Input-Output Analysis as a Tool in Agricultural Marketing Research

Economists engaged in agricultural marketing research are frequently called on to obtain information on industrial markets for farm products, costs of advertising and packaging these products, and tax outlays by marketing agencies. Besides these essentially descriptive questions, they may also be asked to appraise such analytical problems as the effect of various farm programs on industries processing and distributing farm products and, of particular current interest, the impact of the European Common Market and of proposed foreign trade programs on American farmers and on agricultural marketing agencies. Anyone familiar with Leontief (9) 1 input-output economics will readily see that these descriptive and analytical questions—and a host of similar ones—can be organized and studied within the interindustry framework. A review of the literature indicates that agricultural economists have used input output analysis extensively in production and regional research (7, 10), but its application to agricultural marketing problems has hardly been explored. The main purposes of this paper are (1) to illustrate a few of the more obvious applications of inpu toutput research to problems in agricultural marketing, and (2) to present a recent special aggregation of the Bureau of Labor Statistics Interindustry Study for 1947 (5) which can serve as a benchmark for future work in this area.3 The aggregation highlights farm sectors and agricultural marketing sectors detailed in the Bureau of Labor Statistics approximately 500-sector model. Description of the tables is limited to the essentials needed for an understanding of the suggested applications. The mathematics underlying the analysis appears in a technical appendix (pages 99-101). The author expresses his appreciation to Allen Paul and Frank deLeeuw for their helpful comments.