Examining the Input and Output Linkages in Agricultural Production Systems

Abstract

This paper conducts a comprehensive analysis of the agricultural sector’s resource allocation and production decisions. This paper uses the differential systems with quasi-fixity to evaluate the complete agricultural production system, which examines the input and output linkages in terms of elasticities. The differential systems are estimated using the maximum likelihood estimation technique based on the two-step profit-maximizing procedure in theory. The results reveal that livestock production requires more intermediate inputs, but crop production depends on all the inputs, such as labor, capital, and intermediate inputs. In addition, the results show that input demand is inelastic, indicating that the agricultural sector has little flexibility in adjusting the demand for inputs in response to changes in input prices. Substitutable relationships among labor, capital, and intermediate inputs exist, which may reduce the pressures on production costs when input prices rise. Regarding the quasi-fixed input, land expansion changes the composition of labor and intermediate inputs, showing that the agricultural sector reduces the intensive margin when it pursues the extensive margin. Furthermore, the results show that agricultural supply is not very responsive to the respective price changes. Along with the inelastic output supply, there exist substitutable relationships between livestock and crop supply, showing that relative price changes can alter output composition in supply. The agricultural sector also reallocates more land areas into crop production rather than livestock production.

Do Agricultural Supports Affect Production? A Panel ARDL Analysis of Turkey

“…iii) While the increase in input prices affects production negatively in the short run, it has a positive impact over the long run in Turkey. Suh & Moss (2021), Komarek et al (2017) and Srivastava (2017) concluded that input prices affect agricultural production negatively. On the other hand, Taylor & Koo (2008) emphasized that producers respond to the high input and commodity prices by increasing supply for compensating decrease in farm income.…”

An Economic Prognostic Study to Examine the Productivity of Agricultural Smes of Central Europe During the Covid-19 Crisis

“…Lower revenues through the food and hospitality sectors significantly contributed to the drop in worldwide agricultural product trading. During the outbreak, a recurring issue in several economies worldwide was the governmental encouragement of the food self-sufficiency concept (Hrybau et al, 2019;Suh & Moss, 2021). Several governments used trading limitations or other measures to replace domestically grown agricultural products in domestic consumption and commercial food production to promote self-sufficiency and reduce dependence on agricultural product imports.…”

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