prices of tobacco are maintained above equilibrium levels over time. Second, 

 the acreage control and price-support features of the programs provide pro- 

 ducers with an incentive to increase output through increasing yields, or 

 through the substitution of nonland inputs for land inputs. The supported 

 price above equilibrium levels makes it profitable to use more units of labor, 

 fertilizer, and other capital inputs than would be used if tobacco prices 

 were lower. Research in new technology, such as Improved varieties, ferti- 

 lizers, or insecticides, also can be, at least partially, related to the pro- 

 ducers' interest in increasing output per acre under program conditions. 

 Labor input per acre or per pound of tobacco produced is affected by the pro- 

 grams through both the profitability of more intense use of labor and new 

 technology. 



To quantify the influence of these variables — prices, yields, labor re- 

 quirements, and costs — on the returns to land the following equation was used: 



(1) R + y (p-wl-k) 

 where: 



R • Returns to land (or rent) per acre 



y ■ Yield per acre 



p * Price per pound 



w « Returns to labor per hour (including management) 



1 ■ Amount of labor used per pound of tobacco produced 



k ■ Other costs per pound of tobacco produced . 



The costs per pound of tobacco produced include capital outlays by both the 

 landowners and tenants. These capital outlays include expenditures for 

 maintenance and operation, or the overhead and operating costs. The portion 

 of the above equation in parentheses equals the returns to land (or rent) 

 per pound of tobacco, or 



(2) r - p-wl-k. 



Equation (1) can be differentiated to identify the components of changes 

 in income and costs affecting change in land rent between any two points in 

 time. This procedure results in the following equation: 



(3) AR - [r Ay] + [y Ap] - [yl Aw] - [yw Al] - [y Ak] - 



[y AwAl] + [ Ay Ar] 



where the variables without deltas are as defined above, but apply to a base 

 year (such as 1922), and the deltas indicate changes in these variables over 



