World Food Policy Volume 2, Number 1, Spring 2015 | Page 28

Measuring the Size of the Renewable Resource Sector: The Case of Chile

sector j. The share of the VA of sector j
considered in the backward linkages is
given by the product of two elements:
the proportion of domestic intermediate
demand arising in the primary sector for
the products sector j and the proportion
of intermediate demand for sector j
products of the total value of output of
sector j. This measurement of backward
linkage makes clear the importance of
both the demand of the primary sector
relative to the overall intermediate
demand, and the relative importance of
intermediate demand in the total value
of output. There is the possibility that the
domestic agricultural sector is the only
user of an input, in which case the first
two terms would be equal to 1.0. If there
are exports of these inputs, the third
term would be less than 1.0, perhaps
significantly so, as in the case of nitrates
sold as fertilizer but also exported.
Which
industries
depend
significantly on agriculture for their
sales? Our analysis for the base year
2008 indicates that very few sectors
depend on the primary sector for sales,
which suggests that backward linkages
are relatively small. As an illustration
of the only sector highly dependent on
sales to the renewable primary activity,
consider the case of “feed processing”
(sector #26), with products destined
for fish, poultry, and other animals
(products #50, 51, and 52). Some of the
inputs used to produce animal feed are
imported, such as soybeans and other
grains. One finds that 30% of the VA
of feed processing would correspond to
the primary agriculture. If aquaculture
is included, this proportion would be
more than double. In fact, the domestic
feed processing industry depends on

63% of its sales to two sectors, livestock
and fisheries. The remainder is used by
several other sectors, but mainly direct
consumption at the household level
(pet food). For example, if the activities
associated with livestock were to cut
50% of production, it would generate a
reduction of approximately 15% of total
sales of the animal feed sector (including
fisheries).

Results and discussion

T

able 4 presents the basic results
of the calculations of the forward
and backward linkages of the
primary agricultural sector, for the
reference years 1986, 1996, 2003, and
2008. Primary agriculture includes
activities directly related to field crops,
horticulture, and orchards, and livestock.
As one would expect in a dynamic
economy, the country’s share of income
attributable to the primary agricultural
sector has declined over time. Although
agriculture has experienced rapid growth
in production, the sector is becoming
more specialized and integrated with
the rest of the economy through greater
use of intermediate inputs. The added
value of agriculture grows less rapidly
than the rest of the economy. This trend
is a reflection of increased efficiency
of the sector, because it requires fewer
resources allocated to generating inputs
within the sector (e.g., natural fertilizer,
“horsepower” from horses and oxen
now replaced by tractors and fuel). With
fewer resources devoted to internally
producing inputs, land and agricultural
labor is released to other sectors.
Moreover, demand for labor which now
migrates to other sectors is reduced.

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