a social accounting approach to analyzing agribusiness competitiveness

A Social Accounting Approach to Analyzing

Agribusiness Competitiveness *

Roger Fox Roger Dahlgran

The social accounting methodology compares budgets based on private costs and returns to budgets based on the social values of inputs and outputs. The differences between these two budgets indicate the taxes and subsidies associated with policies or market imperfections. This methodology has been extensively used in analyzing policies in less developed countries. This article demonstrates through examples the application of the methodology to the analysis of competitiveness and efficiency of agribusiness firms and sectors.

Several models and methods are available for studying the competitiveness of agribusiness firms and sectors. The private and social profitability approach, sometimes represented as the Policy Analysis Matrix (PAM) method, has some distinct advantages. Specifically, it allows the explicit treatment of public policies that affect the profitability and competitiveness of agribusiness firms. It integrates macroeconomic and microeconomic perspectives, and it is highly flexible, thereby facilitating the analysis of a wide range of problems and situations. Within this framework, simulation analysis can be used to evaluate alternative policy scenarios, both current and future. Following a description of the method, an application to agribusiness research is presented and other possible applications are discussed.

*This article was presented at the Agribusiness Research Meeting, Las Vegas, NV, June 1989.

Roger Fox and Roger Dahlgran are Professor and Assistant Professor, respectively, Department of Agricultural Economics, University of Arizona.

Agribusiness, Vol. 6, No. 3, 209-219 (1990) 0 1990 by John Wiley & Sons, Inc. CCC 0742-4477/90/030209-11$04..00

210 FOX AND DAHLGRAN

METHOD

The most complete presentation of the theory and application of PAM is con- tained in Monke and Pearson.2 The PAM method begins with the definition of product or commodity systems. The systems are defined to include activities beginning with the agribusiness firm and ending with the market, usually the wholesale market, where comparable world market prices can be measured. The principal task is to construct, for each system, an accounting matrix of revenues, costs, and profits (i.e., a set of budgets), first including and then excluding the effects of public policy. This is done for a base period (typically a year) and can be projected using assumptions about changes in the underlying variables that are influenced by public policy. In any given period the impact of public policy can be gauged through comparison with the situation in the absence of such policy. This “efficiency7’ calculation assumes that policymakers have available a full range of policy options.

Profitability and Efficiency

The basic accounting identities that underlie the analysis are illustrated in Table I. The first identity measures profits as the difference between the value of output and costs, where the cost items include both purchased inputs and domestic factors of production. Private profitability, which includes the effects of policy, is calculated as the residual remaining when market costs of inputs-materials and factors- are subtracted from the market value of the output. Calculation of private profitability for the base year is the first step in the analysis; it shows how decision makers have actually reacted to the incentives or disincentives created by government policy. Revenues, costs, and profits are measured separately for each of the activities in the system, and then entries are aggregated to represent the entire system. In Table I the calculation of private profitability (entered as D) is represented in the top row; the value of output (A) less input costs (B) less factor costs (C)

Table 1. Accounting Matrix for Efficiency and Policy Analysis.

Costs

Output Tradable Domestic Value Inputs Factors Profits

~~

Private Prices A B C D. Social Pirces E F G H h

Effects of Policy and I c J“ Ke L‘ Market Imperfections

aPrivate profit, D = ( A - B - C). ”Social profit, H = (E - F - G). ‘Output transfers, I = ( A - E). dInput transfers, J = (B - F). ‘Factor transfers, K = (C - G). ‘Net policy transfers, L = (D - H ) = ( I - J - K ) .

SOCIAL ACCOUNTING 211

yield profits (D), with all entries given in private (actual market) prices. The calculation of private profitability is done routinely by economists. Although the techniques of measurement may vary, the underlying concepts are universal. The estimation of private profitability is one indicator of the competitiveness of the firm being studied. Public policies that result in direct or indirect taxation or subsidies can significantly affect the competitiveness of the firm.

Evaluation of profit in social terms requires assigning prices to outputs and inputs (and hence profits) that reflect the absence of domestic economic policies, or, in economics jargon, underlying scarcity values or social opportunity costs. These social prices, if reflected in actual decisions, would result in an allocation of resources that would generate the highest contribution to national income. The crucial task for efficiency analysis, therefore, is to find reasonably accurate approximations for the social prices of outputs and inputs in the system. Social prices are not necessarily socially optimal. Private market prices might be prefer- able, if they allow attainment of some noneficiency objectives. The method is particularly valuable in this circumstance, because it allows explicit calculation of the opportunity costs of nonefficiency objectives.

