IDEAS home Printed from https://ideas.repec.org/a/gam/jagris/v11y2021i1p54-d478527.html
   My bibliography  Save this article

Examining the Input and Output Linkages in Agricultural Production Systems

Author

Listed:
  • Dong Hee Suh

    (Department of Food and Resource Economics, Korea University, 145 Anam-ro, Seongbuk-gu, Seoul 02841, Korea)

  • Charles B. Moss

    (Food and Resource Economics Department, University of Florida, Gainesville, FL 32611-0240, USA)

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.

Suggested Citation

  • Dong Hee Suh & Charles B. Moss, 2021. "Examining the Input and Output Linkages in Agricultural Production Systems," Agriculture, MDPI, vol. 11(1), pages 1-13, January.
    • Handle: RePEc:gam:jagris:v:11:y:2021:i:1:p:54-:d:478527
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2077-0472/11/1/54/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2077-0472/11/1/54/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Vernon W. Ruttan, 2002. "Productivity Growth in World Agriculture: Sources and Constraints," Journal of Economic Perspectives, American Economic Association, vol. 16(4), pages 161-184, Fall.
    2. Maros Ivanic & Will Martin, 2008. "Implications of higher global food prices for poverty in low‐income countries1," Agricultural Economics, International Association of Agricultural Economists, vol. 39(s1), pages 405-416, November.
    3. Wang, Sun Ling & Heisey, Paul & Schimmelpfennig, David & Ball, Eldon, 2015. "Agricultural Productivity Growth in the United States: Measurement, Trends, and Drivers," Economic Research Report 207954, United States Department of Agriculture, Economic Research Service.
    4. Clements, Kenneth W. & Theil, Henri, 1978. "A simple method of estimating price elasticities in international trade," Economics Letters, Elsevier, vol. 1(2), pages 133-137.
    5. Thomas W. Hertel & Kyle Stiegert & Harry Vroomen, 1996. "Nitrogen-Land Substitution in Corn Production: A Reconciliation of Aggregate and Firm-Level Evidence," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(1), pages 30-40.
    6. Moss, Charles B. & Livanis, Grigorios T. & Schmitz, Andrew, 2010. "The Effect of Increased Energy Prices on Agriculture: A Differential Supply Approach," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 42(4), pages 1-8, November.
    7. Terrell, Dek, 1996. "Incorporating Monotonicity and Concavity Conditions in Flexible Functional Forms," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 11(2), pages 179-194, March-Apr.
    8. Chambers,Robert G., 1988. "Applied Production Analysis," Cambridge Books, Cambridge University Press, number 9780521314275.
    9. Anuradha Mittal, 2009. "The 2008 food price crisis: Rethinking food security policies," G-24 Discussion Papers 56, United Nations Conference on Trade and Development.
    10. Sonia, Akter & Syed Abul, Basher, 2013. "The impacts of the global food and financial crises on household food security and economic well-being: evidence from Bangladesh," MPRA Paper 47859, University Library of Munich, Germany.
    11. Elobeid Amani & Hart Chad, 2007. "Ethanol Expansion in the Food versus Fuel Debate: How Will Developing Countries Fare?," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 5(2), pages 1-23, December.
    12. Dong Hee Suh & Charles B. Moss, 2017. "Decompositions of corn price effects: implications for feed grain demand and livestock supply," Agricultural Economics, International Association of Agricultural Economists, vol. 48(4), pages 491-500, July.
    13. Anríquez, Gustavo & Daidone, Silvio & Mane, Erdgin, 2013. "Rising food prices and undernourishment: A cross-country inquiry," Food Policy, Elsevier, vol. 38(C), pages 190-202.
    14. Hertel, Thomas W., 2010. "The Global Supply and Demand for Agricultural Land in 2050: A Perfect Storm in the Making?," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 92639, Agricultural and Applied Economics Association.
    15. Ivanic, Maros & Martin, Will, 2008. "Implications of higher global food prices for poverty in low-income countries," Policy Research Working Paper Series 4594, The World Bank.
    16. Mitchell, Donald, 2008. "A note on rising food prices," Policy Research Working Paper Series 4682, The World Bank.
