THE USE OF EXTRANEOUS INFORMATION IN THE DEVELOPMENT OF A POLICY SIMULATION MODEL

Figure 1. A SCHEMATIC DIAGRAM OF THE SIMULATION MODEL.

Feed 6rαιπ Pr∣ce∣

Feed Grain.Yield Per
Harvested Acre

Wheot Price

∣Soybeon Price

∣Cotton Price

Wheat Acreoge'
Diversions

,^zCotton Acrec
⅛₄ Diversions

Cotton Production I

Wheat Production
Expenses Per Acre

Soybean Yield Per
Harvested Acre

Soybean Production!

Etpenses Per Acre [^

)eon Harvestei
Acreage

Cotton Harvested

Acreage______

____________________ ! r-j Production

Cotton Yield Per ∣ ^{1 1}--------C∑Ξ

'Corn

Feed Groin
Carryover

Soybean Tota.
I Etpenses

Feed Gram Produclion
Expenses Per Acre

Wheot Total
Expenses

Ifeed Groin Harvested
I Acreage

Wheat Harvested ∣

--∏-∣ Wheol
WlieolYieldPor ; _r⅛I°^jf ”
Harvested Acre ∣    ∣   ∣-------------

Feed Groin

Я

Support J

Cotton Price

'Wheat Other ʌ
Domestic Demond₇

Wheat Cash
Receipts

_ I Wheat Feed I--------

T∣ Demand ∣---

Soybeon

I Soybean

¹ Γ.nrrvιn

Feed Groin
Feed Demand

Wheat Foodl
Demand [

Other Crop
Expenses

L--Jcotton Total
[—-∣ Expenses

! _ι /Wheat GovS

^-*^∖ Payments J

I Wheat
J Export;

I Wheat I

I Corrym Γ^

Livestock Productιon∣ _________________

[By-Products Fed
I To Livestock

Feed Gram
Exports

Feed Groin
Corryin

ICÔttîê And Calf
j Production

Value Of Home C
Of Cottle And

M-IBeef Consumer
I Expenditures

Value Of Home <
Of Pork

Consumption!

>_ Γ~^, __

________________β IPork Consumers!

---------->∣ ∈ιp₈nd∣tj_fes I ’

Sheep And I [value Of Home Consumption!-
Lomb PricesFjOf Lomb And Mutton F’

Marketings

^ Production

Marketings ■

"Egg

ʃ Chicken

• Production

Egg
-Marketings

Value Of Home

Egg Cosh Receipts j∑τ

Value Of Home Consumption!

M∣lk Consumerl .

Expenditures ∣ '

M∣lk Cash Receipts

Consumer ∣
Eipendilures

[Fgg Consumer!
~*^∣Exρeι⅜d∣lures ∣

base supply estimates. The domestic demand
categories and export demands are dependent on the
percentage change between current and base
estimates for current year prices of the crop and
related commodities. Ending year stocks are
calculated as residuals. Crop receipts are calculated as
price times production adjusted for proportions sold.

The production levels of the seven classes of
livestock are based on the estimate of all concentrates
fed to livestock. Livestock prices are determined by
the production levels of the Hvestock categories.
Production and price levels determine gross receipts
for each Hvestock category. The number of Hvestock
production units, calculated from production
estimates, influences Uvestock production expenses.
The sum of cash receipts for the four crops, the seven
Kvestock categories and other crops and Hvestock
products equals total cash receipts. Adding
government payments and the value of home
consumption (adjusted for changes in the prices of
the individual Hvestock categories) to total cash
receipts yields total gross farm income. Total
production expenses are calculated as the sum of
individual crop expenses, other crop expenses and
Hvestock production expenses. Net farm income is
the difference between total gross farm income and
total production expenses.

SUMMARY OF BASE PROJECTIONS

As indicated eaflier, the base data used in the
model are derived, for the most part, from 1980
projections made by United States Department of
Agriculture and SpecificaHy by the Outlook and
Projections Branch, Economic and Statistical Analysis
Division of the Economic Research Service. Some of
the projections are ρubhshed in the July 1970 issue
of Agricultural Economics Research [7] but a newly
revised and updated statistical appendix to the article,
ava∏able from the Outlook and Projections Branch,
provided the bulk of the projections. 1980
projections were made by the USDA for commodity
production, crop acreage and yields, price indexes by
crop and Uvestock categories, commodity suppHes
and UtiHzations, and the components of the feed
concentrate balance sheet.

Among the assumptions used by the USDA in
making their revised projections are: a) a 1980 U.S.
population of 231 milHon, b) a gross national product
of $2.1 triUion, c) average per capita disposable
income of $6,245, and d) the ∞ntinuation of
domestic farm programs and import restrictions on
dairy and beef. Since the USDA 1980 projections are
obtainable elsewhere [7], little space is devoted to
them here. The prices used in the study were
developed from USDA projected price indexes for

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