nep-agr New Economics Papers
on Agricultural Economics
Issue of 2005‒05‒07
nineteen papers chosen by
Angelo Zago
Universita degli Studi di Verona

  1. Measuring Transactions Costs from Observed Behavior: Market Choices in Peru By Renos Vakis; Elisabeth Sadoulet; Alain de Janvry
  2. The Impact of Farmer-Field-Schools on Knowledge and Productivity: A Study of Potato Farmers in the Peruvian Andes By Erin Godtland; Elisabeth Sadoulet; Alain de Janvry; Rinku Murgai; Oscar Ortiz
  3. A Tale of Two Communities: Explaining Deforestation in Mexico By Jennifer Alix-Garcia; Alain de Janvry; Elisabeth Sadoulet
  4. We Should Drink No Wine Before Its Time By Rachel Goodhue; Jeffrey LaFrance; Leo Simon
  5. Creating Incentives for Micro-Credit Agents to Lend to the Poor By Cecile Aubert; Alain de Janvry; Elisabeth Sadoulet
  6. Peer Effects in Employment: Results from Mexico's Poor Rural Communities By Caridad Araujo; Alain de Janvry; Elisabeth Sadoulet
  7. Insecurity of Property Rights and Matching in the Tenancy Market By Karen Macours; Alain de Janvry; Elisabeth Sadoulet
  8. Africa's food and nutrition security situation By Benson, Todd
  9. Development strategies and food and nutrition security in Africa By Heidhues, Franz; Atsain, Achi; Nyangito, Hezron; Padilla, Martine; Ghersi, Gérard; Le Vallée, Jean-Charles
  10. The case of smallholder dairying in Eastern Africa By Ngigi, Margaret
  11. Coping with the “coffee crisis” in Central America By Maluccio, John A.
  12. Vertical coordination in high-value commodities By Birthal, Pratap S.; Joshi, P. K.; Gulati, Ashok
  13. Profiting from the Cattle Cycle: Alternative Cow Herd Investment Strategies By Lawrence, John D.
  17. EVALUATION OF QUALITY ASSURANCE SYSTEMS IN THE AGRI-FOOD SECTOR By Maurizio Canavari; Domenico Regazzi; Roberta Spadoni
  18. Price risk management instruments in agricultural and other unstable markets By Jean-Marc Boussard
  19. Investment in Land, Tenure Security and Area Farmed in Northern Mozambique By Tilman Brück

  1. By: Renos Vakis (World Bank); Elisabeth Sadoulet (University of California, Berkeley); Alain de Janvry (University of California, Berkeley)
    Abstract: Farmers incur proportional and fixed transactions costs in selling their crops on markets. Using data for Peruvian potato farmers, we propose a method to measure these transactions costs. When opportunities exist to sell a crop on alternative markets, the observed choice of market can be used to infer a monetary measure of transactions costs in market participation. The market choice model is first estimated at the reduced form level with a conditional logit, as a function of variables that explain transactions costs. We then use these market choice equations to control for selection in predicting the idiosyncratic prices that would be received on all markets and the idiosyncratic proportional transactions costs that would be incurred to reach all markets. The net between the two gives us a measure of effective farm-level prices. This allows us to estimate a semi-structural conditional logit of the market choice model. In this model, the choice of market is a function of predicted effective farm-level prices, and of market information that accounts for fixed transactions costs. We can use the estimated coefficients to derive the price equivalence of the fixed cost due to information. We find that the information on market price that farmers receive from their neighbors reduces fixed transactions costs by the equivalent of doubling the price received, and is equal to four times the average transportation cost.
    Keywords: transactions costs, market choice, information,
    Date: 2003–10–01
  2. By: Erin Godtland (U.S. General Accounting Office); Elisabeth Sadoulet (University of California, Berkeley); Alain de Janvry (University of California, Berkeley); Rinku Murgai (Development Economics Research Group, The World Bank); Oscar Ortiz (International Potato Center, Consultative Group on Agricultural Research)
    Abstract: Using survey-data from Peru, this paper evaluates the impact of a pilot farmer-field-school (FFS) program on farmers' knowledge of integrated pest management(IPM) practices related to potato cultivation. We use both regression analysis controlling for participation and a propensity score matching approach to create a comparison group similar to the FFS participants in observable characteristics. Results are robust across the two approaches as well as with different matching methods. We find that farmers who participate in the program have significantly more knowledge about IPM practices than those in the non-participant comparison group. We also find that improved knowledge about IPM practices has a significant impact on productivity in potato production.
