New Economics Papers
on Agricultural Economics
Issue of 2005‒11‒05
eighteen papers chosen by

  1. UK Sugar Beet Farm Productivity under Different Reform Scenarios: A Farm Level Analysis By Alan W. Renwick; Cesar L. Revoredo Giha; Mark A. Reader
  2. Crop Substitution on UK Sugar Beet Farms and its Effects on the Environment: A Multi-Product Cost Function Approach By Cesar L. Revoredo Giha; Alan W. Renwick
  3. Contract Marketing in the US after the 2002 Farm Act: The Case of Peanuts By Cesar L. Revoredo Giha; Denis A. Nadolnyak; Stanley M. Fletcher
  4. Analysis of the Impact on UK Sugar Production Efficiency of Reforming the EU Sugar Regime By Alan W. Renwick; Cesar L. Revoredo Giha
  5. On the Segregation of Genetically Modified, Conventional, and Organic Products in European Agriculture: A Multi-market Equilibrium Analysis By Moschini, GianCarlo; Bulut, Harun; Cembalo, Luigi
  6. Land Reform and Sustainable Development By James K. Boyce; Peter Rosset; Elizabeth Stanton
  7. Determinants of Technical Efficiency in Agriculture and Cattle Ranching: A Spatial Analysis for the Brazilian Amazon By Danilo Camargo Igliori
  8. Using a Choice Experiment to Estimate the Demand of Hungarian Farmers for Food Security and Agrobiodiversity During Economic Transition By Ekin Birol; Andreas Kontoleon; Melinda Smale
  9. Sustainable Use and Management of Crop Genetic Resources: Landraces on Hungarian Small Farms By Ekin Birol; Melinda Smeale
  10. Learning About a New Technology: Pineapple in Ghana By Timothy G. Conley; Christopher R. Udry
  11. Compensation for Environmental Services and Rural Communities: Lessons from the Americas By Herman Rosa; Deborah Barry; Susan Kandel; Leopoldo Dimas
  12. Certification Systems as Tools for Natural Asset Building: Potential, Experiences to Date, and Critical Challenges By Michael E. Conroy
  13. On- and off-farm labor decisions by slash-and-burn farmers in Yucatan (Mexico) By Unai Pascual; Edward Barbier
  14. Managing Quality under Heterogeneous Consumer Demand and Product Quality By Carriquiry, Miguel A.; Babcock, Bruce A.
  15. Biodiscovery and Intellectual Property Rights: A Dynamic Approach to Economic Efficiency By Tom Dedeurwaerdere; Vijesh Krishna; Unai Pascual
  16. Social Networks in Ghana By Christopher Udry; Timothy G. Conley
  17. Inspection Intensity and Market Structure By Marette, Stéphan
  18. GMOs: Prospects for Increased Crop Productivity in Developing Countries By Robert E. Evenson

  1. By: Alan W. Renwick (Land Economy Research Group, Scottish Agricultural College, UK); Cesar L. Revoredo Giha (Department of Land Economy, University of Cambridge); Mark A. Reader (Department of Land Economy, University of Cambridge)
    Abstract: The purpose of this paper is to study the effect that the imminent reform in the European Union (EU) sugar regime may have on farm productivity in the United Kingdom (UK). We perform the analysis on a sample of sugar beet farms representative of all the UK sugar beet regions. To estimate the changes in productivity, we estimate a multi-output cost function representing the cropping part of the farm, which is the component that would be mostly affected by the sugar beet reform. We use this cost function to compute the new allocation of outputs and inputs after the changes in the sugar beet quota and price support. This are subsequently used to compute measures of total factor productivity. Our results show slight decreases in the productivity at the individual farm level under both quota and price support reduction. However, when considering the aggregate level, the reduction in the price support shows significant increases in productivity, in contrast to the results obtained from a reduction in quota.
    Keywords: EU sugar reform; UK agriculture; UK sugar beet production; Multi-output cost function; Total factor productivity
    Date: 2005–02
  2. By: Cesar L. Revoredo Giha (Department of Land Economy, University of Cambridge, UK); Alan W. Renwick (Scottish Agricultural College)
    Abstract: This paper analyzes the effect that the imminent reform of the EU sugar beet regime will have on United Kingdom (UK) sugar beet farms. Specifically, we estimate a multi-product cost function to analyze the effect the changes on the sugar beet price support and quota will have on the crop allocation of sugar beet farms and their aggregate use of inputs. Based on these estimates we discuss the implications that changes in the crop patterns may have on farm environmental variables such as soil loss and groundwater pollution.
