FARM DEPENDENCE ON NATURAL GAS

The onset of the energy crisis since 1973 created economic problems throughout the United States. Farmers rely heavily on energy for production purposes. In particular, farmers in the arid western states rely on natural gas for irrigation, and farmers throughout the country rely on natural gas for crop drying. The experience of natural gas shortages and price increases became widespread throughout the economy after 1973. This study was undertaken to explore the impacts of natural gas price increases and supply constraints on agricultural production in order to indicate the types of adjustments farmers would need to make, and to provide state and federal policymakers with an awareness of the crop, state and regional dependence on natural gas for farm production. A qualitative analysis involving collection of information, summarization and analysis of current operational use of natural gas on farms, and calculation of farm dependence on natural gas, by crop, state and region was undertaken. An econometric analysis involving estimation of consumption functions for natural gas used for irrigation and crop drying was also undertaken. The econometric analysis conducted in this study was less successful than the qualitative analysis, most probably a result of data constraints leading to a very small sample size. The qualitative analysis showed that farmers in the Southern Plains region are most dependent on natural gas for irrigation, followed by farmers in the Northern Plains. Production of rice, cotton and grain sorghum is most dependent on natural gas for irrigation. Dependence on natural gas for crop drying is most marked in the Delta States and Northern Plains regions. Rice, peanuts and grain sorghum depend most heavily among crops on natural gas for drying. The variables which seem to have the greatest impact on the consumption of natural gas for irrigation based on the econometric estimation include the quality of land (represented by its market value), the price of fertilizer, and the price of diesel fuel (a substitute). The estimated crop drying equations did not provide useful results. Continued and improved data collection on farm use of natural gas is a necessary first step to continued research on this topic.