    Keywords: agricultural innovations, agricultural productivity, integrated pest management, potato cultivation,
    Date: 2003–11–01
  3. By: Jennifer Alix-Garcia (University of California, Berkeley); Alain de Janvry (University of California, Berkeley); Elisabeth Sadoulet (University of California, Berkeley)
    Abstract: Explaining land use change in Mexico requires understanding the behavior of the local institutions involved. We develop two theories to explain deforestation in communities with and without forestry projects, where the former involves a process of side payments to non-members of the community and the latter of partial cooperation among community members. Data collected in 2002 combined with satellite imagery are used to test these theories. For the forestry villages, we establish a positive relationship between the distribution of profits as dividends instead of public goods and forest loss. For communities not engaged in forestry projects, deforestation is largely related to the ability of the community to induce the formation of a coalition of members that cooperates in not encroaching. This happens more easily in smaller communities with experienced leaders. A disturbing result of the analysis is that deforestation is higher when a community engages in forestry projects, even after properly accounting for self-selection into this activity. This suggests that forestry projects as they now exist in Mexico are not sustainable and contribute to the deforestation problem.
    Keywords: deforestation, common property, partial cooperation,
    Date: 2003–11–07
  4. By: Rachel Goodhue (University of California, Davis); Jeffrey LaFrance (University of California, Berkeley); Leo Simon (University of California, Berkeley)
    Abstract: We consider the impact of taxes on the quantity and quality produced of goods whose market values accrue with age. The analysis is motivated by the high and increasing taxation rates in the wine industry across the globe. If society values both quality and quantity as goods, an optimal tax system would never reduce the quality marketed, though it necessarily reduces quantity. Any two-tax system that includes a volumetric sales tax and any one of three other types of tax - an ad valorem sales tax, an ad valorem storage tax, or a volumetric storage tax - spans the quality/revenue space and can support an optimal tax system. Any tax system that reduces quality relative to the market equilibrium with no taxes could increase tax revenues and reduce the quality distortion without increasing the quantity distortion. Given this, the only explanation for taxation schemes that reduce both the quantity and quality of goods like wine must be a Calvinistic social welfare function.
    Keywords: stochastic models, taxation, wine industry, wines,
    Date: 2004–02–01
  5. By: Cecile Aubert (Universite Paris Dauphine); Alain de Janvry (University of California, Berkeley); Elisabeth Sadoulet (University of California, Berkeley)
    Abstract: Microfinance institutions (MFIs) have introduced incentive pay schemes for their credit agents to induce information acquisition on borrowers. Bonuses linked to repayment are efficient for profit-oriented MFIs but insufficient for non-profit MFIs trying to reach very poor borrowers, when repayment and wealth are positively correlated. We show that no incentive scheme is consistent with this (non-verifiable) objective: Random audits on the share of very poor borrowers selected by the agent become necessary. Under the optimal contract, non-profit MFIs generally maximize the number of poor borrowers it services by cross-subsidization between very poor and less poor borrowers.
    Keywords: micro-credit, pro-poor objectives, incentives,
    Date: 2004–06–01
  6. By: Caridad Araujo (The World Bank and Georgetown University); Alain de Janvry (University of California, Berkeley); Elisabeth Sadoulet (University of California, Berkeley)
    Abstract: Empirical evidence has shown that off-farm non-agricultural (OFNA) employment offers a major pathway from poverty for rural populations. However, the pattern of participation in these activities is heterogeneous across categories of individuals and poorly understood. We explore the role of spillovers from peers on an individual's participation in formal and informal OFNA employment using village census data for rural Mexico. We test and reject the possibility that peers' decisions could be proxying for unobserved individual, village-level, or individual-type effects. We find that peers' participation in OFNA employment has a large impact on an individual's ability to engage in this type of employment, both formal and informal, even after controlling for individual attributes and village characteristics. Peer effects are structured by similarities in gender, ethnicity, educational level, and land endowment. We find that marginal peer effects tend to be stronger for categories of individuals that are already more engaged in OFNA employment, such as men, non-indigenous people, the more educated, and the landless, contributing to reinforcing inequalities in accessing these jobs. However, the role of peer effects relative to that of education in obtaining formal OFNA employment is more important for members of groups that are less engaged in these jobs, such as women, indigenous people, the less educated, and smallholders.
