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Use of the single factoral terms of trade to analyse agricultural production

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  • Euan Fleming

Abstract

The aim in this note is to reintroduce the single factoral terms of trade into the policy arena. This economic concept has scarcely been used by analysts or policy makers over the past three decades. It is defined and compared favourably with other terms of trade concepts in terms of their usefulness to agricultural policy makers in Australia. A distinction is made between the single factoral terms of trade from the viewpoint of the farm business and from the viewpoint of the farm household, but only slightly different indices are specified in each case because of the very high positive correlation between farm prices paid and consumer prices. Developing industry-level indices appears to be a more attractive way to proceed given the substantially different rates of growth in total factor productivity (TFP) between agricultural industries. Despite its usefulness, challenges lie ahead in accurately estimating each of the two components of the single factoral terms of trade, the net barter terms of trade and TFP, and the relations between these two components. Copyright 2007 The Author Journal Compilation 2007 Australian Agricultural and Resource Economics Society Inc. and Blackwell Publishers Ltd .

Suggested Citation

  • Euan Fleming, 2007. "Use of the single factoral terms of trade to analyse agricultural production ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(2), pages 113-119, June.
    • Handle: RePEc:bla:ajarec:v:51:y:2007:i:2:p:113-119
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    File URL: http://hdl.handle.net/10.1111/j.1467-8489.2007.00366.x
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    References listed on IDEAS

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    1. Robert E. Lipsey, 1994. "Quality Change and other Influences on Measures of Export Prices of Manufactured Goods and the Terms of Trade between Primary Products and Manufacture," NBER Working Papers 4671, National Bureau of Economic Research, Inc.
    2. Lipsey, Robert E., 1994. "Quality change and other influences on measures of export prices of manufactured goods," Policy Research Working Paper Series 1348, The World Bank.
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    Cited by:

    1. Kym Anderson & Peter Lloyd & Donald Maclaren, 2007. "Distortions to Agricultural Incentives in Australia Since World War II," The Economic Record, The Economic Society of Australia, vol. 83(263), pages 461-482, December.
    2. Villano, Renato A. & Fleming, Euan M. & Rodgers, Heidi, 2010. "Productivity and returns to resources in the beef enterprise on Victorian farms in the South-West Farm Monitor Project," AFBM Journal, Australasian Farm Business Management Network, vol. 6(2), pages 1-6, April.
    3. Fabrice Nzepang & Saturnin Bertrand Nguenda Anya, 2022. "Effects of ICTs on the Terms of Trade of Sub-Saharan African Economies," Journal of African Trade, Springer, vol. 9(1), pages 107-119, December.

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