A NEGATIVE INCOME TAX AND LOW INCOME FARM FAMILIES*

An efficient procedure is proposed for making welfare payments to low income farm families. This is a negative income tax. It uses the income tax system for linking directly transfer payments to income needs, without unduly adverse effects on resource allocation. The negative income tax proposal is considered in relation to rural adjustment and reconstruction.     

THE INCOME AND CONSUMPTION EXPERIENCES OF A SAMPLE OF FARM FAMILIES*

The way in which the consumption of farm families is adjusted to fluctuations in income has important implications at the national, regional and farm levels. In this paper, hypotheses about the consumption of farm families are examined using data from 16 families in a wheat-sheep region of New South Wales for the eight-year period 1968/69 to 1975/76. The results of the study indicate that lagged effects are important in explaining consumption by farm households. It was not possible to partition these lag effects between partial adjustment and normal income influences. Estimates of the short-run (one-year) marginal propensity to consume (mpc) were quite low, ranging from 0.13 to 0.16. The best estimates of the long-run mpc ranged from 0.19 to 0.25.     

PARTICIPATION OF FARM OWNERS IN FARM AND OFF-FARM WORK INCLUDING THE OPTION OF FULL-TIME OFF-FARM WORK

The option of working full-time off the farm is generally neglected in farmers' time allocation studies. In this paper, a generalised multinomial logit model, in which the choices are working only on the farm, allocating the time between farm and off-farm work, or working only off-farm, is estimated using Israeli data. The results show that the explanatory variables have significantly different effects on utility for off-farm workers who also work on the farm versus those who do not. There seem to be incentives to work full time rather than part time off the farm. These conclusions cannot be reached if farm owners who do not work on the farm are excluded from the estimation. The conclusions imply that policy intended to encourage pluriactivity could instead result in increased specialisation in full-time farm work or full-time off-farm work if it does not target the right incentives.     

THE VARIABILITY OF NET FARM INCOME*

The movements in, and variability of, net farm income over time have considerable impact on the agricultural sector. But variability of income is quite dificult to measure in a satisfactory and objective way. In this note, a previous study (by R. B. Jones) of the variability of net farm income is sunimarised and discussed. Following this, a different approach, involving the use of various time series, is considered. Although the period covered differs from that used by R. B. Jones, his general conclusions remain unaltered. However, the analysis does suggest a definite rise in relative variability since 1963–4. It is felt that the alternative method used has some advantages over the other methods, especially in enabling tests of significance to be used to assess if observed changes are significant, and if the basic underlying assumptions are tenable.     

A NOTE ON THE PIG CYCLE IN AUSTRALIA

Spectral analysis is used to test hypotheses relating to regular four-year cycles in the Australian pig industry. The data point to the existence of annual cycles in production, slaughterings and prices, but four-year cycles are only evident in pig prices. Relationships between these series are also examined by cross-spectral analysis     

A NOTE CONCERNING THE EFFECT OF INCOME DISTRIBUTION ON DEMAND

This note attempts to develop a method of measuring the impact of changes in income distribution on future demand, an important consideration when a country is experiencing a rapid rise in per capita income. Cross-sectional analysis utilising the Lorenz coefficient focuses on the impact of income inequality on the demand for mutton in urban Iran. It is hypothesised that long-term projections of demand using traditional methodology will over-estimate future consumption as a result of failure to consider deterioration in income distribution. The hypothesis is substantiated for this example. It is concluded that current income distribution and the alterations in income inequality which may accompany increased per capita income must be taken into account when estimating changes in aggregate future demand.     

THE COST-PRICE SQUEEZE ON AUSTRALIAN FARM INCOME

Relative price movements for major agricultural commodity groups are reviewed. Estimates of the movement in real farm income per farmer are presented for Australian agriculture over the period 1949 to 1969, and for the sheep industry for the period 1953 to 1967. Increased productivity has offset the adverse price movements experienced by farmers over the period examined. The effect of the cost-price squeeze on farm investment and adjustment is discussed. The continuing cost-price squeeze has not prevented sustained investment by farmers.     

A FURTHER NOTE ON THE MEASUREMENT OF EFFICIENCY AND ECONOMIES OF FARM SIZE

Efficiency has a precise meaning in the case of the optimally conditions associated with the perfectly competitive norm. However, the efficiency concept loses a precise meaning and much of its usefulness under real world conditions of uncertainty and costly information since efficiency is inescapably evaluative and cannot be defined and measured independently of the goals and knowledge of the decision maker. Similarly, the concept ‘economies of size’ is shown to lose its normative significance when specialised resources and other unique aspects of the firm are taken into account. Although the economist has no objective procedure by which to measure the efficiency of entrepreneurial activity, it is argued that in the real world of uncertainty and disequilibrium, there is always scope for entrepreneurial activity in the sense of unexploited profit opportunities.     

EFFECTS ON FARM INCOMES AND RURAL LABOUR OF A RELATIVE INCREASE IN WAGES*

We use the concept of the elasticity of farm incomes with respect to changes in input prices to analyse the effects of a large increase in relative wages on selected measures of farm incomes. In order to estimate the elasticity of farm incomes we have to estimate elasticities and cross-elasticities of demand and supply for farm labour and capital. The estimates of elasticity of demand for operator and hired labour allow us to calculate the impact of a rise in wages on numbers of farmers and hired labour employed in agriculture.     

