risk.     

THE USE OF A DECISION MAKER'S UTILITY FUNCTION IN A LINEAR PROGRAMMING ANALYSIS OF AGRICULTURAL POLICY*

A decision theoretic approach to agricultural policy decision making is examined to discover whether a utility function of an Australian Wool Corporation decision maker can be established and, if so, whether this can be used to improve the policy analysing performance of an agricultural sector linear programming model. After discussing the theoretical requirements of the utility function elicitation and the elicitation procedures, the characteristics of the resulting functions are examined. A means for its inclusion in a linear programming framework is described and some analysis of policy is carried out. The general conclusions are that the relevance of the agricultural sector analysis is enhanced by the use of such a utility function.     

A FORMAL APPROACH TO AGRICULTURAL POLICY

Two of the major objectives of UK agricultural policy are the need to save imports and to effect a transfer of income to the farm sector. The paper presents a way of comparing the cost by alternative means of price support. The wheat market is used as an example. The deficiency payment policy is seen to be more efficient as a means of income transfer than a variable levy-threshold price scheme or a minimum import price programme, though the main difference is in the incidence of the burden. The minimum import price is inefficient relative to the other two policies if the objective is to save foreign-exchange. When the effects on markets using wheat us an input item are considered, the deficiency payment policy becomes far superior to the others in terms of cost. It is pointed out that a single policy cannot achieve both objectives satisfactorily, and a possible solution using a mixed policy is suggested.     

AGRICULTURAL POLICIES IN OECD COUNTRIES: AGENDA FOR THE FUTURE

Market disequilibria, the economic costs involved and the resulting international tensions have led to a political agreement on the need to reform agricultural policies in the direction of market orientation. However, progress has been limited so far. The present period is decisive in requiring the concrete implementation of the agreed reform principles, through a combination of domestic and international actions. In this process of reform, agriculture will be faced with new issues, reflecting the overall structural adjustment of economies and their growing internationalisation.     

THE EROSION OF AGRICULTURAL EXPORTS IN AN OIL ECONOMY: THE CASE OF NIGERIA

After several years of oil production and exports with attendant revenue influx, the sector is yet to make a significant impact in Nigeria's economic growth. Contrary to the hopes and expectations that greeted the oil discovery, the non-oil export sector of the economy, more specifically the agricultural sector, has been declining consistently with further increases in oil exports. This paper is intended to provide an empirical analysis of an aspect of structural change that has taken place in the Nigerian economy. The hypothesis investigated is that an increase in oil exports results in higher relative prices on non-tradeable to tradeable goods and an appreciation of the domestic currency, hence a loss of the competitiveness of the agricultural export sector in the international market. This phenomenon, popularly known as the ‘Dutch disease’, has been vigorously discussed in the United Kingdom, Norway and the Netherlands, has also received much attention from Australian economists in relation to minerals.     

AN APPROACH TO UNIVERSITY TEACHING IN AGRICULTURAL ECONOMICS

In our complex industrialised society there can no longer be a clear cut distinction between education and the training for a profession. Pressure from society for highly specialised knowledge and from students for satisfaction of vocational needs has resulted in the greater development of applied subjects. The aim of teaching in Agricultural Economics is to present a variety of subject matter within the framework of cohesive degree structures consistent with an academic discipline, while as far as possible fitting a student for a professional career in the field of Agricultural Economics. In the ever widening range of professional activity a distinction which has relevance to teaching can be made between the practising agricultural economist and the academic agricultural economist. For the former some professional training has to be incorporated in the first degree scheme. The need in industry and government is for economists who are prepared to make direct economic appraisals and the practising economist will therefore be involved in problem solving in a sphere where non-economic consideration have also to be weighed. He can best be fitted for his environment if he is aware of the interaction between economics and other relevant disciplines.