The decreasing share of production agriculture in the U.S. economy in general and Delaware in particular has raised questions about the amount of government resources being spent on the local agricultural sector. A basic question in the debate is: “What is the real economic contribution of agriculture?” This study looks at the economic role of agriculture in Delaware, presenting different perspectives of what agriculture is and what it contributes to the state economy. Based on three definitions of agriculture, the economic impacts as measured by shares to total employment, output, and value added were estimated using IMPLAN, an input-output modeling software. In each economic impact measure, the share of the local agricultural sector to the total Delaware economy ranged from around 2% to 6% in 1991.

An eleven-region stochastic coefficient econometric model was estimated and used in an optimal control framework to evaluate the effectiveness of the dairy price support program and marketing orders in reducing and stabilizing government purchases of dairy products. The results showed significant pressure on the reduction of the support price both in the presence and absence of Class I differentials. The optimal control model also showed that the drop in price support levels did not dramatically alter the regional distribution of milk production.

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