Measurement of Texas livestock capacity and its effect on the Texas economy : an application of quadratic input-output analysis

Abstract

The ability of the Texas agricultural production sector to provide food and fiber products at reasonable prices to a growing population has always aroused concern among Texas consumers. With retail livestock product prices leading the rapidly rising food prices, it is important for policy makers to be able to assess the effects of alternative livestock oriented policies on both producers and consumers in the Texas economy. To assist policy makers in their decision-making process, and to gain a better understanding of how events taking place both inside and outside the Texas economy have upon its current performance, information is needed on the productive capacity of each production sector, the dependencies each production sector has upon the output of other sectors, and their use of primary inputs in their production process. Since the concepts of capacity and sector interdependencies are closely related, these two concepts must be combined into a single analytical framework to analyze specific events in the economy. The objective of this study was to develop an analytical framework for estimating the capacity of the livestock production sectors in the Texas economy and examine the effects that specific events and policies might have one economic well-being of this state's producers and consumers. The above objective was completed by first establishing meaningful definitions of engineering and economic capacity at the firm, sector and economy levels. Engineering capacity was said to be the maximum output possible given current plant and equipment size, normal production intensity, existing technology and the absence of external constraints to production. Economic capacity, on the other hand, was said to be the quantity of output that the firm, sector or economy desires to produce in the current period, given current economic conditions and existing engineering capacity. Alternative methods of estimating capacity were discussed with special emphasis on measuring engineering capacity in the livestock production sectors. Proposals were made for minor modifications of existing primary surveys to provide additional capacity-related information for further analysis...