    Keywords: Multi-product cost function, UK sugar beet production, CAP reform
    Date: 2005–06
  3. By: Cesar L. Revoredo Giha (Department of Land Economy, University of Cambridge, UK); Denis A. Nadolnyak (Department of Agricultural and Applied Economics, University of Georgia, USA); Stanley M. Fletcher (Department of Agricultural and Applied Economics, University of Georgia, USA)
    Abstract: The elimination of the marketing quota system that regulated the peanut market since the 1930s has been accompanied by the emergence of marketing contracts between farmers and peanut buyers (mainly peanut shellers). Two types of contracts have been observed, forward contracts for delivery at harvest or at a later date and “option to purchase” contracts. We analyze the clauses of contracts used by major shellers in order to infer the motivation behind these contracts (i.e., risk sharing, reduction of transaction costs, improve coordination, exercise of market power, etc.). The analysis points out that the main role of the contracts is to replace the marketing structure existing prior the 2002 Farm Act, where peanut marketing was quite regulated. In this sense, the reduction of transaction costs associated to the need for coordinating a continuous supply of homogeneous quality seems to be the most plausible explanation.
    Keywords: US agriculture, agricultural marketing, peanuts, economics of agricultural contracts
    Date: 2005–06
  4. By: Alan W. Renwick (Land Economy Research Group, Scottish Agricultural College, UK); Cesar L. Revoredo Giha (Department of Land Economy, University of Cambridge)
    Abstract: The purpose of the paper is examining the potential implications for the UK sugar beet sector of the EU sugar regime reform. Although the reform has yet to be formalised, the initial proposals centre on price and quota cuts. Using panel data from the Farm Business Survey for England, the paper estimates two cost functions: one for the sugar enterprise and another for the cropping part of the farm (i.e., excludes any livestock enterprise) and use them to analyse the impacts on profitability and costs of three possible reform scenarios: a 25 per cent cut in UK quota, a 25 per cent cut in price, a 40 per cent cut in price. The results show that the largest gains in terms of economic efficiency would be achieved under the 40 per cent price cut; however, the models suggest that this would also lead to the greatest reduction in production if the fixed costs of producing sugar were not adjusted.
    Keywords: EU sugar reform; UK agriculture; UK sugar beet production; Multi-output cost function.
    Date: 2005–02
  5. By: Moschini, GianCarlo; Bulut, Harun; Cembalo, Luigi
    Abstract: Evaluating the possible benefits of the introduction of genetically modified (GM) crops must address the issue of consumer resistance as well as the complex regulation that has ensued. In the European Union (EU) this regulation envisions the “co-existence” of GM food with conventional and quality-enhanced products, mandates the labelling and traceability of GM products, and allows only a stringent adventitious presence of GM content in other products. All these elements are brought together within a partial equilibrium model of the EU agricultural food sector. The model comprises conventional, GM and organic food. Demand is modelled in a novel fashion, whereby organic and conventional products are treated as horizontally differentiated but GM products are vertically differentiated (weakly inferior) relative to conventional ones. Supply accounts explicitly for the land constraint at the sector level and for the need for additional resources to produce organic food. Model calibration and simulation allow insights into the qualitative and quantitative effects of the large-scale introduction of GM products in the EU market. We find that the introduction of GM food reduces overall EU welfare, mostly because of the associated need for costly segregation of non-GM products, but the producers of quality-enhanced products actually benefit.
    Keywords: biotechnology, differentiated demand, genetically modified crops, identity preservation, innovation, welfare.
    Date: 2005–10–26
  6. By: James K. Boyce; Peter Rosset; Elizabeth Stanton
    Abstract: Land reform – the reallocation of rights to establish a more equitable distribution of quality. This paper surveys land reform strategies, illustrated by the postwar reforms in East Asia and the ‘bottom-up’ land reform today being led by Brazil’s Landless Workers’ Movement. Land reform can reduce rural poverty not only by channeling a larger slice of the agricultural- income pie to low- income households, but also by increasing the size of the pie by raising land productivity. Land reform’s contribution to poverty reduction can be magnified by spillover effects in the urban economy. With a supportive policy environment, land reform also can foster a transition to sustainable agriculture, due to the environmental comparative advantages of small farms.
