The figures include both the direct outlays and the opportunity costs of intervention


A significant amount of liquidation occurs, in contrast, during the tax scenario, due largely to the high levels of real interest rates. Thus, while it would be expected that the higher grain prices of the subsidy scenario would hurt the livestock sector, this effect is more than offset by higher income and lower interest rates. Table 11 reports the U.S. Treasury cost of the provisions of the 1981 Farm ,I Bill and the settings of policy parameters in Table 4. The major components of the calculations include deficiency payments, carrying costs of government-held inventories, the cost of acquisition and release of government-owned inventories, and the opportunity cost of holding stocks. As can be seen in the Table, these costs are considerably higher during the tax scenario–the real cost of agricultural policy is as much as 45 times larger for some quarters These large differences in costs are due mainly to deficiency payments incurred as a result of the low prices of the tax scenario, and also due to the cost of acquiring stocks to support the market price. Thus, it is apparent that one important effect of a tight monetary policy is on the public sector, rather than the wheat and feed grains sectors. If a policy of supporting prices by acquiring stocks is followed, much of the effect of low prices is shifted to the government. This is especially true when farm incomes are examined. Table 12 gives net farm incomes for wheat and feed grains, along with income to the livestock sector.

In computing the income measures for crops, no storage activity was considered; instead,growing blueberries total production is assumed to be sold in the harvest quarter for either the market or support price. Government payments are also included in these income measures. Costs are simply the variable per acre cost reported in Table 4, multiplied by the number of planted acres, plus storage costs associated with the farmer-owned reserve. Under the subsidy scenario, all computations are based on a 60 percent participation rate. while this is assumed to be 100 percent during the tax period. For the livestock sector, the retail price is used for meats. since the model does not at present include margins determination. result. This figure overstates income to the farm sector as a .J . As can be seen from the Table, income is generated during the harvest quarter. and in the remaining quarters, carrying cost charges are incurred for both grains sectors. The important quarters are those in which harvest occurs. We find that the third quarter real incomes for wheat and fourth quarter real incomes for feed grains are higher under the regime of tight money. The only exception is the fourth quarter of 1984, when ,they are virtually the same in the two scenarios. This is not surprising when the price support policy and the government expenditures on these programs are considered. The burden of low prices which would have occurred was felt by the public sector, not wheat and feed grains producers. This situation is reversed when government stocks are not used to support prices. Throughout the simulations, on the other hand. livestock producers prefer the easy monetary policy. Even though this puts pressure on prices of feed. the combined effects of lower real interest rates and higher incomes dominate the income calculation.In this paper, we took the overs booting model and the fix-price, flex-price characterization of the U.S. economy as the starting point for policy experiments to examine the effects of monetary policy on the agricultural sector.

The results support the predictions of the simple overshooting model that monetary policy can have significant real effects in the agricultural sector. These results are also consistent with the experience of the agricultural sector since the early 1970s. Results for Australia also support the fix-price. flex-price characterization. In the simulation experiments conducted, we considered the effects of a change in the degree of monetization of the federal deficit on the macroeconfomy. the agricultural sector, and government expenditures on agricultural programs. We found substantial effects on income. real interest rates, and exchange rates, and on the rate of growth of the price level. Different levels of monetization of the deficit can be viewed as providing an indication of the tightness of monetary policy, since the level of government spending was held constant in the two scenarios. As these shocks to macroeconomic variables are passed through to the agricultural sector, there are significant responses in the grain and livestock sectors. Grain prices fell with money growth rates, while more grain showed up in government stocks. The strong dollar led to the weakening of export markets, and high interest rates added to the problem by increasing the opportunity costs to private agents of holding grain stocks. Livestock producers also fared poorly during the tight money period as high real interest rates encouraged the reduction of inventories. As one might expect, the shock to livestock prices increases with the length of the production cycle. Analyses of conditions in the agricultural sector must, therefore, take into account not cnty reat demand and supply forces directly related to the sector, but also the effects of monetary arid fiscat policies operating through these forces. This paper has argued that the short-run effects of these policies are sub-stantial. 

