An econometric model of P.E.I. agricultural sector with major emphasis on potato sector

Potatoes contribute one-third of total farm cash receipts in Prince Edward Island, Canada, and account for 20-25% of total Canadian potato production, and over 50% of total Canadian potato exports. Fluctuations in prices, production and exports have considerable affect on the Province's economy. A model of the PEI agricultural sector is developed, with major emphasis on the potato sector. The model is used to analyze the effects of changes in the exogenous variables such as potato production levels in the USA (a competitive exporter as well as an important buyer of PEI potatoes), and Netherlands (a major international exporter of potatoes), exchange rate, Canadian and PEI personal disposable incomes, interest rate, wage rate, and farm capital stock on the agricultural economy. Section 2 gives a brief background of the potato sector. Section 3 contains the model specification, and Section 4 the estimation of the model. The results of estimation of impact analysis are discussed in Section 5. Section 6 presents some simulation results. Finally, Section 7 presents a brief summary.