New Economics Papers
on Agricultural Economics
Issue of 2005‒09‒29
thirteen papers chosen by

  1. Multilateral Trade and Agricultural Policy Reforms in Sugar Markets (Revised) By Elobeid, Amani; Beghin, John C.
  2. Economic reform in the Agricultural sector of Nigeria: Merits and Demeits By Obayelu Abiodun Elijah; Okoruwa V.O
  3. Dams By Esther Duflo; Rohini Pande
  4. Examining Changes in the Value of Rural Land in New Zealand between 1989 and 2003 By Steven Stillman
  5. Driver costs in small firms: empirical analysis for farms By Josep Maria Argilés and Josep Garcia Blandón
  6. Policy to Encourage Carbon Sequestration in Plantation Forests By Suzi Kerr; Emma Brunton; Ralph Chapman
  7. Boards in Agricultural Cooperatives: Competence, Authority, and Incentives By Hendrikse, G.W.J.
  8. Land reform with human capital: A new analysis using the theory of economic growth and the theory of the firm By Miguel Rocha de Sousa
  9. The likely regional impacts of an agricultural emissions policy in New Zealand: Preliminary analysis By Isabelle Sin; Emma Brunton; Joanna Hendy; Suzi Kerr
  10. Land Reforms and Economic Development By Gersbach, Hans; Siemers, Lars
  11. Vertical Product Differentiation, Entry-Deterrence Strategies, and Entry Qualities By Noh, Yong-Hwan; Moschini, GianCarlo
  12. Technology Fees Versus GURTs in the Presence Of Spillovers: World Welfare Impacts By Lence, Sergio H.; Hayes, Dermot J.
  13. Small Fish - Big Issues The Effect of Trade Policy on the Global Shrimp Market By Debaere, Peter

  1. By: Elobeid, Amani; Beghin, John C.
    Abstract: We analyze the impact of trade liberalization, removal of production subsidies, and elimination of consumption distortions in world sugar markets using a partial-equilibrium international sugar model calibrated on 2002 market data and current policies. The removal of trade distortions alone induces a 27% price increase while the removal of all trade and production distortions induces a 48% increase by 2011/12 relative to the baseline. Aggregate trade expands moderately, but location of production and trade patterns change substantially. Protectionist OECD countries (the EU, Japan, the US) experience an import expansion or export reduction and significant contraction in production in unfettered markets. Competitive producers in both OECD countries (Australia) and non-OECD countries (Brazil, Cuba), and even some protected producers (Indonesia, Turkey), expand production when all distortions are removed. Consumption distortions have marginal impacts on world markets and location of production. We discuss the significance of these results in the context of mounting pressures to increase market access in highly protected OECD countries and the impact on non-OECD countries.
    Keywords: agricultural policy, Doha, domestic subsidies, sugar, trade liberalization, WTO.
    Date: 2005–09–26
  2. By: Obayelu Abiodun Elijah (University of Ibadan, Ibadan Oyo State Nigeria); Okoruwa V.O (University of Ibadan Ibadan Oyo state, Nigeria)
    Abstract: The main objective of this working paper was to look at the economic reforms and there impacts in the Nigeria agricultural sector using some indicators such as the Gross domestic Products, prices of agricultural product,prices of agricultural inputs,effects on poverty, effects on both imports and export effect on quality of agricultural products etc.This was however done through extensive review of various forms of economic reform the sectors since the pre colonial era and comparing there effects both negative and positives on all the stakeholders: the farmers, consumers as well as the government and the economy as a whole.The result shows that The Nigerial economic reforms in the agricultural sector is the best option only if nigeria government is honest in the execution of the reform exercise. This will in know doubtenable the country to compete favourably with other countries of the world interm of provision of food to her citizenry as well as generation of foreign exchange in boosting the economy
    Keywords: Economic reform, agricultural sector, Nigeria, merits and demerits
    JEL: O P
    Date: 2005–09–14
  3. By: Esther Duflo (Massachusetts Institute of Technology); Rohini Pande (Economic Growth Center, Yale University)
    Abstract: The construction of large dams is one of the most costly and controversial forms of public infrastructure investment in developing countries, but little is known about their impact. This paper studies the productivity and distributional effects of large dams in India. To account for endogenous placement of dams we use GIS data and the fact that river gradient affects a district's suitability for dams to provide instrumental variable estimates of their impact. We find that, in a district where a dam is built, agricultural production does not increase but poverty does. In contrast, districts located downstream from the dam benefit from increased irrigation and see agricultural production increase and poverty fall. Overall, our estimates suggest that large dam construction in India is a marginally cost-effective investment with significant distributional implications, and has, in aggregate, increased poverty.
