Investigating the effect of changes in the production of agricultural raw materials on the production of processed food products (An Input-Output Analysis)

Production in agricultural sector is always facing with some fluctuations. Since this sector provides inputs for most of the economic sectors, fluctuations in production of agricultural sector are transferred to the related sectors and, results in fluctuation in these sectors. Given that food and beverage industries are the main industries using agricultural products, the purpose of the present study is to investigate the effect of production changes in agricultural subsectors (crops and horticulture, livestock and poultry, fisheries and forestry) on the production of food and beverage industries. To this end, Ghosh supply-driven model based on input-output table is applied as the analytical framework. In addition, to investigate the effect trend of the production change in agricultural sector on the food and beverage products over past three decades, input-output tables of 1986, 1991, 2001 are utilized. Results indicate that changes in production of agricultural sub-sectors have the highest effect on food and beverage industries relative to the other economic sectors. Moreover, investigation of changes in the linkage between agricultural subsectors and food and beverage industries over studied period shows that linkages of the fisheries sub-sector have increased. For livestock and poultry sub-sector, these linkages remained constant, where the other agricultural sub-sectors have experienced a decrease in linkages with food and beverage industries. These result lead to the conclusion that, to create more values from crops and horticultural products, the expansion of food industries which are more related to these products, has to be considered more seriously.