What multipliers don’t tell you: A spatial analysis of farm household linkages

Agricultural policy and farm lobby groups often stress the role of farm production in sustaining local economies. This paper considers the spatial pattern of the upstream and downstream agricultural transactions of farms in North East Scotland and, in particular, the extent to which they take place within the locality of the farm holding. Three alternative definitions of “local” are considered: a distance based measure; a measure which takes into account the location of the farm in relation to the nearest town; and finally a measure which takes into account the location of input suppliers/output purchasers. The results are shown to vary qualitatively according to the definition of local adopted, highlighting the importance of allowing for context as well as demand-side factors when explaining purchasing and sales decisions. A highly complex pattern of production-related linkages in the region is revealed. Certain towns are found to dominate agriculture-related transactions in the region reflecting the spatial concentration of upstream and downstream agribusinesses. Probit analysis suggests that farm size, farm type and risk attitudes influence output sales patterns. The policy implications of the findings are considered.