THE DEMAND FOR FARM OUTPUT

This paper treats the demand for farm output as part of an interrelated factor demand system. The farm level outputs are meat, poultry, dairy, fruits and vegetables and other food. The processing and distribution inputs are labor, packaging, transportation and all other. Input demands are modeled using a restricted translog cost function which is conditional on capital stock in the processing sector. The results show that: each category of farm output demand is inelastic; capital stock is an important determinant of the demand for farm output; there is no substitution among various farm outputs and little substitution between outputs and other inputs; there is moderate substitution among the nonfarm inputs; and, increases in nonfarm input cost have significant negative effects on farm output demand.