The tong-run effects of these shocks can be argued to be neutral and there is support in the titerature for this using simple regressions involving the rate of change of price indices. The practical length of the short run, however, which one might define as the time period during which the kinds of external shocks examined above are of concern to agricultural policymakers, remains an open question. Using a model of the agricultural sector, we have found effects on breeding stocks and grain inventories which are likely to be felt for some time.An important result of simutating the effects of a price support policy which transfers grain to government positions when prices are less than 90 percent of support prices is that the burden of tower prices is targely shifted from producers to taxpayers A policy of continuing to support the nominat price of grain, much as was the case in the earty 1980s, can only lead to increasingly intoterable government expenditures and stockhotding. and increasing support for prouction controls. another PIK program, or export subsidies. The analysis of changes in agricultural policy parameters will be of particular interest given recent developments in the U.S. A new Farm Bill has been passed and support prices have been reduced considerabty. One can therefore expect the substitution of exports and targe deficiency payments for government stock-carrying. In the context of the fix-price, flex-price specification we have advanced in this paper, analysis of different fiscal policies and varying the parameters of agricultural programs will help to indicate whether sector-specific policies can offset the large budget outlays which were legislated under the provisions of the 1981 Farm Bill. In addition, some of the long-run properties of the model will be explored. Of particular interest will be a determination of the duration of the effects of changes in monetary policy in the agricultural sector. The length of time before money would be neutral in such a model of the agricultural sector has not been tested,square plant pots nor has the simple overshooting hypothesis. Given the reasons which might exist for violations of the law of one price and the many ways monetary policy and exchange rates affect sectors such as agriculture , it is likely that the one-for-one movements in the exchange rate and agricultural prices will not occur, at least, not for sectors such as .1. wheat and feed grains in the U.S.Botswana is a land-locked, semi-arid African country with a population of over 2 million people. The Kgalagadi Desert covers approximately 70% of Botswana. Temperatures reach as high as 38–46°C and, coupled with an exceptionally low rainfall, this results in Botswana being described as “one of the most desertified countries in sub-Saharan Africa” . Rainfall in the Kgalagadi Desert ranges from about <150 mm in southwestern Botswana to ca. 650 mm or more in the north depending on the year. Botswana thus relies almost exclusively on imports for food and fuel, which ultimately is not sustainable.

Most of the agriculture in Botswana takes place in savannah ecosystems, defined as the lands between forested regions and deserts. Savannahs make up 10-25% of the world’s land surface, and in many parts of the world, including Africa, they have a dual purpose: growing crops and grazing livestock. The natural vegetation of savannah ecosystems in Botswana consists of grasses, thorny shrubs and trees, particularly vachellias , as well as numerous native herbaceous dicotyledons, especially nitrogen-fixing legumes such as Tephrosia purpurea and Indigofera charlieriana. Many agricultural crops are cultivated in savannahs in Botswana, the most common being cereals, especially sorghum, sweet sorghum, millet, and maize. Other non-cereal crops include sunflowers, watermelons and nitrogen-fixing crops including beans, cowpea, and groundnut. Farmers are only able to meet 18% of the domestic demand for cereals, and crop production overall makes up a very small percentage of the agricultural gross domestic product of Botswana. As a result, most food other than beef is imported from elsewhere. Agricultural crop production in Botswana is challenging in large part due to the lack of reliable rainfall, coupled with a high evapotranspiration rate. Droughts have been known to last 15-20 years, with alternating periods of rainfall punctuated by drought years. Furthermore, only 0.65-0.7% of Botswana is arable, and the sandy soils are highly susceptible to wind erosion. Arenosols are also frequently nutrient-poor, especially with regard to nitrogen, phosphorus, and potassium. Moreover, much of the soil is contaminated by pesticides and other toxic substances. Like most of sub-Saharan Africa, the agricultural sector in Botswana is therefore extremely vulnerable to changes occurring worldwide in terms of climatic fluctuations and population growth. Plant growth-promoting bacteria improve plant growth via diverse mechanisms including nitrogen fixation, phosphate solubilization, siderophore production for iron acquisition, as well as antagonizing pathogens, among others. The objective of this research was to assess microbial diversity in an agricultural soil in Botswana to identify rhizobial strains and PGPB, which are adapted to this ecosystem. To do this, we performed both 1) cultivation-independent analysis of the soil and also of legume root nodules to determine the differences in microbial diversity in addition to 2) cultivation-dependent analyses of rhizospheres collected in two different years and isolations of plant-selected bacteria from the interior of root nodules of different legumes used as trap plants. Because only 1-3% of bacteria in soil can be cultured, we reasoned that the nodule-isolated bacteria that could grow on artificial media might serve as potential inoculants because they were selected by the legume host. Bacterial isolates from nodules and soil were both evaluated for their potential for PGPB activity using various assays. Specifically, we tested for bacteria that promoted plant growth in N-limiting substrates, solubilized phosphate, produced siderophores, were salt and pH-tolerant, and were not known pathogens. These traits strongly suggest plant growth promotion ability. Even though the number of soil isolates that can be cultured is low compared to the number detected by cultivation-independent methods, many PGPB with potential for use in sustainable agriculture have been isolated from arid soils worldwide. In addition, because legume nodules house bacteria in addition to rhizobia, we isolated non-rhizobial microbes from nodules because they are hypothesized to help in the establishment and maintenance of an effective nitrogen-fixing symbiosis. Ultimately, the use of PGPB isolates from drylands for agricultural production will help reduce the amount of N fertilizer used in soils impacted by climate change and decrease agricultural runoff and fertilizer costs for Sub-Saharan farmers. Because only a small percentage of soil microorganisms can be cultured in the laboratory, we first undertook a cultivation-independent approach to obtain an overview of the diversity of microbes in Botswana soils in addition to using cultivation-dependent methods to discover nodule tissue-isolated microbes that might serve as inoculants for crops grown in dry, nutrientpoor soils. This two-pronged approach of using both cultivation-independent and -dependent methods provided an overview of the Botswana arid soil environment and yielded insight into microbial diversity.