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<br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br />I <br /> <br />c. <br />~~~5~~ <br />U'U~ ~u <br /> <br />C. CONSTANT PRICE SUPPLY <br /> <br />The Constant Price Supply component supplies inputs to the other sub- <br />model components. The principal inputs are the amount of government diver- <br />sion and technology index for the Aggregate Farm Output component and <br />cropland availability and crop yields for the Land Use and Regional Share <br />of Production component. <br /> <br />Government Diversion <br /> <br />Diversion programs shift supply curves to the left, which--given a <br />constant demand curve--results in less of the commodity being produced at a <br />higher price. See Figure 11-2 for an illustration of a hypothetical situ- <br />ation. Quantity produced declines from Ql to Q2; farm prices increase from <br />PI to P2. Government diversion programs were used extensively in the late <br />1950's and 1960's when the excessive productive capacity of U.S. agricul- <br />ture caused low commodity prices and low farm income. Because of the tre- <br />mendous increase in export demand during the 1970's, and resultant <br />increases in commodity prices and farm income, government diversion pro- <br />grams were generally phased out. Some minor programs still remain and are <br />projected to remain in effect in the future. An example of this is the <br />milk price support system. The baseline estimated for the High Plains Stu- <br />dy has a government diversion rate of 1 percent of national production. <br /> <br />11-7 <br />