Masters Theses

Date of Award

12-1952

Degree Type

Thesis

Degree Name

Master of Science

Major

Agricultural Economics

Major Professor

Erven J. Long

Committee Members

W. P. Ranney, Horace C. Smith Jr., Thomas J. Whatley, R.B. Hughee Jr.

Abstract

This study is directed towards the problems confronting individual farmers of the humid Southeast, particularly those of the East Tennessee Valley, and the public with regard to water control.

First an attempt has been made to formulate a rational procedure for bringing erosion into consideration in the selection of farming systems by individual farmers, under simplifying assumptions with regard to relative prices and control of individual farmers over economic resources. It was assumed that relative prices would be unchanged by the decisions of the individual farmer. Thus, his plans will be made upon a predicted pattern of relative prices, a pattern which is not expected to change as a result of his actions. Further, it was assumed that the individual farmer owns an equity in a certain area of land (the land having certain physical properties) and in certain other productive agents. It was assumed that the farmer controlled a given force of labor including managerial ability. In addition it was assumed that the individual's equity in wealth provides collateral for acquiring credit for production and/or consumption purposes. It was also assumed that the individual's knowledge (beliefs) regarding production functions include soil erosion. The farm was considered to be a going concern. In some way similar to the solution of simultaneous equations in mathematics the individual fanner must decide among other things: (1) what to produce? (2) how to produce these commodities? (3) what quantities of various commodities to produce? and (4) what quantities of credit to use and for what purposes? That is, the farmer must decide the combination and quantities to produce, the combination and quantities of resources to use and the manner in which to use them. The decision as to quantities of commodities to produce determines the relative else of each enterprise and the aggregate size of the farm. The quantity of credit used must be within limits of availability. Knowledge is so inadequate that a maximum return allocation of resources can not be estimated by the simultaneous solution of equations. Present available data are the result of observing specific conditions and must be adjusted to fit desired situations. Maximum income for a specific farm must be arrived at through a combination of maximizing process and trial and error.

The idea has long prevailed among agronomy and soil scientists that the problem is one of finding which farming systems will give the greatest degree of erosion control and then choosing from among them on the basis of earnings. Although they have admitted that it might be desirable under certain price conditions to follow farming systems which would deplete soil, they very largely continue to deny that it can ever be desirable to allow erosion to occur, except in the rare case where no income (satisfaction) oan be earned without some erosion coloring. It seems that this position is due to the failure to distort incomes that are likely to be earned in the future. In other words they fail to recognise that, except to the extent that soil fertility is valued per se, depreciation of land is merely another cost of production. It is similar in all respects to depreciation on a tractor except as to the capital agent. Except for the psychic cost for those who love the land for its own sake, the erosion cost of one year's production, using a farming system that allows erosion, is equal to the decline in land value that results consequent to the year's production. Except to the extent that land is valued on the basis of fertility per se, rather than on the basis of its money income producing ability, this cost will approximate losses in future money income discounted to the present.

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