    17. Hendrik Wolff & Thomas Heckelei & Ron Mittelhammer, 2010. "Imposing Curvature and Monotonicity on Flexible Functional Forms: An Efficient Regional Approach," Computational Economics, Springer;Society for Computational Economics, vol. 36(4), pages 309-339, December.
    18. Piroli, Giuseppe & Ciaian, Pavel & Kancs, d'Artis, 2012. "Land use change impacts of biofuels: Near-VAR evidence from the US," Ecological Economics, Elsevier, vol. 84(C), pages 98-109.
    19. Clements, Kenneth W. & Izan, H.Y., 1982. "More on an aggregative multiproduct supply model," European Economic Review, Elsevier, vol. 17(2), pages 271-276.
    20. Laitinen, Kenneth & Theil, Henri, 1978. "Supply and demand of the multiproduct firm," European Economic Review, Elsevier, vol. 11(2), pages 107-154, August.
    21. Kalkuhl, Matthias & von Braun, Joachim & Torero, Maximo, 2016. "Food Price Volatility and Its Implications for Food Security and Policy," MPRA Paper 72164, University Library of Munich, Germany.
    22. Livanis, Grigorios & Moss, Charles B., 2006. "Quasi-fixity and multiproduct firms," Economics Letters, Elsevier, vol. 93(2), pages 228-234, November.
    23. C. Richard Shumway & Roberto R. Saez & Pablo E. Gottret, 1988. "Multiproduct Supply and Input Demand in U.S. Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 70(2), pages 330-337.
    24. Nicola Rossi, 1984. "The Estimation of Product Supply and Input Demand by the Differential Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 66(3), pages 368-375.
    25. Clements, Kenneth W., 1980. "An aggregative multiproduct supply model," European Economic Review, Elsevier, vol. 13(2), pages 239-245, March.
    26. Matthias Kalkuhl & Joachim von Braun & Maximo Torero (ed.), 2016. "Food Price Volatility and Its Implications for Food Security and Policy," Springer Books, Springer, number 978-3-319-28201-5, September.
    27. Alex F. McCalla, 2009. "World Food Prices: Causes and Consequences," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 57(1), pages 23-34, March.
    28. Palominos, Pedro & Quezada, Luis & Moncada, Germán, 2009. "Modeling the response capability of a production system," International Journal of Production Economics, Elsevier, vol. 122(1), pages 458-468, November.
    29. Chris Funk & Molly Brown, 2009. "Declining global per capita agricultural production and warming oceans threaten food security," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 1(3), pages 271-289, September.
    30. Grace, Kathryn & Brown, Molly & McNally, Amy, 2014. "Examining the link between food prices and food insecurity: A multi-level analysis of maize price and birthweight in Kenya," Food Policy, Elsevier, vol. 46(C), pages 56-65.
    31. Ge, Houtian & Gray, Richard & Nolan, James, 2015. "Agricultural supply chain optimization and complexity: A comparison of analytic vs simulated solutions and policies," International Journal of Production Economics, Elsevier, vol. 159(C), pages 208-220.
    32. Jana, R.K. & Sharma, Dinesh K. & Chakraborty, B., 2016. "A hybrid probabilistic fuzzy goal programming approach for agricultural decision-making," International Journal of Production Economics, Elsevier, vol. 173(C), pages 134-141.
    33. Miljkovic, Dragan & Shaik, Saleem & Braun, Dane, 2012. "Impact of biofuel policies on livestock production in the United States," Journal of Policy Modeling, Elsevier, vol. 34(6), pages 817-831.
    34. Banasik, Aleksander & Kanellopoulos, Argyris & Claassen, G.D.H. & Bloemhof-Ruwaard, Jacqueline M. & van der Vorst, Jack G.A.J., 2017. "Closing loops in agricultural supply chains using multi-objective optimization: A case study of an industrial mushroom supply chain," International Journal of Production Economics, Elsevier, vol. 183(PB), pages 409-420.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Oana Coca & Diana Creangă & Ștefan Viziteu & Ioan Sebastian Brumă & Gavril Ștefan, 2023. "Analysis of the Determinants of Agriculture Performance at the European Union Level," Agriculture, MDPI, vol. 13(3), pages 1-23, March.
    2. Lingying Lu & Guoliang Xu & Zhiyuan Li & Chunyan Wan, 2022. "Understanding the Farmland Rights Confirmation Policy from the Perspective of Farmers: Evidence from Jiangxi, China," IJERPH, MDPI, vol. 19(18), pages 1-13, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Suh, Dong Hee & Moss, Charles B., 2014. "Exploring Agricultural Production Systems: Interactions between the Crop and Livestock Sectors," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170149, Agricultural and Applied Economics Association.