For commodities that are tradable internationally, the appropriate social prices are the world prices, the CIF price for imports or the FOB price for exports. This implies that a country always has the choice of importing to meet domestic needs. The same reasoning applies to tradable inputs needed for domestic production; they can either be imported or domestically produced. Hence the world price is the appropriate standard for valuing these costs in domestic use.

Domestic factors of production and nontradable inputs require different treatment, however, because no world price is available to serve as a benchmark for social valuation. Labor and capital are evaluated with respect to their social opportunity cost, the amount of national income foregone by removing a unit of that factor from its next best alternative activity. Scarce factors provide valuable services in production; the social opportunity costs of each factor is a measure of that scarcity. A key distinction is made here between fixed and variable factors. Labor and capital are considered as variable factors. They are assumed to be allocated freely between alternative uses. Land, however, is considered a fixed factor when PAM is used to analyze agricultural production systems. Its price is determined as a share (not known) of the profits leftover after all variable factor and intermediate input costs are subtracted from the value of output. Because capital costs are treated as variable, the budgets reflect long-run rather than short-run incentives. Maintenance of the long-run perspective mandates the use of long-run average values for other variables as well, such as yields and world prices.

Nontradable inputs, such as services, local transportation, and commodities with very high international transportation costs, cannot be evaluated by making world price comparisons, since by definition they do not enter international commerce. In the PAM method, both private and social costs of nontradable inputs are disaggregated into their underlying tradable input and domestic factor costs, the two cost categories shown in Table I. The disaggregation of nontradable inputs may represent a difficult empirical problem and can require the use of disaggregation coefficients from other studies or the analysis of the economic structure of the local industries providing nontradable goods and services.

The calculation of social profitability follows easily, once the revenues and


costs have been evaluated in social prices. With reference to the symbols in Table I, the social prices of output (E) and of tradable inputs (F) are given by CIF import or FOB export prices, the social valuations of factors (G) are their social opportunity costs, and social profitability (H) is the difference between receipts and costs in social prices (H = E - F - G). If social profits are positive, the activity is competitive at world prices and thereby is an efficient user of scarce resources and a contributor to national income.

Tradable inputs and outputs are valued directly in terms of foreign exchange, and thus the difference between the value of tradable output (E) and all tradable input costs (F) gives an indication of the balance of trade contribution of an activity. However, an economic activity can only be truly said to “save” or “earn” foreign exchange if it is socially profitable, because this indicates the ability of the activity to use domestic resources (G) to generate foreign exchange (E - F). So long as domestic factors are scarce, their costs need to be included in evaluating foreign exchange effects. Removal of domestic factors from the production of an alternative commodity will either reduce the exports of that commodity or require increases in imports to substitute for the decline in domestic production. The net actual foreign exchange saving is, therefore (E - F - G), which is the measure of social profitability. In this context, positive social profitability is an indication of comparative advantage or the ability to compete in international trade efficiently, i.e., without the stimulus of subsidies or other government assistance.

Effects of Policy

The second fundamental accounting identity in the analysis is that the difference between valuation of any column entry in Table I (output value, costs, or profits) in private prices and in social prices gives a measure of the effects of policy. This difference will also include the effects of any market imperfections, which pre- vent product or factor markets from allocating outputs or inputs efficiently. Mar- ket failures are ignored in the remainder of this section to allow an emphasis on the effects of policy. Market failures due to monopoly or other market imperfections, however, may be important in using PAM for the analysis of some large agribusiness firms.

There is a close relationship between calculation of social profitability and measurement of the effects of policy, as shown in the third row of Table I. In the absence of market imperfections, only government policy can cause a divergence between private and social prices. Unless the government enacts a protection policy, for example, each importable output and input will be available at its CIF import price, which will in turn become the domestic price. In Table I, A will equal E and B will be the same as F. Consequently, any difference between A and E or between B and F is caused by some combination of trade restriction, price control, tax/subsidy, or exchange rate policies. If A exceeds E, either domestic consumers are forced to pay higher than world prices or the government treasury is directly subsidizing production, causing an output transfer (Z) equal to (A - E). Similarly, if B is greater than F, tradable inputs are being taxed resulting in a transfer ( J ) from the system of (B - F). For domestic factors, the transfer (K) amounts to (C - G); if there was a positive transfer to the system, say from a credit subsidy, then C would be less than G, and K would be negative.


