The estimation of supply response in Australian agriculture: the CRESH/CRETH production system.

Develops a theory of input demand and product supply relationships flexible enough to accommodate realistically joint production in the overwhelmingly multi-product environment of Australian agriculture. The CRESH/CRETH framework constitutes an improvement over the earlier work of Powell and Gruen in that input demands are treated simultaneously with product supplies and in the degree of consistency in the theoretical specification of the model. 1) farming in the three zones, and especially in the Wheat/Sheep Zone, is characterized by multi-enterprise production possibilities reflecting generally high technical prospects for farmers to change their enterprise mix in response to changes in the expected prices of products; 2) unless agricultural supply analysis is carried out within an economic framework sufficiently comprehensive to allow modelling the joint production features of different agricultural regions, the resultant estimates of the reponsiveness of various products to changes in own prices and prices of competing products is likely to be considerably understated. -from Authors