    2. Marwa Ben Abdallah & Maria Fekete-Farkas & Zoltan Lakner, 2021. "Exploring the Link between Food Security and Food Price Dynamics: A Bibliometric Analysis," Agriculture, MDPI, vol. 11(3), pages 1-19, March.
    3. Dalheimer, Bernhard & Herwartz, Helmut & Lange, Alexander, 2021. "The threat of oil market turmoils to food price stability in Sub-Saharan Africa," Energy Economics, Elsevier, vol. 93(C).
    4. Gülcan ÖNEL, 2018. "An implicit model of adjustment costs in differential input demand systems," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(2(615), S), pages 119-132, Summer.
    5. Giray GOZGOR & Baris KABLAMACI, 2014. "The linkage between oil and agricultural commodity prices in the light of the perceived global risk," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 60(7), pages 332-342.
    6. Md. Fuad Hassan & Lukas Kornher, 2022. "Farm wage and Rice Price dynamics in Bangladesh," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 14(1), pages 127-146, February.
    7. Lafang Wang & Wenjing Duan & Dan Qu & Shaojun Wang, 2018. "What matters for global food price volatility?," Empirical Economics, Springer, vol. 54(4), pages 1549-1572, June.
    8. Amolegbe, Khadijat B. & Upton, Joanna & Bageant, Elizabeth & Blom, Sylvia, 2021. "Food price volatility and household food security: Evidence from Nigeria," Food Policy, Elsevier, vol. 102(C).
    9. Aradhyula, Satheesh Venkata, 1989. "Policy structure, output supply and input demand for US crops," ISU General Staff Papers 198901010800009909, Iowa State University, Department of Economics.
    10. James L. Seale Jr., & Gulcan Onel & Manhong Zhu, 2016. "A New Empirical Output Allocation Model for the Competitive Multiproduct Firm," Economic Papers, The Economic Society of Australia, vol. 35(4), pages 403-410, December.
    11. Vorotnikova, Ekaterina & Asci, Serhat & Seale, James L., Jr., 2013. "Effect of Relative Price Changes of Top Principle Crops on U.S. Farm Land Allocation," 2013 Annual Meeting, February 2-5, 2013, Orlando, Florida 143099, Southern Agricultural Economics Association.
    12. Dong Hee Suh & Charles B. Moss, 2017. "Dynamic adjustment of ethanol demand to crude oil prices: implications for mandated ethanol usage," Empirical Economics, Springer, vol. 52(4), pages 1587-1607, June.
    13. Zhu, Manhong & Seale, James L. Jr & VanSickle, John, 2015. "China’s soybean import allocation analysis by country-of-origin," 2015 Annual Meeting, January 31-February 3, 2015, Atlanta, Georgia 196797, Southern Agricultural Economics Association.
    14. Seale, James L. & Vorotnikova, Ekaterina & Asci, Serhat, 2014. "An empirical input allocation model for the multiproduct firm," Economics Letters, Elsevier, vol. 124(3), pages 367-369.
    15. Zhu, Manhong & Onel, Gulcan & Seale, James L., 2015. "An empirical input allocation model for the cost minimizing multiproduct firm," Economics Letters, Elsevier, vol. 132(C), pages 73-76.
    16. Dethier, Jean-Jacques & Effenberger, Alexandra, 2012. "Agriculture and development: A brief review of the literature," Economic Systems, Elsevier, vol. 36(2), pages 175-205.
    17. Suh, Dong Hee, 2016. "Interfuel substitution and biomass use in the U.S. industrial sector: A differential approach," Energy, Elsevier, vol. 102(C), pages 24-30.
    18. Joe Dewbre & Céline Giner & Wyatt Thompson & Martin Von Lampe, 2008. "High food commodity prices: will they stay? who will pay?," Agricultural Economics, International Association of Agricultural Economists, vol. 39(s1), pages 393-403, November.
    19. Jasmien De Winne & Gert Peersman, 2021. "The adverse consequences of global harvest and weather disruptions on economic activity," Nature Climate Change, Nature, vol. 11(8), pages 665-672, August.
    20. Jaah, Mkupete & Fintel, Dieter von & Burger, Ronelle, 2021. "Maize Price Shock, Agriculture Production and Children Nutrition Outcomes in Tanzania," 2021 Conference, August 17-31, 2021, Virtual 314974, International Association of Agricultural Economists.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jagris:v:11:y:2021:i:1:p:54-:d:478527. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.