Changes in prices received and the impact of weather on farm production were the most common factors contributing to changes in net farm income from 1961 to 1962. The farms with higher returns in 1962 also had higher net farm production and received higher prices for products sold. On the seven farm types with lower net farm income in 1962 compared with a year earlier, net farm production was lower on six. Prices received for products sold averaged lower in 1962 on four farm types, higher on two types, and the same on one. Estimates on costs and returns have been completed for 1961 and earlier years for 39 important types of commercial farms. Net farm incomes averaged higher in 1961 than in 1960 on 27 of these farm types. They were lower on seven types of farms and about the same on five. Returns were higher in 1961 on dairy farms in the Midwest and Northeast, Corn Belt farms, western cattle ranches, tobacco farms in the Coastal Plain of North Carolina, and tobacco-livestock farms in the Bluegrass area of Kentucky. They were lower on poultry farms and western sheep ranches. Changes in net farm income were substantial on most of the farms. Increases from 1960 to 1961 on 12 of the farm types were more than 20 percent. Decreases were more than 50 percent on three types of farms. Over the long run, variations in net returns are the result of changes in prices, production, and production efficiency. In 1957-59, 21 of 37 farm types had higher returns than a decade earlier (1947-49). All of these 21 farm types had higher production and greater production efficiency than a decade earlier, and 5 also received higher prices for products sold. Prices paid for production items averaged higher on all farm types in 1957-59. 4. Mixed trends develop in farm real estate values.-Changes in land values showed no definite trend in the northeast and north-central portions of the country in the 4 months ended July 1, 1962. However, values continued upward in the southeast and south-central regions, and the increases in these States were sufficient to raise the national average 2 percent above the March 1, 1962, level. The index for the 48 contiguous States advanced to 186 (1947-49=100), 5 percent above July 1961. Increases for the latest 12-month period in the southern portion of the country were generally twice those reported in the northern portion (fig. 3). These regional patterns are about the same as in the preceding 4- and 12-month periods ended March 1, 1962. 5. Projected land and water requirement.-A study of land and water resource requirements indicates that food and fiber requirements in 1980 could be met with 407 million acres of cropland, or about 50 million acres less than we had in 1959. This acreage would be available for meeting growing needs for grassland pasture, urban expansion, and other special-purpose uses. The projections are based on certain assumptions with respect to levels and trends in population growth, economic activity, technology, yields, imports and exports, and the needs of the various competing uses. Agriculture is expected to continue as the predominant consumptive user of water well beyond 1980. Acreage irrigated by 1980 would be expected to increase by about a fourth over 1960, and irrigation withdrawals and consumption by about a fifth. The conservation and economic management of water in agricultural uses appears critical for the balanced growth of the economy. 6. Recreation investigations.-Research shows that expansion of recreation and tourism in a 31-county area of the Missouri Ozarks has resulted in significant employment and income opportunities for rural people. By 1970 it is estimated that tourist spending will increase to about $125 million. If this increase comes about, tourist expenditures may represent 40 percent of the gross sales of all retail and service firms in the area. It is likely that such expenditures will be greater than the value of all locally grown farm products. Such extensive recreation development is encouraging for rural people. Over 60 percent of the retail and service businesses in the area associated with recreation were operated by people born in the Ozarks. About 97 percent of the people employed in the tourist trade resided in the county in which they were working, and had lived there before their present employment. This kind of employment utilizes very well those persons that would have difficulty in finding employment in industry or elsewhere because of advanced age or lack of education and training. At the same time, a large recreational complex such as the Missouri Ozarks helps to make better use of resources, to maintain opportunity for persons in the area, and to encourage economic growth. 7. Taxes continue up.-Farm real estate taxes in the 50 States totaled $1,329 million in 1961, an increase of 6.3 percent from the amount levied in 1960. This rise extends an uptrend that has been uninterrupted since 1942. Levies in 1961, at $1.30 per acre, averaged more than three times those of 1942. In 1961, real estate taxes absorbed 8.6 percent of the total net farm income, before deduction of real estate taxes and net rent paid to nonfarm landlords. This was a slight reduction from 1960, attributable to the rise in net farm income. In 1952-54, the proportion was 5.3 percent; in 1947-49, 3.9 percent; and in 1937-41, 6.8 percent. Although taxes as a percentage of net income are higher today than in any of these periods, they are still far below the levels of the early 1930's when they reached an alltime high of 18 percent of net farm income. 8. Rural government and taxation.