    Keywords: Dams, Development Planning, Program Evalluation, India
    JEL: O21 O12 H43 H23
    Date: 2005–08
  4. By: Steven Stillman (Motu Economic & Public Policy Research)
    Abstract: This paper uses valuation data from Quotable Value New Zealand to examine changes in the value of the rural land in New Zealand between 1989 and 2003. The value of rural land reflects the profitability of agriculture as well as the returns to alternative land uses, and has a large impact on the prosperity of rural areas. The paper highlights the importance of both changes in land use and changes in the value of land in different uses in explaining overall changes in land values. It also examines the relationship among productive characteristics of the land, the local climate, various local amenities, and changes in land values and land use to better understand what factors have been driving overall changes in the value of rural land across New Zealand. We find that the real value of rural land in all uses increased substantially over the years being examined. Land use in rural areas also changed considerably during this period, but these changes in land use were essentially uncorrelated with changes in land values. Our regression results indicate that rural land values increased the most in less populated areas with good climates and local amenities. Initial land use also plays an important role in explaining the variation in changes in rural land values with greater increases in land values found in areas with more land initially devoted to urban uses and commercial forestry, and less land initially devoted to horticulture and lifestyle uses.
    Keywords: Land Use, Land Value, New Zealand, Rural Areas
    JEL: R14 R22 Q15
    Date: 2005–09–12
  5. By: Josep Maria Argilés and Josep Garcia Blandón (Universitat de Barcelona)
    Abstract: The agricultural sector has always been characterized by a predominance of small firms. International competition and the consequent need for restraining costs are permanent challenges for farms. This paper performs an empirical investigation of cost behavior in agriculture using panel data analysis. Our results show that transactions caused by complexity influence farm costs with opposite effects for specific and indirect costs. While transactions allow economies of scale in specific costs, they significantly increase indirect costs. However, the main driver for farm costs is volume. In addition, important differences exist for small and big farms, since transactional variables significantly influence the former but not the latter. While sophisticated management tools, such ABC, could provide only limited complementary useful information but no essential allocation bases for farms, they seem inappropriate for small farms.
    Keywords: cost behavior, Activity based costing, farm management accounting, small firms
    JEL: M10 M40 M41
    Date: 2005
  6. By: Suzi Kerr (Motu Economic & Public Policy Research); Emma Brunton (Motu Economic & Public Policy Research); Ralph Chapman (Maarama Consulting Ltd)
    Abstract: Carbon sequestration in plantation forests provides the main means by which New Zealand will meet its international climate change obligations in the first commitment period of the Kyoto Protocol (2008–2012). However, without active policy, forests are unlikely to contribute as much in subsequent commitment periods. This research paper provides the background for examining policy measures for encouraging carbon sequestration in plantation forests in New Zealand. Part I focuses on providing factual information and positive analysis of: key domestic and international regulations; information on New Zealand forests, the forestry industry and forest profitability; discussion of land-use decision making, including the central question of what influences conversion of farmland to forestry; and forest carbon ecology. Part II moves on to normative analysis of policy design. It discusses how including considerations of the value of carbon sequestration and storage changes optimal land-use behaviour, and outlines key issues that need to be addressed when developing a policy to encourage sequestration and storage in a pragmatic way. Finally, the paper identifies a number of key areas where we need more information before we can make well- informed choices about policy design. Future work will endeavour to identify and evaluate policies that would effectively encourage sequestration.
    Keywords: climate, forest, carbon sequestration, policy, New Zealand, Kyoto
    JEL: Q25 Q28
    Date: 2005–09–12
  7. By: Hendrikse, G.W.J. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: This article addresses three observations regarding the board of directors in agricultural cooperatives. First, many scholars and practitioners worry about the competency of the member dominated board of directors in agricultural cooperatives. Second, it is sometimes stated that cooperatives seem to behave like ordinary enterprises. Finally, it is argued that cooperatives may have advantages compared to firms with publicly exchanged shares. These observations are analyzed from various contract theoretic perspectives.
    Keywords: Boards;Cooperatives;Contract theory;
    Date: 2005–09–05
  8. By: Miguel Rocha de Sousa
    Abstract: In section 1 we refer to a historical synopsis, section 2 classifies the different land reforms using KAWAGOE (1999) typology. Afterwards we link the concepts of human capital and land reform within the theory of economic growth. In section 3 a simplified formal dynamic model of land reform based on the neoclassical theory of economic growth is introduced, following SOLOW-SWAN models. In section 4 an endogenous growth model tries to evaluate land reform in the process of economic growth, based on the ROMER (1990) model. We further try to relate the notion of convergence with successful land reform. The main conclusion of these sections is that with the neoclassical exogenous framework there is convergence between small landholders and latifundia holders. This is a successful land reform: there is a finite time horizon that allows almost landless illiterate to catch up with rich literate farmers. In the case of endogenous growth there is never convergence thus the land reform process fails. Another conclusion in the endogenous framework is that, by reverse causality, failed land reforms result from perpetuating initial differential human capital stocks. In section 5, another approach is to extend ARROW (1962) learn by doing model to evaluate land reform as a structural break (or cut-off point). A condition for land reform viability is established, creating a Possibility Set of Recovery of Human Capital (PSRHC). In section 6 we simplify the theory of the firm JOVANOVIC´s (1982) model, applying it to agricultural firms to explain birth, life and death of latifundia. We establish the date and process of land reform, as a cut-off process, in which it arises from the failure of firms. Finally, in section 7, we conclude and present in section 8 the references.
