Land allocation among the main crops in Argentina: estimation of price and land elasticities

Abstract

In the past twenty years, there have been significant changes in land allocation among the main crops in Argentina. The aim of this paper was to analyze how those changes responded to variations in their relative prices in the short-term and quantify their responses. Additionally, it focused on understanding how the hectares devoted to a particular crop responded to changes in the total planted area. For this purpose a system of land allocation equations was estimated for the period 1980-2014. The results showed that the area planted with corn, soybean, sunflower and wheat responded to their own prices, being inelastic in all cases. A statistically significant and negative cross-price elasticity was observed for sunflower and corn. The other cross-price elasticities showed substitution for land use but they were not statistically significant. The land elasticities revealed to be elastic for wheat and inelastic for corn, soybean and sunflowers, while not significant for sorghum.