Inter-regional recursive LP model used in forecasting Danish agricultural development up to 1985

Frede Andersen and Poul Erik Stryg

European Review of Agricultural Economics, 1976, vol. 3, issue 1, 7-21

Abstract: The Danish agricultural co-operatives (viz. dairies, slaughter-houses and feeding-stuff industries) have a constant need for forecasts of the development within agriculture on which to base their own production and investment planning. Therefore a research project has been carried out with the purpose of forecasting regional developments in Danish agricultural production and its structure up to the year 1985. For forecasting, a recursive LP model was used with 11 regions, each with four size-groups of farms. All important branches of production were included in the model and the development of farm structure was forecasted endogenously with help of separate structural activities that allowed for decrease or increase in the number of farms within each group. Before computing the forecasts the model was tested for one of the regions (R4) for the whole analysis period (1956–1970). Best agreement between the computed values and the recorded data occurred when all price data were included in the model with a lag of a 3–year sub-period. An additional purpose of the model test was to provide a descriptive basis for the objective function parameters of the structural activities. This was obtained by estimating the farmers‘ regional alternative incomes (objective function parameters) by means of parametric LP based on the regional gross factor income development (per capita).

Date: 1976
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