Agriculture and New Agricultural Policies in the Great Plains

The Great Plains will be affected by the 1996 farm legislation in important ways. The transition to the new law could increase demands for farm inputs and services in the Great Plains by $1.2 to $1.4 billion per year (3.8 to 4.6 percent)—enough to make the difference between decline and growth for many farm-related sectors. The residual returns to the farm sector may decline under the 1996 law if demands for agricultural products continue to grow at their historical rates. But residual returns to the sector could increase if demands grow at slightly more than their historical rates, as is likely with the progressive implementation of the North American Free Trade Agreement and World Trade Organization pacts liberalizing trade in agricultural products. Increasing the rate of growth of farm product demands by an average of 1.4 percent per year over less than 4 years would restore longrun net returns to the favorable levels of the 1995 base year.