World Food Policy Volume 2, Number 1, Spring 2015 | Page 34

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

livestock have few ties forward outside
of the basic food set, compared to the
primary set, because forward sales are
within the same (expanded) set. Also at
this level of broader aggregation, there
are several activities that sell directly to
domestic consumers or foreign buyers,
and so are unlinked to activities that
generate domestic VA in the accounts. For
example, tobacco manufacturing shows
zero forward linkages, selling directly to
consumers.

Further expanding coverage
chains to the expanded food and forestry
product set (c), the simple sum of VA
within the set increases to 7.76% (largely
due to the inclusion of wood products
and paper). The total expanded VA,
including backward and forward links,
reached 11.28% (Figure 1).

expands from 3.4% to 5.4%, an increase
of almost 60%. If one adds aquaculture
and fisheries, the renewable sector as
a whole, with backward a nd forward
linkages, would increase to 6.4%. In the
case of Chile, and very likely most other
middle and high income countries, the
largest proportion of the expansion of
GDP comes from forward linkages.

All calculations in this study
make use of weighting scheme based
on intersectoral transactions at national
level. The information is typically not
available in national accounts, but a
regional breakdown of the primary
sector’s importance for some subnational regions would likely show that
linkages would be higher level than for
the economy as a whole. In the case of
Chile, in 2008 there were four regions in
the main agricultural areas of the Central
Valley where agriculture and forestry
accounted for over 10% of the total
regional GDP. This figure would increase
considerably if one were to incorporate
linkages.

This study does not address
the relationship between agricultural
development and rural employment and
its critical importance in reducing rural
poverty. These issues have been examined
elsewhere for Latin America (e.g., de
Ferranti, et al. 2005; in the specific case
of Chile (e.g., Valdés and Foster 2005) the
evidence supports the contention that the
presence of a dynamic agriculture during
the last three decades has had a significant
impact on poverty reduction, through
its direct employment in rural areas and
through indirect impacts on the growth of
the rest of the economy. National accounts
measure the intersectoral flows, and
the objective is not to capture a broader

Conclusions

A

s a percentage of GDP, the
primary agriculture sector is
typically small in middle-income
and wealthier countries. But national
accounts include only on-farm activities,
giving both the public and policymakers
an impression that the food sector is a
minor actor in the economy as a whole.
When one includes activities closely
related to farm production and often
dependent on domestic agriculture, the
size and significance of the agro-food
sector becomes more apparent. In the case
of Chile, where the official agricultural
VA is approximately 2.5% of the national
total, by including backward and forward
linkages the size of the sector would
increase by over 80%, to 4.8% of total
VA. If forestry is included in the primary
group, the forestry and agricultural VA
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