    Keywords: off-farm employment, rural poverty, social aspects,
    Date: 2004–08–01
  7. By: Karen Macours (Johns Hopkins University); Alain de Janvry (University of California, Berkeley); Elisabeth Sadoulet (University of California, Berkeley)
    Abstract: This paper analyzes the effects of insecure property rights over land on the functioning of the land rental market in the Dominican Republic. It shows that insecurity of property rights not only reduces sharply the level of activity on the land rental market, but also causes market segmentation. A principal-agent framework is used to model the landlord's utility maximization, where he takes into account the risk of losing the land when it is not traded within a narrow local circle of confidence. Using data collected with a methodology that enables to characterize the entire market, we show that insecure property rights lead to matching in the tenancy market along socio-economic lines and hence severely limit access to land for the rural poor. Simulations suggest that improving tenure security would increase the total area rented to the poor by 63%. While a small fraction of this gain is achieved via formal titling, most is obtained through reducing conflicts over land and enhancing protection of property rights. Results also show the importance of minimum working capital endowments for the poor in gaining access to land in the rental market.
    Keywords: agricultural land, land rights, property rights, rents, tenancy,
    Date: 2004–08–01
  8. By: Benson, Todd
    Abstract: "Efforts and initiatives to combat hunger and malnutrition in Africa are gaining momentum at all levels—local, national, continental, and international. To design and implement effective strategies for action, it is vital that we have a clear understanding of the problems and options. In this 2020 discussion paper, Todd Benson reviews the extent of food and nutrition insecurity across Africa. He assesses recent patterns and trends, exploring where significant progress has occurred, or not, and why. The differences between food and nutrition security, and how they are linked, are clarified. Benson examines the key direct and indirect determinants and consequences of food and nutrition insecurity in the African context and offers a menu of actions and strategies. Lack of access to and availability of food—the key factors behind food insecurity—remain central concerns in Africa. When food insecurity interacts with health and care problems it translates into nutrition insecurity. HIV/AIDS is an important issue in that context. This comprehensive paper gives prominent attention to the oft-neglected issue of nutrition security. Reflecting emerging Africa-wide initiatives, the paper takes a continental perspective, which should be helpful for strategic consideration by the New Partnership for Africa's Development (NEPAD) and the African Union. This paper was commissioned for the IFPRI 2020 Africa Conference on “Assuring Food and Nutrition Security in Africa by 2020: Prioritizing Actions, Strengthening Actors, and Facilitating Partnerships,” held in Kampala, Uganda on April 1-3, 2004. There, it served to illuminate the discussions on why Africa has not yet achieved food and nutrition security and what needs to be done." Foreword by Joachim von Braun, Director General, IFPRI
    Date: 2004
  9. By: Heidhues, Franz; Atsain, Achi; Nyangito, Hezron; Padilla, Martine; Ghersi, Gérard; Le Vallée, Jean-Charles
    Abstract: "Momentum is building in and around Africa today for policy action to decisively confront hunger and malnutrition. If we are to succeed, it is vital that food and nutrition security strategies be both sound and able to be implemented. Ultimately, strategies deficient in either of these two areas will be ineffectual. Lessons from past strategies provide a valuable resource in the design of future strategies, yet there is a dearth of programmatic information and rigorous evaluations of the approaches used in the past. With this in mind, the authors of this 2020 discussion paper review the multitude of approaches and strategies for achieving food and nutrition security in Africa within the context of development over the past four decades. They assess the extent to which these plans have been implemented and identify the key constraints and limitations, along with the priority investments needed for more effective design and implementation in the future." from Foreword by Joachim von Braun, Director General, IFPRI
    Keywords: Food policy ,Hunger ,Malnutrition Africa ,Food security Africa ,Development policies ,Assessment ,Investments ,
    Date: 2004
  10. By: Ngigi, Margaret
    Abstract: "Agriculture plays a crucial role in the economy of sub-Saharan Africa. A feature of particular significance about the region is that the majority of households are heavily dependent on agriculture as their major source of livelihood. Smallholder agriculture is the principal producer of staple foods and cash crops, accounting for very large shares of national production and marketed output. For the respective countries, therefore, the performance of smallholder agriculture has crucial implications for the overall economic development process including the alleviation of rural poverty. The demands created by steadily increasing populations, and the pressing need to increase agricultural productivity means that these countries must continuously adopt methods to intensify agricultural production." Authors' Abstract
    Keywords: Poverty alleviation ,Population growth ,Agricultural productivity ,Small farmers ,Rural poor ,livestock ,Dairy products industry ,
