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<br /> <br />n '" ~ J <br /> <br />- <br />- <br /> <br />Petroleum and natural gas price project ions were made based on an analy- <br />sis of the historical price relationship between primary energy commodities <br />and the various products. The analysis showed that the feedstock-product <br />price relationship would best be approximated for the High Plains Region <br />on a constant dollar per million Btu basis. The projections were then devel- <br />oped using the current (MarCh 1980) price markups. <br /> <br />Electricity prices were projected based on prOjections of future <br />generating capacity mix and the projections of input fuel prices. The pro- <br />jections assumed successful implementation of the Powerplant and Industrial <br />Fuel Use Act of 1978 and the resultant impact of reduced natural gas fueled <br />electricity generation in the Study area. <br /> <br />Estimates of other farm input prices were developed by Arthur O. Little, <br />Inc. in conjunction with the state researchers, based in part upon an assess- <br />ment of the effect of energy prices on energy related industr;es--notably <br />fertilizer--and the market distorting effects of currently enforceable <br />patents on important herbicides and pesticides. <br /> <br />An estimate of the prices at which crops can be sold is one of the most <br />important factors to be incorporated into any farm enterprise model. Except <br />for alfalfa, major field crops raised in the High Plains--cotton, wheat. <br />corn, grain sorghum and soybeans--have a nationwide market, and local prices <br />paid to farmers closely reflect the national price. Alfalfa is used in <br />livestock production and demand is related to its nutritional and roughage <br />value and the total demand for feed grains in the Region. To estimate crop <br />prices, the General Contractor selected the NIRAP {National-Inter-regional <br />Agricultural Projection} model [4]. developed by the U.S. Department of <br />Agriculture.... National prices were then adjusted in each state to reflect <br />differences based on transportation costs and local market conditions. <br /> <br />. See F i gu re 1. <br /> <br />.. Because USDA is prohibited by law from estimating cotton prices, <br />Arthur D. Little researchers developed independent projections of <br />cotton prices. <br /> <br />A-II <br />