change has been higher on irrigated farms Thus, 

 while irrigated land currently accounts for only 

 one-seventh of the nation's cropland, it accounts for 

 more than one-fourth of the value of the nation's 

 crops" (p. 1) 



Now this quotation, I believe, is an accurate sum- 

 mary of the past and current contribution of irrigation 

 to agricultural production, but these past trends will 

 not continue into the future and the future contribution 

 of irrigation to increased production will be less than it 

 was in the past In the West, the lowest cost water 

 already has been developed, ground water levels are 

 declining, and the value of water in non-agricultural 

 uses is increasing. In the East irrigated acreage will 

 continue to grow but its contribution to aggregate pro- 

 duction will be less than it has been in the West in the 

 recent past In some parts of the Great Plains and 

 elsewhere m the West, declining ground water levels 

 have reduced output. In other areas salinity has 

 become a limiting factor in production 



Some people have added up these trends and pre- 

 dict a crisis I am not one of them In fact, I find little 

 basis for alarmist statements that we are facing a 

 massive water shortage in the 1980s, nor does there 

 seem to be any basis for the notion that aggregate 

 agricultural output will suffer greatly as a result of the 

 loss of agricultural water to non-farm uses. About 90 

 percent of the consumptive use of water in irrigated 

 areas is in agriculture. In most such areas water is 

 used quite inefficiently in a physical sense because of 

 its low economic cost. Should water become less 

 abundant or higher in price, its agricultural use would 

 become more efficient, or it already has become more 

 efficient in some areas, and it is unlikely that aggre- 

 gate agricultural output would suffer significantly. I 

 should make clear, however, that this assumes our 

 water institutions will be sufficiently responsive to 

 transfer water to its highest and best use and that its 

 user cost will reflect not only the cost of making it 

 available but its productivity as well. 



Now for a few comments on energy 



f\/lost energy analysts predict that the real costs of 

 energy will increase during the 1980s and 1990s If 

 this turns out to be correct, I believe the impact will be 

 greater on food marketing and distribution than it will 

 on on-farm production. Higher energy costs probably 

 will not do much harm to the competitive position of 

 the United States in the production of food because 

 other food exporting areas are likely to be hit by the 

 same cost with similar effects 



Agriculture and the Environment. Pierre Crosson 

 and Sterling Brubaker of our staff have discussed this 



subject in a most thorough and systematic way in a 

 forthcoming book to be entitled. Resource and Envi- 

 ronmental Impacts of Trends in U.S. Agriculture. They 

 examine very carefully the evidence regarding environ- 

 mental threats posed by insecticides, herbicides, fertil- 

 izers, and erosion. They conclude, and I agree, that 

 with the exception of erosion, most of these threats 

 can be met without increasing production costs signifi- 

 cantly if we are prudent managers. Now for some 

 final comments. 



I have identified some disturbing trends. We do not 

 have a large unused cropland base, soil erosion is 

 severe m some areas, irrigation will not increase in the 

 future to the extent that it has in the past, energy may 

 become more expensive, and many agricultural inputs 

 need to be managed carefully if undesirable environ- 

 mental impacts are to be avoided. 



Still, should the costs of producing U.S. agricultural 

 products that enter into world commerce rise, more 

 than such costs in other exporting regions for the 

 remainder of this century, I do not believe it will be 

 because of greater natural resource scarcity in this 

 country. 



The major determinants of costs will not be the lim- 

 its of our natural resources, but rather the limits on 

 our imagination and our creativity. On what produc- 

 tion innovations, if any, are forthcoming, and the way 

 they are managed and applied. Here the investment 

 in research and education in both the public and the 

 private sector will be most significant. I now comment 

 briefly on just one aspect of managerial efficiency 

 made possible by technology that is often overlooked 

 in discussions of sources of agricultural productivity 

 growth 



"The major determinants of costs will 



not be the limits of our natural 



resources, hut rather the limits on our 



imagination and our creativity. " 



I refer to the enormous strides that have been 

 made in the collection and transmission of information, 

 advances that have not yet been fully implemented in 

 agricultural production One reason we do not have 

 giant corporations in agriculture, generally, is that bio- 

 logical organisms — plants and animals — require 

 many small decisions if they are to produce economi- 

 cally And these decisions have not been standard- 

 ized to the extent necessary to make mass production 



17 



