The farmer as service provider: the demand for agricultural commodities and equine services

In recent years there has been much interest in alternative sources of income for farmers. This is because economic theory suggests that demand for agricultural commodities is inelastic so that, as incomes in society as a whole increase, those of farmers do not necessarily keep pace - hence the current problems with falling real farm incomes. In contrast the demand for services is relatively elastic. Thus it is logical to divert agricultural resources into service provision. One such service is provided by equine enterprises. We have estimated the own price and income elasticities of demand for selected agricultural commodities and for 'equine services'. Our results confirm that demand for equine services is more elastic than for agricultural commodities. Thus diversification into horse enterprises is likely to have long term benefits for farmers vis a vis traditional agricultural production. (C) 2001 Elsevier Science Ltd. All rights reserved.