—With taxes continuing to press more heavily on farmers, cooperative research has been undertaken with the State experiment stations to provide needed guides for constructive action. An analysis of State and local tax systems in the Great Plains showed that while the total taxload in the 10 States in this region is not particularly heavy compared to the rest of the Nation, it is heavily weighted with the property tax. This tax falls particularly heavily on agriculture. Sales and income taxes are generally lower than elsewhere. The relatively heavy property tax, especially in the seven Northern Plain States, may also impede their economic development. Study of a rural Michigan township in the path of urbanization indicated that farmers, although in position to induce local action, seemed to have little awareness of the pace of urbanization or of problems that urbanization would bring. These findings suggest the need for more research and improved information programs for rural people, and underscore the opportunities that exist for constructive action by rural local governments. 9. New developments in rural zoning.—A survey of rural zoning developments indicate that the 50 States have conferred zoning powers on rural governmental units in three-fourths of the 3,000 counties. New exclusive-type farm-zoning districts, initially developed in California and now used in nine States, permit only agriculture and a few supporting activities, and require minimum tracts from 5 to 60 acres. New recreational districts in which agriculture is a desirable secondary use are found in many States. New watershed zoning districts protect mountainous and hilly lands from fire, erosion, soil compaction, pollution, and spoilation of scenic values. Recently developed floodway zones and flood plain zones limit use to agriculture, recreation, and activities not subject to major flood damage. Erection of buildings or other structures requires approval of location and design. Conservation zoning districts, a new term, may enclose either watersheds, flood plains, or both. Their regulations resemble those of watershed and flood plain zones. New open-space zoning districts provide permanent open space or protect natural watercourses. Historic zoning districts now preserve and protect historic buildings and places in nine States. 10. Sizes of farms.—In a study, of sizes of farm businesses necessary to obtain 4 levels of operator cash earnings ranging from $2,500 to $5,500, 8 types of farm were budgeted in 15 selected areas. The budgets describe resource requirements for efficiently organized farms making full use of improved practices and available technology at 1959 cost rates and prospective prices. The budgets, which characterize rather closely the more progressive and adequate-size farms in agriculture, do not necessarily describe current production and income relationships on average farms. Two findings are especially significant: (a) The amount of gross farm sales required for operator cash earnings of $2,500 a year averages $13,400 on the 15 budgeted farms. Operator cash earnings of $5,500 are associated, on the average, with gross sales of about $26,800. Gross sales of farms budgeted for $2,500 operator earnings range from $9,275 on the southeastern Minnesota dairy farm to $26,450 on the cotton-wheat farm in the rolling plains area of Oklahoma. Throughout the $2,500 to $5,500 range of operator earnings on the budgeted farms, an average of approximately $5 gross sales is associated with each $1 of operator earnings. This relationship constitutes a strong incentive for the rapid shifts that are occurring in the size of farms throughout the Nation's agriculture. Farms with $10,000 or more of gross sales are expanding in number, while smaller farms are rapidly decreasing. (b) The average total capital investment in real estate, livestock, and machinery needed to obtain operator earnings to $2,500 was $57,000; for $5,500 operator earnings, $111,000. Returns to capital on the budgeted farms, as measured by a capital charge calculated as 5 percent of the total investment, approach or exceed in some instances, the operator's labor and management earnings. 11. The farmland price puzzle.-Market values of farm real estate have advanced almost steadily since the end of the Korean outbreak without corresponding support from net farm income. As a result, the average value of farm real estate has advanced to about 10 times net income in 1959-61, compared with about 5.6 times income in 1950-54. The imputed rate of return on current market values remains below the rate of interest on farm mortgages, although the rate of return has increased each year from 1959 through 1961. Nearly $50 billion has been added to the apparent capital value in agriculture, despite essentially constant net returns to the industry. Some of the major factors that have contributed to the rise in farmland values appear to be (a) Land prices have responded to general inflation.-Land values have increased about a third more than the general price level, but substantially less than common stocks. Total returns to land from both annual earnings and capital appreciation averaged about 8 percent a year in the 1950-54 period but somewhat less in 1955-60. Farm real estate also has yielded other kinds of return in the form of tax savings and intangibles such as the satisfaction of ownership. (b) Population growth creates a scarcity value for land. The rapid increase in population since the end of World War II has strengthened the belief that land prices will continue to rise over the long term. Projections of land requirements indicate no likely shortage of land for some time to come for the production of food and fiber. Rapid strides in technology have increased the economic supply of land substantially. However, nonagricultural uses of land are likely to increase. (c) Increased returns from technology have been capitalized into land values. Many farms have an excess supply of nonland inputs such as machinery and operator labor which they can profitably utilize by operating more land. Also, the optimum size of farms under present levels of technology is substantially higher than the majority of farms in most areas. As a result, the demand for additional land by established operators has helped to bid up land prices. 12. Part-time farming attractive to farm families.-Studies of part-time farming in Michigan and other States reveal several facts that continue to make it attractive to farm families in better as well as in poorer farming areas. Higher and steadier incomes are usually the primary aims reported by farmers who |