projected increase in population nationally is used in the equation. Because 

 it is assumed that supply is perfectly elastic, then the quantity demanded 

 equals the quantity supplied. The equation above serves a forecasting func- 

 tion, based on Engels' law which relates income to consumption. Engels 

 observed that the income elasticity for food was quite low and that as income 

 rose people spent a lower percentage of their income on food. There is a 

 point where any increase in income would not induce people to spend more on 

 food and it is for this reason that income elasticity is excluded as a com- 

 ponent of demand past the year 2000. The exact date when, if ever, the income 

 elasticity becomes zero is unknown, but rough adjustments for Engels' law are 

 made in these forecasts. It is also assumed that any loss of farm acreage 

 will be matched by increases in productivity as this has been the historical 

 trend and can be counted on to continue for some time. Although real whole- 

 sale prices fell when retail prices rose, the assumption that real wholesale 

 and retail prices will remain constant is a realistic simplifying assumption 

 in the absence of knowledge of the contrary. Population and income projec- 

 tions were furnished by the Water Resources Management Council, OBERS (1972). 

 Major agricultural commodity projections until the year 2030 are given in 

 Table 17. 



PROJECTIONS SET 2 



These projections were made by using 1978 as a base year and projecting 

 to the year 2030 using OBERS' population and income growth rates. OBERS' pro- 

 jections of aggregate demand for domestic food are based upon the projected 

 rates of population growth and projected level of per capita consumption. In- 

 come of the latter is related to projected levels of per capita income. These 

 projections reflect specified relationships between product consumption and 

 income potentials for product substitution and price elasticity of product 

 demand. The writer then used the State's growth rates and applied them to the 

 region (Table 18). 



A comparison of set 1 and set 2 indicates that for all commodities, 

 except tomatoes, OBERS' projections are much higher than the authors' projec- 

 tions. This is likely because the writer suspended the impact of income elas- 

 ticity after the year 2000, whereas the OBERS' study decreased the income 

 elasticity over time. It could also be the result of different elasticities. 



120 



