A characteristic of our rural policies is that we seem to treat farm policy and other rural policy as if agriculture and the rest of the rural economy and society are separate. Literature from each perspective tends to ignore the existence and context of the other. There has been enough change in the rural context, however, to require a different approach to rural policy analysis and formulation. We must start from a comprehensive view of the rural economy, including both the agricultural and nonagricultural rural economies. The paper discusses issues that have changed the rural policy context: the changed rural economic structure, macro forces, farm-nonfarm interdependence, and the political arena. These changing contexts create new opportunities for rural policy formulation. The paper concludes by suggesting that agricultural economists will contribute more to systematic knowledge and policy formulation if they base analysis on the changed objective conditions in rural areas, and utilize more theoretically-based analysis.

This paper discusses a paper presented by Stephen Smith at the 1995 annual meeting of the Northeastern Agricultural and Resource Economics Association. Smith presented key issues that have changed the context for rural development policy in the United States. We propose that the induced innovation model of economic development can be used to identify a variety of ways that LGU's can contribute to developing and delivering appropriate rural economic development programs. These ways include assisting rural communities in identifying comparative advantage, identifying and/or providing relevant resource persons, delivering appropriate educational programs and conducting research on important issues. The success of LGU's in these areas will depend on their willingness to undertake these activities and their ability to recognize and adapt to current to future economic and social realities affecting rural America.

Recent studies of capital budgeting procedures used by business executives suggest increasing use of present value methods. This study compares Massachusetts greenhouse business managers use of capital budgeting procedures to those of Fortune 1000 firms. Results indicate that different capital budgeting procedures are used and that the payback criterion remains the most popular for the farm firms studied. Some implications for Extension finance educators are drawn.

While many studies have estimated the impacts of air pollution on crop yields on experimental plots, few have estimated these impacts under actual farm production conditions. This study econometrically estimates the impact of air pollution on corn and soybean yields, controlling for weather, soil quality and management practices, using farm-level data for the eastern United States. Ozone pollution was found to reduce yields for both crops. The mean elasticity of yield with respect to ozone exposure was − 0.19 for corn and − 0.54 for soybeans. The benefits of ozone standards to protect crops, measured in terms of crop revenues, range from $17 to $82 million depending on the stringency of the standard. Over 85 percent of the revenue gains are captured by three states: Maryland, North Carolina, and Virginia.

A combination of conceptual analysis and empirical analysis—partial regression and residuals analysis—was used to derive an appropriate functional form hedonic price model. These procedures are illustrated in the derivation of a functional form hedonic model for an automated, econometric daily cotton price reporting system for the Texas-Oklahoma cotton market. Following conceptualization to deduce the general shapes of relationships, the appropriate specific functional form was found by testing particular attribute transformations identified from partial regression analysis. Minimizing structural errors across attribute levels and estimation accuracy were used in determining when an appropriate functional form for both implicit and explicit prices was found.

The growing American retired population increasingly is viewed for its economic development potential. The relationship between the elderly and local taxes may have a critical effect on this potential, however. This paper examines the local tax implications of an increasing elderly population in communities prohibiting tax referenda. In such communities, citizens have no direct role in tax decisions. The elderly's attitudes towards different local taxes are examined using telephone survey data, before using aggregate data to investigate the relationship between the elderly and the specific taxes used in communities. The results suggest that a high proportion of elderly do not affect the mix of local taxes, but that an increasing proportion does have an influence.

Monte-Carlo simulation of nonparametric efficiency shows that even when the number of firms is large, defining ten or more inputs results in most firms being measured as efficient. Comparison of the simulated results with any empirical results may suggest that the dimension of the problem, rather than actual efficiencies, determines computed efficiencies.

The perceived importance of food safety is instrumental in the success of consumer information programs to promote public health and to market safer foods. This paper examines how the belief of a household's main meal planner about the importance of food safety in food shopping is influenced by the person's or the household's demographic and socioeconomic characteristics. Results suggest food safety is more important to main meal planners who are female, older, more educated, non-working, have at-risk household members (elderly, young children, and pregnant women), or live in the Northeast and the South. Implications of the results on consumer education are discussed.

An equilibrium-displacement model is combined with econometric estimates of key model parameters to identify the impacts of Canada's dairy advertising programs on prices and quantity. Results suggest increased advertising of fluid milk enhances the farm value of milk but has minimal effect on government costs of the dairy price-support program. Owing to government intervention in the butter market, increased butter advertising has no effect on the farm value of milk, at least in the short run, but is highly effective at reducing government costs. Advertising is most effective, ceteris paribus, in markets where retail demand and wholesale supply for the specific dairy product are relatively price inelastic.

Economic incentives created by the commodity programs are hypothesized to cause program participants to apply agrichemicals at greater rates than nonparticipants. Corn producers who participate in the USDA feedgrain program are shown to apply nitrogen, herbicides, and insecticides at statistically greater rates than those who do not participate.

This paper examines the effects of the use of increasingly-popular phytosanitary regulations on production costs, and output and factor trade flows. The case addressed is that of the European regulation of maximum chemical residues in cigarettes manufactured with tobacco containing maleic hydrazide. The paper presents simulations of the effects of tightening the EU regulation on the tobacco growing and manufacturing industries. The analysis focusses on input/output market linkages and on the substitution away from the residue-contaminated U.S. input to residue-free non-U.S. inputs. This induced substitution results in higher costs, lower quantity supplied of the final product, and higher prices for U.S. cigarettes in Europe. Cross-price effects lead to higher quantities of EU cigarettes sold and a corresponding increase in the use of all inputs, including U.S. tobacco. When the U.S. tobacco price is allowed to fall, direct price effects stimulate the EU derived demand for U.S. tobacco. Although the regulation is protectionist in the output market, it leads to increased EU imports of the residue-contaminated input. When the price of U.S. tobacco adjusts, the regulation is actually antiprotective for EU growers. The regulation also indirectly influences production practices of U.S. tobacco growers and leads to lower levels of MH residues on U.S. leaf.

Factors affecting marketing margins were identified and assessed using a relative price spread technique. Margins were disaggregated into slaughter-to-wholesale and wholesale-to-retail for a more complete understanding. Marketing costs, concentration, demand, and price were used to explain variations within these margins. Results showed that packer concentration had a significant effect on margins. Forces of supply and demand (as represented by production and market price) and changes in marketing costs also explained the variation in margins. A higher degree of price transmission from slaughter-to-wholesale level was observed in comparison to the wholesale-to-retail level.

Subtleties involving measurement of quantities and prices when derived demands are graphically displayed in frameworks representing market linkages are discussed. Complications arising from assuming variable proportions rather than fixed coefficients are noted. Finally, an example developed by Wohlgenant and Haidacher is clarified.

Contingent-valuation estimates for white-water boating passengers are compared with Likert ratings by river guides. The approach involves asking whether passengers and their guides ordinally rank alternative flows the same. The National Oceanic and Atmospheric Administration's Contingent Valuation Panel (1993) suggested “one might want to compare its (contingent-valuation's) outcome with that provided by a panel of experts.” River guides constitute a counterfactual panel of “experts.” For commercial trips, optimum flows are 34,000 cfs and 31,000 cfs for passengers and guides, and the comparable figures for private trips are 28,000 cfs and 29,000 cfs. In the NOAA Panel framework, passengers can evaluate the consequences of various river flows and translate this into contingent-valuation responses.