    Date: 2005
  11. By: Maluccio, John A.
    Abstract: "The international and local Nicaraguan media have widely reported on the “coffee crisis” in Latin America and there is substantial evidence that there has been a downturn and that this has been more severe in the coffee-growing regions. Using household panel data from a randomized community-based intervention carried out in both coffee- and noncoffee-growing areas, I examine the role of a conditional cash transfer program, the Red de Protecci򬟓ocial (RPS), during this downturn. While not designed as a traditional safety net program in the sense of reacting or adjusting to crises or shocks, RPS has performed like one, with larger estimated program effects for those who were more severely affected by the downturn. For example, it protected households against declines in per capita expenditures and, while not significantly depressing labor supply relative to before the program, muted additional labor supply for beneficiaries in coffee-growing areas, relative to their counterparts without the program. Beneficiaries who participated in the coffee industry as laborers before the program were more likely to have exited the coffee industry, whereas those who participated as producers were less likely to have exited. The findings are consistent with the existence of credit constraints inhibiting such transitions in the absence of the program. Overall, then, RPS appears to be playing an important part in the risk-coping strategies of households.." Authors' Abstract
    Keywords: conditional cash transfer program ,coffee crisis ,social safety nets ,
    Date: 2005
  12. By: Birthal, Pratap S.; Joshi, P. K.; Gulati, Ashok
    Abstract: "Rising per capita income, urbanization and globalization are changing the consumption basket in the developing countries towards high-value commodities (like fruits & vegetables, milk, meat, poultry, fish, etc.). This paper explores how smallholders can benefit from the emerging opportunities from a silent demand-driven changes in high-value agriculture in India. The study examines the institutional mechanisms adopted by different firms to integrate small producers of milk, broilers and vegetables in supply chain and their effects on producers' transaction costs and farm profitability. The study finds that the innovative institutional arrangements in the form of contract farming have considerably reduced transaction costs and improved market efficiency to benefit the smallholders. The study does not find any bias against smallholders in contract farming. Also, the study does not find that the relevant firms have exploited their monopsonistic position by paying lower prices to farmers. On the contrary, contract producers were found enjoying benefits of assured procurement of their produce and higher prices. The study lists policy hurdles in scaling up the innovative models of vertical coordination in high-value food commodities" Authors' Abstract
    Keywords: Globalization ,High-value commodities ,
    Date: 2005
  13. By: Lawrence, John D.
    Abstract: Beef cowherds are capital-intensive enterprises and should be viewed as other capital investments. Beef cowherd owners can benefit from incorporating price signals into their heifer retention decisions.
    Date: 2005–05–04
  14. By: Maurizio Canavari (Alma Mater Studiorum-Università di Bologna); Rino GHELFI (Alma Mater Studiorum-Università di Bologna); Maurizio MERLO (Università di Padova); Sergio RIVAROLI (Alma Mater Studiorum-Università di Bologna); Danio SARTI (Consiglio Nazionale delle Ricerche)
    Abstract: The latest orientations of the CAP have had remarkable and wide-spread effects on the whole agri-food sector. It has deeply influenced the entrepreneurs' choices, with reference both to the production techniques and to the business organization. The changes have had inevitable reflexes on the economic results of the firms, thus determining adaptations regarding both the structure and the amount of inputs. In this paper, an analysis of the book-keeping results of agricultural enterprises of Northern and Central Italy is carried out. We try to underline and analyze the evolution of the economic results and the main structural and organizational elements in the firms. The accountancy data of a group of firms located in the Veneto, Emilia-Romagna and Tuscany regions, referred to the period 1994-2000, are taken into consideration. These firms seems to adequately represent the main type of farming: field crops, fruit-growing, wine-growing, husbandry. The study is aimed at underlining the influence of the EU payments on the profitability and the changes in the value distribution between the various input suppliers.
    JEL: P Q Z
    Date: 2005–05–03
  15. By: Riccardo SCARPA (Alma Mater Studiorum-Università di Bologna); Fiorenza SPALATRO (Alma Mater Studiorum-Università di Bologna); Maurizio CANAVARI (Alma Mater Studiorum-Università di Bologna)
    Abstract: This paper reports some preliminary results on a mixed logit random utility analysis of conjoint data from costumers' preferences over agricultural products. The data are collected via a telematic sample representative of Italian households. The survey instrument was implemented via a computer supported system. A multivariate normal full correlation structure is imposed in the mixed logit estimation and the implications of such a taste structure are examined.
