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<br /> <br />-4'\...... ~.. I <br /> <br />Some states ran the LP models using the higher real energy prices. A <br />full summary of these analyses is contained in study element 8-8. The <br />results show that the increase in energy related costs (pumping, fertilizer, <br />tractor fuel) eats into the farmer's profits. Returns to land and management <br />are reduced. In practice, this would undoubtedly reduce the rate of increase <br />in the sale price of farm acreage. There is some shifting between crops but <br />irrigated land generally remains in production. While energy prices eat into <br />farm profits. returns to land and management are still positive because the <br />value of production continues to increase. A representative example is shown <br />for New Mexico in 2020: some cotton land shifts into sorghum, and returns to <br />land and management are reduced $20 million for the crops there. <br /> <br /> Energy Prices Used <br /> in High Plains Analysis High Band Energy Prices <br />Crop Total Prod. RLM Total Prod. RLM <br />Cotton 25,923,000 IbS. S7,630,OOO 10.124.000 1 bs. S1,646,OOO <br />Wheat 19,686.000 bu. S47.373,OOO 19.497.000 bu. 533,621.000 <br />Sorghum 2.027,000 bu. S8,711,OOO 2,988.000 bu. S8.298,OOO <br />Alfal fa Unchanged <br /> $63.7 million $43.6 million <br /> <br />Those who believed that higher energy prices in the long run might force <br />irrigated land back to dryland production have reasoned from the experience <br />of the past few years. Real oil and gas prices have increased 200 percent <br />and 300 percent respectively over the 1974-80 period. Average yields per <br />acre increase only very gradually as new cultivation practices are adopted. <br />Prices increase slowly in the long run with rising population and income. <br />Short-term prices will show sharp fluctuations because of weather-induced <br />variations in supply. Over the forty year period, a gradual increase in <br />energy prices should be offset by higher crop prices and yields so that <br />the total crop production prOjected in the Baseline will be relatively <br />unaffected. Quantum leaps in energy prices over the very short term <br />(one to five years) can distort these results. <br /> <br />In general, the results shown for di fferent strategies wi 11 not be <br />greatly changed by higher energy prices, although larger price increases <br />could bring dbout improved water use efficiencies in the Baseline in early <br /> <br />A-I? <br />