The differences in gross agricultural income between the models is not 

 particularly significant if viewed in the proper perspective. With an aver- 

 age range of from —$22,000 to +$14,000, the gross difference between 

 models is only $36,000. This difference of $36,000 is equivalent to a change 

 m the average annual price of milk of about 8V2 cents per hundred-weight 

 for the producing herds of the County. Or, this amount of income is equiva- 

 lent to the income from about 100 cows. Hence, the Soil Bank participation 

 does not seem to have affected appreciably gross agricultural income to 

 the County. 



INCOME FLOW IN THE LOCAL ECONOMY 



The Coos County economy is basically an isolated one. The County is 

 bordered on the east, south, and west by mountains and rough terrain. 

 It is bordered on the north by Canada. Farming is carried on in valleys 

 of the Connecticut River, the Androscoggin River, tributaries of these two 

 rivers, on rolling hills of the famed Colebrook area, and on rolling and 

 sometimes rocky hills around Lancaster. Recreation and wood industries 

 are the basis for the nonfarm economy. Although people living in parts 

 of Maine, Vermont, Canada and other parts of New Hampshire use towns 

 in Coos County as a market area, the contribution of these other areas to 

 the County economy is not great because of the sparse population. 



Output for local use is confined to a modest amount of wood and food 

 products, and to personal, retail, and recreational services. Demand in the 

 area can be broken down into two parts: Demand for goods and services 

 produced in the area, and demand for goods and services produced out- 

 side the area. Supply in the area can likewise be broken into two parts: 

 Supply of goods and services for local demand; and supply of goods and 

 services for consumption elsewhere. A reduction in the latter means a re- 

 duction of the income flow into the area. A reduction of income flow 

 into the area would also mean a reduction in demand for local production. 



Income Flow Model 



Assume that a dairyman produces a dollar's worth less milk (Table 

 9). This means that he has one dollar less to spend. Suppose further, that 

 he decides to spend one dollar less for coffee for the family. Obviously 

 no coffee beans are produced in the area. But the services that bring the 

 coffee into the area, store it, and transfer it to the farmer are produced 

 in the area. The price of these services is called the retail markup. Let us 

 assume that this markup is 30 percent. Thus the demand for goods and 

 services produced in the area falls by an amount equal to 30 cents and 

 the fall in demand for goods produced outside the area equals 70 cents. 

 The 30 cents received by the grocer for his service represents income to 

 him, and the reduction in the farmer's expenditure means a 30-cent loss 

 in income to the grocer. The grocer must curtail his expenditures by 30 

 cents. Assume now that the grocer cuts 30 cents from his expenditure 

 for shoes and that the markup on shoes is also 30 percent. The expendi- 

 ture for the local service of providing shoes falls by an amount equal 

 to 9 cents, and the expenditure for shoes produced outside the area falls 

 by an amount equal to 21 cents. This process continues until the expendi- 

 tures for goods produced outside the area equals the $1.00 lost bv the 

 dairyman. The loss in outflow of dollars then equals the loss in inflow of 



27 