    JEL: Q15 O0
    Date: 2005
  9. By: Isabelle Sin (Motu Economic & Public Policy Research); Emma Brunton (Motu Economic & Public Policy Research); Joanna Hendy (Motu Economic & Public Policy Research); Suzi Kerr (Motu Economic & Public Policy Research)
    Abstract: Hendy and Kerr (2005b) find that an emissions charge on agricultural methane and nitrous oxide of $25 per tonne of carbon dioxide (CO2) equivalent would be likely to reduce New Zealand’s net land-use related emissions for commitment period one in the order of 3%, with full accounting. The costs per farmer and as a percentage of profit would be very high. This paper considers the regional impacts of such a policy in New Zealand by allocating the emission charge across space according to the location of animals. We then combine our emissions charge information with data on the socio-economic characteristics of the affected areas. Obviously rural areas are heavily affected. In many respects, for example median income, ethnic mix, and percentage of working people with a university degree, the rural areas most affected have very similar socio-economic characteristics to other parts of rural New Zealand. Only in two ways do they appear to differ. Our findings indicate that areas with high emission costs tend to have high employment rates, but that they also have a disproportionately high number of unqualified people.
    Keywords: climate change, land use, social impacts, methane, nitrous oxide, dairy, sheep, beef, distribution of costs, regional
    JEL: Q25 Q28 R14
    Date: 2005–09–12
  10. By: Gersbach, Hans; Siemers, Lars
    Abstract: We demonstrate that there is a nexus between land transfers and human capital formation. A sequence of land redistributions enables the beneficiaries to educate their children and thus to escape from poverty and to overcome child labour. We find that open access to land markets should be prohibited for beneficiaries for some time. Moreover, a temporary state of inequality among the poor is unavoidable. Finally, a successful land reform allows for the transition of a society from an agriculture-based state of poverty to a human capital-based developed economy.
    Keywords: land market access; land reforms; migration; poverty; transition
    JEL: I28 I38 O11 O15 Q15
    Date: 2005–08
  11. By: Noh, Yong-Hwan; Moschini, GianCarlo
    Abstract: We analyze the entry of a new product into a vertically differentiated market in which an entrant and an incumbent compete in prices. Here the entry-deterrence strategies of the incumbent firm rely on “limit qualities.” With a sequential choice of quality, a quality-dependent marginal production cost, and a fixed entry cost, we relate the entry-quality decision and the entry-deterrence strategies to the level of entry cost and the degree of consumer heterogeneity. Quality-dependent marginal production costs in the model entail the possibility of inferior-quality entry as well as an incumbent’s aggressive entry-deterrence strategies of increasing its quality level toward potential entry. Welfare evaluation confirms that social welfare is not necessarily improved when entry is encouraged rather than deterred.
    Keywords: entry deterrence; quality choice; vertical product differentiation.
    JEL: C72 D43 L13
    Date: 2005–09–14
  12. By: Lence, Sergio H.; Hayes, Dermot J.
    Abstract: A two-country extension of an ex ante simulation model of research and development (R&D) in agriculture developed by Lence, Hayes, McCunn, Smith, and Niebur (2005) is used to analyze issues regarding intellectual property (IP) protection, spillovers, and genetic use restriction technologies (GURTs) in the context of the United States and South America soybean sectors. The model is used to examine how various IP protection levels in the United States and South America might have impacted on the level of innovation, market equilibrium and the welfare of market participants had they been in place prior to the introduction of Roundup Ready technologies. The results indicate that technology fees that are charged in the United States but not in South America are harmful to US producers. Neither producers in the United States nor US-based R&D firms have incentives to support or develop technologies such as Roundup Ready that can be easily adopted in countries with low IP protection. However, total world welfare is higher when this type of transferable R&D is conducted. Equalizing IP protection across countries gives R&D firms a strong incentive to conduct R&D of relevance to both countries. Surprisingly, the introduction of a low level of IP protection in South America does not necessarily improve expected welfare of US producers. To the extent that GURTs contribute toward IP protection harmonization, they can be world-welfare enhancing. However, the positive impact of GURTs could be greatly reduced if they increase IP protection beyond a certain level. The use of GURTs to impose IP protection in South America generally increases the expected welfare of US producers.
    Keywords: GURT, Roundup Ready soybeans, spillover, technology fee, welfare.
    Date: 2005–09–22
  13. By: Debaere, Peter
    Abstract: It is a well-established theoretical result that the trade policy of a large country can directly affect its own and other countries' welfare by affecting international goods prices. However, there exist very few empirical studies that analyze the effect of trade policy on international prices. With detailed data on unit values and tariffs, I show how policy actions in Europe disrupted the global shrimp market in a non-negligible way and set the stage for the current anti-dumping case in the US. The loss of Thailand's preferential trade status in Europe and the international differences in food safety standards during the antibiotics crisis, have shifted esp. Thai, Vietnamese and Chinese shrimp exports away from Europe towards the US in the late 1990s and early 2000s. I document how these shifting markets have decreased US prices for shrimp significantly compared to those in Europe.
    Keywords: international trade
    JEL: F1
    Date: 2005–09

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