    JEL: P Q Z
    Date: 2005–05–03
  16. By: Alessandra CASTELLINI (Alma Mater Studiorum-Università di Bologna); Maurizio Canavari (Alma Mater Studiorum-Università di Bologna); Carlo Pirazzoli (Alma Mater Studiorum-Università di Bologna)
    Abstract: In Europe the demand of functional foods varies remarkably from country to country, on the basis of the alimentary traditions, the enforced legislation and the different cultural heritage that people have acquired. The opportunities of expansion on the market seem to be quite favorable and the interest of the consumers is rather high. But the diffusion of these products in the community area is slowed down by some obstacles. One of main ones is the lack of an official law-recognized definition for these references, necessary in order to clearly assign these products to the food sector rather than to the pharmaceutical one. In a such situation, we note that nowadays it is impossible to carry out a complete survey of this world, due to the lack of homogeneous and trustworthy statistical data and to the confused definition of the sector. In fact, every country adopts his own national legislation and includes in this class different products. The variable meaning assumed by the term “functional food” in the EU member states, can also hinder the free trade even within the EU boundaries. In fact, pursuing the safeguard of human health, each partner can block the admission of a product, even if it comes from an other EU member country. This lack of clarity at the production phase is reflected in a difficult control at the consumption phase. The disinformation of the trade operators and, consequently, of the consumers can involve some risks for these last ones due to not only to the deficiency of benefits, using functional foods, but also possible damages to the health. Ambiguous definition and gaps of knowledge about the composition and the effects of these products, in fact, can interfere with an aware choice of purchase and an organized development of the sector.
    JEL: Q13 Q18 L65 L66
    Date: 2005–05–03
  17. By: Maurizio Canavari (Alma Mater Studiorum-Università di Bologna); Domenico Regazzi (Alma Mater Studiorum-Università di Bologna); Roberta Spadoni (Alma Mater Studiorum-Università di Bologna)
    Abstract: The 'quality issue' in the agri-food sector has been gaining importance over the past few years. Firms are continually searching for techniques and tools which permit production of goods that meet as many as possible of the characteristics demanded by the market. Quality assurance methods and techniques can provide a useful tool for approaching evolving markets in the correct way. This paper focuses on a survey conducted in certain sub-sectors (fruit and vegetable, meal and pasta, wine) and is specifically restricted to the Emilia-Romagna region. The survey found that there is extensive awareness of and widespread interest in quality systems. However, the objective of initiating a pattern of renewal which incorporates quality systems has not yet been widely attained. The survey also highlighted a certain absence of the 'quality culture' necessary for correctly addressing these issues. The second part of this paper focuses on the economic analysis of the costs related to quality systems (QS). Its aim is to apply a method for collecting data on activities and resources, and to analyse the results. The importance of QS-related costs is evident if we are to consider it an investment, entailing the deployment of management effort and funds, and yielding a set of benefits in return. Case study analyses were conducted utilising an original classification scheme. From the initial results it is possible to identify the principal cost categories. The method adopted could be useful for firms wishing to monitor their QS.
    JEL: P Q Z
    Date: 2005–05–03
  18. By: Jean-Marc Boussard (INRA - MONA Paris, France)
    Abstract: Most economists congregate on the idea that commodity price instability should be reduced. Since at least one century a variety of instruments have been designed to that end, without much success, especially for agricultural commodities. The failure might be a consequence of the fact that most policies have neglected the reason for price fluctuations. Commodity price fluctuations are endogenous, caused by the market equilibrium local dynamic instability. It means that any measure relying on the “law of large numbers” is likely to be inoperative. In addition, because, in agriculture, the production function is homogenous and of degree one, any effective stabilisation leads to over production. Only production quotas can cope with these difficulties. They may be designed in such a way as to maintain the essential feature of market equilibrium, i.e. marginal cost equating price.
    Keywords: Crop insurance agriculture commodity price stabilisation
    JEL: L16 G22 O13 Q13 Q14 Q28
    Date: 2005–05–05
  19. By: Tilman Brück (German Institute for Economic Research (DIW Berlin))
    Abstract: The analysis of land investment and tenure security usually assumes land scarcity. However, some developing countries have communities with land abundance. This article therefore examines the effects of land abundance for investment and tenure security. The paper develops a formal test of land abundance and estimates a system of three simultaneous equations. The empirical analysis uncovers significant land abundance in Northern Mozambique. In contrast to the literature, area farmed is a determinant of investment and tenure security. However, no link exists between investment and tenure security. These findings have strong implications for rural development policy in land abundant communities.
    Keywords: rural development, land use, agricultural investment, property rights, farm household survey
    JEL: O12 O13 Q12 Q15
    Date: 2003–07

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