A QUARTERLY MODEL OF AGRICULTURAL INVESTMENT IN AUSTRALIA*

The aims of this study were (a) to attempt to develop a quarterly model to explain aggregate farm investment in Australia, and (b) to examine the concept of the implicit rental price of capital services as a method of taking account of taxation concessions in an investment equation.     

AGRICULTURAL DEVELOPMENT AND FARM INCOME DISTRIBUTION IN LDCs

There were remarkable and sustained increases in agricultural and food production in the developing countries over the last three decades. But the fruits of this progress were not shared by all, and many remain in poverty. Some believe this due to the unequal distribution of benefits and accordingly claim that an agricultural strategy which focuses on reducing disparities of income, assets and access is the most important objective for agricultural development. This approach is justified by claims of wide and increasing disparities of income in the agricultural sectors of LDCs. This paper looks at the evidence for such claims and finds that they cannot be supported by hard evidence. Indeed, the few valid studies of agricultural income distribution show modest disparities. Accordingly, redistribution strategies, especially those aimed at uni-modal farm sectors, are rejected as unnecessary, undesirable and unachievable (without destroying the main spring of agricultural progress). On the contrary, it is urged that growth in productivity, output and incomes should be the dominant development objective to encourage, as many examples show, the enterprise, ability and energy of small farmers and their families. Such a strategy produces a degree of unequal distribution of benefits which reflects the distribution of personal qualities and endowments and acts as an incentive to their exercise. To keep disparities within bounds, agricultural policies relating to pricing, extension, credit, research and so on should aim at widening the number of small farmer beneficiaries of agricultural development.     

SENSITIVITY OF FARM PLANS UNDER RISK-AVERSE BEHAVIOUR: A NOTE ON THE ENVIRONMENTAL IMPLICATIONS

This study demonstrates that the intensity of farm-level land use can be extremely sensitive to minor reductions in expected farm income when the risk-averse farmer makes utility maximising decisions. The study uses directly elicited utility functions for farmers in the North of England in conjunction with MOTAD generated E, V frontiers. The results imply that instability encourages the use of less intensive farming methods and therefore could actually assist the achievement of environmental policy goals.     

SOME FEATURES OF FARM INCOME AND STRUCTURE VARIATIONS IN REGIONS OF THE UNITED KINGDOM

Farm income trends and developments in farm structure have varied within the UK in the last decade. While Wales and Northern Ireland have similarities in form structure, agricultural production has risen to a much smaller extent, and farmers have suffered more severe net income reductions, in Scotland and Northern Ireland than in England and Wales. The net incomes of Cropping farms rose faster and, in England, have remained much higher than those of Dairy or Livestock farms. Large numbers of small farm businesses depend on beef cattle and sheep production and have limited development prospects. As most of their occupiers are unlikely to find other employment, structural problems will persist and policy adjustments are suggested to enable agriculture to contribute more to the economy in remote and depressed localities.     

THE ANALYSIS OF NET FARM INCOME: AN EXAMINATION OF FARM MANAGEMENT SURVEY DATA

The practical significance of the conventional “net farm income” is elusive. It would be useful to have an accepted method of dividing “management and investment income” into its recognised Components—managerial salary and return on tenant's capital. One is a residual if the other can be calculated, and both alternatives are considered. An empirical formula is suggested for estimating the managerial salary which may be imputed to the farmer, taking account of his total turnover, his labour bill and his net farm income. This formula is then applied to Farm Management Survey data, for individual farms and for groups of average, high and low performance (output per £ input). The method may permit closer analysis of relative profitability.     

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.     

FARM INCOME POLICY IN ONTARIO: REVIEW AND ANALYSIS

This paper discusses and evaluates "The Challenge of Abundance" [l]. The recommendations of the Ontario Farm Income Committee are reviewed, the assumptions implicit in the recommendations are presented and the shortcomings of the Report discussed. The author, while finding a number of sound recommendations, ques the extreme emphasis on government intervention and control; the lack of research documentation; the failure to adequately comprehend the dependence of Ontario farmers on inputs from and sales to the rest of Canada and foreign countries; and the absence of a program to assist the majority of farmers who would no longer be allowed to produce food.
LE REVENU AGRICOLE EN ONTARIO: REVISION ET CRITIQUE — Cet article discute et évalue "The Challenge of Abundance" [l]. Les recommandations de la commission ontarienne sur le revenu agricole sont examinées, les assumptions dans les recommandations sont présentées, et les imperfections du rapport sont discutées, Tout en constatant plusieurs recommandations sérieuses, l'auteur interroge l'appuie intense donné à l'intervention et l'autorité govememental; le manque de documentation; l'incompréhension vis à vis la dépendance du fermier ontarien dans la vente au reste du Canada et à l'étranger; et l'absence d'un programme qui assisterait la majorité des fermiers qui ne sont plus permis de produire les aliments.