The social prices of tradable outputs (E) and of tradable inputs (F) are estab- lished in international markets and most countries have little or no power to influence these prices. Commodity price policies in these countries, therefore, have no significant effect on the social valuation of tradable commodities. In the case of the United States, commodity price policies may have important effects on world prices. Exchange rate policy can, however, cause the private prices of tradables (A and B) to be either higher or lower than efficiency levels (E and F) in a manner that is directly analogous to use of a trade-restrictive policy for a given output or input. This result would be achieved, for example, if the government employed a fixed exchange rate policy and chose fiscal and monetary policies that permitted a rate of inflation higher than the average rate experienced in its main tiading-partner countries.

An overvalued exchange rate depresses the prices of tradables relative to those of nontradables and thus acts as a tax on all exporting or import-substituting activities and as a subsidy on imports. For example, if the exchange rate were overvalued by 20%, imports of tomatoes would be 20% cheaper in domestic currency than their social opportunity cost and local tomato farmers would re- ceive 20% less for their output than in the absence of policies affecting exchange rates. In Table I, A would be less than E by 20%, and the effect of the overvalued exchange rate policy would be shown in I . The tax effect of overvaluation on output would be partially offset by a subsidy effect on tradable inputs (B - F = J would be 20% of F because of overvaluation); the tomato farmer would purchase his tradable inputs at prices 20% less than what they would be if the exchange rate were in equilibrium.

The social prices of domestic factors (G) are given by determination of social opportunity costs, which reflect underlying supply and demand conditions in domestic factor markets. In most cases, the effects of macro or commodity policies upon these social prices are ignored. The government can, however, enact tax or subsidy policies on capital or labor which creates a divergence between private costs (C) and social costs (G). Credit subsidies, credit rationing, minimum wage laws, and employer taxes on labor use are examples of policies that can cause private factor costs to exceed or fall short of comparable social opportunity costs.

The net transfer (L) from all policy equals the output transfer (I) less the input transfer (4 less the factor transfer (K). 'The net transfer can also be found by subtracting social profitability from private profitability (L = D - H). Depending on the net incidence, subsidy policy can thus create positive private profitability when social profits are negative, whereas taxing policy can cause negative private profits even when the activity is socially profitable. In the former case, policy is generating resource transfers to encourage production while in the latter case, policy is transferring resources away from producers and discouraging production.

In summary, collection of data for private and social revenues and costs (A, B, C, E, F, and G) permits calculation of private profit (D), social profit (H), net transfers from all policy (L), and output, input, and factor transfers ( I , J , and K). The method described here thus allows measurement of private profitability or competitiveness (indicated if D is positive), social profitability or comparative advantage (indicated if H exceeds zero), and estimates of the net transfer impact of policies (net subsidy to activity if L is positive, net tax if L is negative). The


latter measure shows the incentive effects of commodity and macro policies on private profitability.

Comparison Among Systems

The measures illustrated in Table I are sufficient to analyze a single agribusiness system or to compare two or more systems that produce the same commodity. But a precise meaning cannot be attached to a comparison among systems producing different outputs; for example, no clear choice can be made between a system that yields social profits of $1,O00 per ton of beef and one that generates social profits of $300 per ton of tomatoes. The formation of certain ratios facilitates such comparisons.

Five derived measures are listed in the following tabulation (where symbols are drawn from Table I):

1) private cost ratio 2) domestic resource cost ratio 3) net transfer ratio 4) producer subsidy equivalent 5) subsidy ratio to producers

= PCR = C / ( A - B ) = DRC = G / ( E - F ) = NTR = K / ( I - J ) = PSE = ( L / A ) * 100 = SRP = ( L / E ) . 100

The first three ratios allow a comparison of private profitability, social profitability, and net transfers, respectively, across systems. PCR is the cost of domestic resources valued in market prices required to generate a unit of value added (also in market prices). Value added is the difference between the value of output and the costs of tradable inputs; it shows how much the system can afford to pay domestic factors (excluding or including land) and still remain competitive, that is, break even after earning normal profits. Entrepreneurs prefer to earn excess profits and thus try to minimize the private cost ratio (< 1) by holding down factor and tradable input costs. DRC shows the cost of domestic resources in social prices needed to produce a

unit of value added (in world prices); it serves as a proxy measure for social profits. The DRC ratio equals one if social profit is zero. Minimizing the DRC is thus equivalent to maximizing social profits. In cross-country comparisons, DRC ratios replace social profit measures as indicators of relative degrees of eficien- cy. NTR compares the level of policy transfer that occurs through the factor markets (K) with the transfer taking place in commodity markets ( I - 4.

