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Abstract
A model for forecasting changes in crop areas in response to changes in output
prices in Australian broadacre agriculture is outlined in this paper. The
crop–livestock interactions and substitution and complementary relationships
among crops are modeled as a set of land allocation decisions made
simultaneously but at a number of hierarchical stages.
The model developed here is broader in scope than previous models of crop
area response in Australian broadacre agriculture in terms of crop coverage.
The method employed takes specific account of lagged relationships and
producer expectations for prices. In the model, area allocation decisions at
the aggregate level are also affected by rainfall. The specified equations are
estimated employing the seemingly unrelated regression procedure, over the
period 1974-75 to 1995-96 using annual data at the national level. The model
is then validated by simulating it over historical and forecast periods. The
preliminary results suggest that the model is capable of generating plausible
estimates of crop area response.