Modeling crop area allocations in Australian broadacre agriculture

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.

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 Record created 2017-04-01, last modified 2020-10-28

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