The last two measures give a convenient summary of policy transfer in percentage terms. PSE is the percentage subsidy, relative to private revenues, which would substitute for the actual mixture of commodity and macro policies in the system. SRP is an analoguous percentage subsidy, but is relative to social revenues and thus indicates the degree of net policy transfer as a percentage of what revenues would be in the absence of policy.

POSSIBLE APPLICATIONS OF PAM TO AGRIBUSINESS RESEARCH

The application of PAM to agribusiness research requires the selection and definition of a system or systems to be investigated. In order to apply PAM, the


system must produce a tradable output, thus agribusiness firms that only provide services cannot be analyzed using PAM. In terms of the levels of analysis, PAM could be applied at any level, from the international to the individual firm (company). Obviously, the simplest, most direct application of PAM would be the case of one firm producing one tradable output. In the more normal case of many firms producing the same product (e. g., wheat flour), representative or synthetic firms have to be identified. In the case of multiple firms, the representative firms may be defined in terms of size or location or other factors that influence their competitiveness. When the firms being analyzed produce several products, the analysis can focus on the principal output or a whole-firm analysis can be developed that is based on fixed product proportions (e.g., 60% wheat flour and 40% corn meal). PAM also can be applied to vertically integrated firms. As the structure of the firms become more complicated and the number of products increases, application of PAM becomes more complex and time consuming.

PAM has been adapted to a variety of empirical ~ettings.~-lO In this section we demonstrate the model’s application for an impending technological change ap- plicable to the dairy industry. Finally, other situations where this model could be applied will be suggested.

Bovine Somatotropin and the US Dairy Industry

Bovine Somatotropin (bST) is a naturally occurring, protein-structured hormone that regulates growth and lactation in dairy cows. When administered to dairy cows, bST increases metabolic efficiency which results in added milk production. Recent advances in genetic engineering have made it possible to commer- cially produce bST at a much lower cost than was formerly attainable. This bST production-cost reduction now makes bST a viable factor of commercial milk production. Experimental results indicate that the main determinants of the cow’s response are the amount and frequency‘of bST injections. Factors which do not seem to be strongly related to bST are the cow’s innate production potential and age, and environmental stresses such as heat and humidity. Furthermore, the bST injections require minimal capital outlays, and can be accomplished easily by any producer. Thus, the potential for commercial use of bST seems substantial.

The overall impact of this new technology on the dairy industry has already been examined by Fallert et a1.,l1 Lesser et a1.,12 Kaiser and Tauer,13 and Magrath and Tauer.l* In general it has been found that the economic impact of bST depends on such critical unknowns as (a) the effect of bST on cows’ production and feed intake in a commercial dairy, (b) the dosage size, cost, and frequency, (c) the speed and ultimate level of adoption by milk producers, and (d) the reaction of government policy to deal with the surplus milk production that will result under current price support policy. Several dairy groups are actively lobbying against FDA approval of bST and may in fact succeed in banning its use in the US.

The PAM model can be used to analyze the adoption of, or conversely a ban on, this technology. The results of a ban can also be compared to situations that existed historically in the dairy industry. Baseline econometric projections are presented in Table I1 which shows four different dairy policy scenarios. Case I shows actual data depicting the dairy sector as it existed in 1986. This situation was transitional, however, due to the size of government price support purchases.

2 16 MIX AND DAHLGRAN

Table 11. be Analyzed by the Policy Analysis Matrix Model.

US Domestic Dairy Policy Scenarios to

Case

Economic Variable

I I1 I11 IV 1986 1986 1996 1996

Actual Equil wlo bST wlbST

Producing Dairy Cows thous hd 10,813 10,595 9,532 9,088 Production per Cow lbs 13,260 12,780 15,968 16,835 Total Production bill lbs 143.4 135.4 152.0 153.0 Commercial Utilization " 133.4 131.8 148.9 149.9 Government Purchases 10.6 3.6 2.9 2.8

Support Price 11.60 10.60 10.10 8.60

I ,

Average Milk Price $lcwt 12.50 11.42 11.50 10.10 I

Sources: Case I (Agricultural Statistics, USDA). Case I1 (Dahlgran). Case I11 and IV (Fallert).

Legislated government price support purchase targets are 2.5 to 5 billion pounds indicating that the baseline case contains incompatibly high support prices. The data shown in Case I1 are ex ante econometric forecasts (Dahlgran15) showing approximately what the dairy situation would have been in 1986 if the support price had been cut in early 1984 to bring the US milk market back into equilibrium. Cases I and I1 can be compared to show social profits and losses associated with a policy of high support prices ($ll.60/cwt versus $10.60/cwt).

