EFFECT OF THE SOIL BANK ON THE ECONOMY 



The effect of the Soil Bank Program on the economy of Coos County 

 can be determined by measuring the Program's effect on gross farm in- 

 come, income flow, change in expenditure pattern, and nonparticipating 

 farmer's incomes and costs of production. 



GROSS FARM INCOME ESTIMATES 



The effect of the Program on farm income is analyzed by comparing the 

 income expectation from land resources enrolled in the Program with an 

 estimate of income that might have been derived from these resources 

 had they not been enrolled in the Program. 



Economic theory suggests that operators of individual units would im- 

 prove their net income by enrolling their land resources in the Program 

 and hence explains why operators enrolled. Preliminary budgeting con- 

 firms this hypothesis. This, coupled with the fact that the Program has 

 been put into operation, reduces the areas for study to the effect on the 

 remaining farm economy and on the local nonfarm economy, which in- 

 cludes the agencies that serve agriculture. 



Future income from the land resource enrolled in the Program is pre- 

 dicted from data furnished by the State Agricultural Stabilization and 

 Conservation Service. The land resource enrolled in the Program as of 

 July 1, 1959, is assumed to be held under contract until the contract ex- 

 pires. The estimates take into account the extension of income flow from 

 the 1956-59 Program through 1972. Ten-year contracts involving tree- 

 planting operations may be extended if trees are not available for planting. 



Predicting what the future income flow from enrolled resources in- 

 volved in enrolled units might have been in the absence of the Program 

 is more difficult. Predicting income for the year 1959 can be done with 

 some degree of accuracy, given a realistic set of basic assumptions. Pre- 

 dicting income for any ensuing year is impossible because of the many 

 forces that modify prices and farm production decisions. The income pre- 

 diction for resources on enrolled units in the absence of the Soil Bank Pro- 

 gram is presented as an indication of income flow over the entire 10 to 12 

 year period and not as a prediction of income in any specific year. It is 

 based essentiaUy on the assumptions that current trends continue over the 

 next decade. 



Method of Analysis 



To facilitate the analysis, two models of agricultural resource use and 

 output and therefore income projections are developed. These models 

 represent likely extremes in resource use and provide precise enough 

 answers to permit some analysis of the Program's impact on the farm 

 economy. 



The assumptions common to both levels of analysis are: 



Prices. Prices typical in the last few years are assumed to continue 

 through 1972. As with other assumptions, these prices may not truly repre- 

 sent those which will occur regularly. However, they are consistent in that 

 the prices paid-prices received ratio is that which is anticipated. 



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