During 1960-1965, both yields per acre and average price per pound 

 of flue-cured tobacco increased about 5 percent. If it is assumed that labor 

 required to produce a pound of tobacco, wages, and other costs per pound did 

 not change in the period, the 5-percent increase in yield would increase rent 

 per acre by about $5 in Virginia and $11 in North Carolina. On the other 

 hand, the 5-percent increase in prices per pound would increase rent per acre 

 by about $48 in Virginia and $55 in North Carolina. jLl/ Since, under the 

 assumptions, the only other component of change in rents would be a yield- 

 price interaction, it appears that rent is much more sensitive to changes 

 in prices of tobacco than to changes in yields. 



11 / The implied increases in rent per acre of $53 in Virginia and $66 

 in North Carolina during 1960-1965, even if true, do not provide a basis for 

 inferring aggregate increases in rents in the two States. The acreage har- 

 vested declined by about 20 percent in the period for each State. Thus, 

 yield and price increases may have, in effect, actually decreased the acreage 

 which, in turn, increased rent per acre. 



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