Cases I11 and IV are derived from Fallert's'l study of the impact of bST on US milk markets. Case I11 shows projections for the dairy industry for 1996 with a US ban on the use of bST in milk production. Case IV shows the impact of bST availability and adoption on US milk markets. In Case IV the support price has been reduced to keep price support purchases in line with legislated targets. Because Cases I11 and IV assume nearly identical price support purchases, their comparison allows a computation of the social profitability of allowing the use of bST.

The PAM format must be modified slightly to describe the sectoral effects of domestic policies. Specifically, purchased inputs, which are typically variable, replace tradable inputs, and fixed inputs take the place of domestic factors. Explicit prices exist for valuing the purchased inputs while implicit prices must be determined for the fixed factors. This modified PAM format is shown in Table I11 where it is used to describe the impacts on the US dairy sector of high milk-price supports and of banning bST. The first column shows the impact in 1986 of high milk-price supports ($1 1.60/cwt versus the legislatively-compatible $10.60/cwt). The second column of Table I11 shows the impact in 1996 of banning bST before its scheduled approval in 1991.

According to the results in Table 111, the policy effect of banning bST is roughly equivalent to the $11.60/cwt price support policy of 1986. Both policies result in a divergence between private and social profitability of about $1.35/cwt and a net transfer ratio of about 24%. However, these two policies differ in their


Table 111. for the Dairy Industry, 1986 and 1996 under Various Policies.

Private and Social Costs, Revenues, and Profits

Item PAM Variable 1986 1996

Private Output prices

Primary Secondary

Input Costs Purchased Inputs Land Labor Capital

Total Costs Returns

Social Output prices

Primary Secondary


Total Costs Returns

Policy Effects' Output Prices

Primary Secondary


Total Costs Net Effects of Policy

Derived Measures Private Cost Ratio Domestic Resource Cost Ratio Net Transfer Ratio Producer Subsidy Equivalent Subsidy Ratio to Producers

A

B

C

D

E

F

G

H

I

J

K

L

Case I Case 111

$12.50 $11.50 1.03 0.86

6.21 5.83 1.99 1.65 1.67 1.39

2.20 2.65 12.52 11.07 1.01 1.29

- -

Case11 CaseIV

$11.42 $10.10 1.07 0.81

6.29 6.04 2.06 1.53 1.74 1.32

12.84 10.97 -0.35 -0.06

2.75 - 2.09 -

$1.08 $1.40 -0.04 0.04

f0.08 +0.21 +0.07 -0.12 +O.M -0.07 f O . 1 0 -0.11 +0.32 -0.09 f1.36 +1.35

0.862 0.802 1.056 1.014 0.240 0.244

10.0 10.9 10.9 12.4 -

SPlus (+) represents a subsidy, minus (-) represents a tax.


impact on the average cost structure. Reduction of the 1986 support price does not greatly influence the average costs of the purchased inputs. However, in analyzing the impact of bST, the increase in average cost of the purchased inputs is relatively large. Also, the high price support levels of 1986 depressed average costs of the owned factors while a ban on bST increases the average costs of the owned factors. The reason for this is that most of the owned inputs are fixed, and bST utilization increases output resulting in lower average fixed costs while a cut in the support price reduces output, increasing average fixed costs.

An extension of the analysis shown in Table I11 could focus on regional effects of a ban on bST, or conversely, the regional effects of the use of bST. Such an analysis will indicate the future milk-production competitiveness of various re- gions vis a vis each other. Such an analysis has implications for agribusinesses in terms of the scales of regional milk production and the resulting capital needed for the assembly, processing, and distribution of the various dairy products. Likewise, this approach could be used to indicate the future competitiveness of the US in the production of not only dairy products, but also other agricultural commodities under different biological-technological developments such as biological nitrogen fixation (BNF) (Halbrendt and Blase16) and porcine somatropin.

Other Applications

Government policies which stimulate competitiveness may take the form of an investment tax credit program. Currently there is debate about reinstating these credits to encourage asset sales and subsequently generate tax revenues. The application of PAM to a set of representative agribusiness firms would provide an evaluation of the impact of changes in the tax credit program on profitability. Alternative scenarios could be devised to represent different tax incentive programs. The impacts would be observed in terms of the costs of capital and private profitability. The transfers resulting from the programs would be reflected in the difference between the private and social cost of capital. The availability of such analyses would be useful for lobbying by agribusiness firms and for policy makers concerned with competitiveness of these firms.

