An Economic and Statistical Analysis of Selected Structural Characteristics of Louisiana Agricultural Sector and Its Impact on Resource Situations.

Abstract

This study focuses on the importance of structural change in the farm sector and its interactive relationship with the nonfarm sector. This relationship was exemplified through an overview and trend analysis of the structural change and resource adjustments that have occurred in the farming areas in Louisiana between 1959 and 1982. Extrapolative forecasting techniques, such as trend extrapolation, Markov Process, negative exponential and age cohort analysis, were used to project changes in farm numbers to the year 2000. The results show declining farm numbers and the continuation of present trends. Large and medium size farms will increase while small and hobby farms will decrease in number. Evaluation results show that trend extrapolation and Markov Process provide better projections than the other two techniques when judged on the basis of mean squared error and mean absolute error. The impacts of selected structural determinants on farm numbers and resource adjustments were estimated by econometric models. Sector interdependency through intersector flow of goods and services formed the conceptual framework of the models. The determinants have a significant impact on structural transformation and resource adjustments in the farm and nonfarm sectors. However, the impacts on different size categories were varied due to differences in the natural resource base, enterprise mix, geographic characteristics, and demographic distribution of the area. Impact multipliers show positive relationships between farm numbers, farm employment and farm earnings. However, negative relationships were estimated for nonfarm employment, nonfarm earnings and total earnings in selected farming areas. The model assumed no area interaction and internalized all resource adjustments which brought about the trade-off effect. Average profit per farm appears to be most promising in promoting economic growth since it has a positive impact on employment, earnings and personal income in all farming areas. Farm earnings were found to have a positive impact on consumption expenditures, nonfarm earnings, total employment, area population and indirectly affects the number of nonbasic business establishments.