Another application of the PAM model is in the competitive efficiency of a subsector of agribusiness. This type of analysis involves a comparison of the existing industry pricing and production behavior with a competitive norm. Such a comparison would use as private prices and costs the actual average costs and revenues of the firm or industry. The social costs should be filled with the average opportunity cost of land, the average opportunity cost of capital and the average opportunity cost of managerial labor. Tradable inputs would be all of those purchased by the firm. Explicit costs are readily available for these inputs. Social profits and competitive prices are determined jointly by assuming prices which allow firms to earn a return for risk-taking. In this case, the effects of policy and market imperfections will indicate the magnitude and allocation of the distortions to the various inputs and outputs.

CONCLUSIONS

In this article we have demonstrated applications of social profitability analysis and the PAM interface technique to many agribusiness competitiveness issues.


The method has been demonstrated to be general, capable of analyzing policies and market imperfections affecting an entire agricultural system and individual sectors. Applications to subsectors and individual firms have also been suggested. The methodology is conceptually clear in its approach, relying on comparative budgets. In this regard, the tool requires an understanding of budgeting and an economic understanding of the system to be analyzed. The methodology is flexible, as costs may be classified in a number of different ways. The tool is limited only by the number of policy evaluations demanding attention. Policies and distortions not discussed here but where the PAM method could be utilized include environmental issues, PL 480 donations and other food aid, and trade and exchange rate policies.

REFERENCES

1. K.F. Harling, “The Effect of Government Policy on Industries: An Approach to its Analysis,” Agribusiness: An Internaiwnal Joumul, 5 , 497-504 (1989).

2. E.A. Monke and S.R. Pearson, The Policy Analysis Matrix for Agricultural Development, Cornell University Press, Ithaca and London, 1989.

3. S.R. Pearson, F. Avillez, J.W. Bentley, et al., Portuguese Agriculture in Transition, Cornell University Press, Ithaca and London, 1987.

4. M. Banelay and S.R. Pearson, “The Efficiency of Producing Alcohol for Energy in Brazil,” Economic Development and Cultural Change, 31 , 131-144 (1982).

5. D.R. Byerlee, “Comparative Advantage and Policy Incentives for Wheat Production in Ec- uador,” CIMMYT Economics Program, Working Paper 01/85, El Batan, Mexico, 1985.

6. W.P. Falcon, et al., The Cassava Economy of Java, Stanford University Press, Stanford, CA, 1984.

7. W.D. Ingram and S.R. Pearson, “The Impact of Investment Concessions on the Profitability of Selected Firms in Ghana,” Economic Development and Cultural Change, 29, 831-39 (1981).

8. E. Monke, S. R. Pearson, and N. Akransee, “Comparative Advantage, Government Policies, and International Trade in Rice,” Food Research Institue Studies, 15, 259-283 (1976).

9. S. R. Pearson, J.D. Stryker, C.P. Humphreys, et al., Rice in West Africa: Policy and Econom- ics, Stanford University Press, Stanford, CA, 1981.

10. C.P. Timmer, Ed., The Corn Economy of Indonesia, Cornell University Press, Ithaca and London, 1987.

11. R. Fallert, T. McGuckin, C. Betts, and D. Bruner, bST and the Dairy Industry: A National, Regional and Farm-Level Analysis, USDAIERS, Agricultural Economics Report 579, Wash- ington, DC, October 1987.

12. W. Lesser, W. Magrath, and R. Kalter, “Projecting Adoption Rates: An Application of an Ex Ante Procedure to Biotechnology Products,” North Central Journal of Agricultural Economics,

13. H.M. Kaiser and L.W. Tauer, “Impact of Bovine Somatotropin on US Dairy Markets under Alternative Policy Options,” North Central Journal of Agricultural Economics, 11, 59-73 (1989).

14. W.B. Magrath and L.W. Tauer, “The Economic Impact of bGH on the New York State Dairy Sector: Comparative Static Results,” Northeastern Journal of Agricultural and Resource Eco- nomics, 15, 6-13 (1986).

15. R.A. Dahlgan, “A Synthesis of Microeconomic Duality Theory and Distributed Lag Modeling with Implications for US Dairy Policy,” North Central Journal of Agricultural Economics, 7 ,

16. C. Halbrendt and M. Blase, “Potential Impact of Biological Nitrogen Fixation: The Case of

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a social accounting approach to analyzing agribusiness competitiveness

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