    Date: 2005
  7. By: Danilo Camargo Igliori (Department of Land Economy, University of Cambridge, UK)
    Abstract: The determinants of technical efficiency in agriculture and cattle ranching are closely related with the debate involving the conservation-development trade-off in the Brazilian Amazon. Concerned with balancing development and environmental conservation, policy makers and academics have emphasized the importance of choosing ways of selecting areas where land use restrictions would be established. In order to understand the relationship between spatial patterns of deforestation and the associated distribution and characteristics of economic activity, issues regarding technical efficiency are clearly important. This paper aims to identify the socio-economic and environmental determinants of technical efficiency in agriculture and cattle ranching in the Brazilian Amazon emphasizing their relationship with spatial processes of deforestation and development. The study is structured in two parts. The first part is concerned with measuring technical efficiency for agriculture and cattle ranching in each geographical unit focusing on the production relationship between inputs and outputs. The second one focuses on the variation in the efficiency measure explained by exogenous factors and includes the spatial analysis. We adopt the model proposed by Battese and Coelli (1995) where the production function and the exogenous effects influencing technical efficiency are estimated simultaneously.
    Keywords: stochastic frontier, technical efficiency, spatial analysis, Brazilian Amazon
    Date: 2005–06
  8. By: Ekin Birol (Homerton College, University of Cambridge, UK); Andreas Kontoleon (Department of Land Economy, University of Cambridge, UK); Melinda Smale (International Food Policy Research Institute, Washington DC, USA and International Plant Genetic Resources Institute, Rome, Italy)
    Abstract: Hungarian home gardens are small farms that are repositories of agrobiodiversity and provide food security during economic transition. We use a choice experiment to test the hypothesis that farmer demand for home gardens will decrease as markets develop with European Union accession. Data represent 22 communities with varying levels of market and social infrastructure. We find that farmers located in more economically developed communities choose to be less dependent on small farms for food and prefer lower levels of agrobiodiversity. Findings indicate that the survival of small farms is jeopardized by economic change, but point to some conservation policy options.
    Keywords: food security, agrobiodiversity, home gardens, choice experiment, multi-functional agriculture
    Date: 2005–06
  9. By: Ekin Birol (Homerton College and Department of Land Economy, University of Cambridge, Cambridge, UK); Melinda Smeale (International Food Policy Research Institute, Washington DC, USA and International Plant Genetic Resources Institute, Rome, Italy)
    Abstract: Crop genetic resources are natural assets that are necessary for future crop improvement. In isolated, marginal production environments where markets function imperfectly, farm families depend on them directly for food. In recognition of their importance, international agreements such as the Convention on Biological Diversity and the International Treaty on Plant Genetic Resources for Food and Agriculture encourage national governments to support their sustainable use and management, on farms and in gene bank collections. Hungary is a signatory to these international agreements. The aim of this study is to contribute research-based information to support the design of efficient and equitable conservation programmes for socially valuable crop landraces still found on small farms in Hungary. Landrace cultivation and richness is predicted with a Poisson hurdle model applied to data from a statistical survey of 323 households in three pilot conservation sites. Poorer, larger farm families with older decision-makers, who are more isolated from market infrastructure, are more likely to grow landraces and maintain greater landrace richness. Those managing smaller farms with lower quality soils and less irrigation have higher predicted probabilities of growing landraces. Findings suggest that the development of market infrastructure may contribute to abandonment of landraces, although specialised markets for high-quality products merit further investigation. Where economic development opportunities remain limited, supporting the continued management of crop genetic resources on farms could have positive equity implications and address other social goals, although the full cost and benefit implications of relevant policy instruments would need to be assessed in the context of Hungary’s national agri-environmental programme.
    Keywords: crop genetic resources, landraces, farm household model, Poisson Hurdle model, sustainable use and management,
    Date: 2005–02
  10. By: Timothy G. Conley; Christopher R. Udry (Economic Growth Center, Yale University)
    Abstract: This paper investigates the role of social learning in the diffusion of a new agricultural technology in Ghana. We use unique data on farmers’ communication patterns to define each individual’s information neighborhood, the set of others from whom he might learn. Our empirical strategy is to test whether farmers adjust their inputs to align with those of their information neighbors who were surprisingly successful in previous periods. We present evidence that farmers adopt surprisingly successful neighbors’ practices, conditional on many potentially confounding factors including common growing conditions, credit arrangements, clan membership, and religion. The relationship of these input adjustments to experience further supports their interpretation as resulting from social learning. In addition, we apply our methods to input choices for another crop with known technology and they correctly indicate an absence of social learning effects.
    Keywords: Social Learning, Technology, Innovation
    JEL: O31 O12 O13
    Date: 2000–07
  11. By: Herman Rosa; Deborah Barry; Susan Kandel; Leopoldo Dimas
    Abstract: In principle, payments for environmental services – such as watershed management, biodiversity conservation, and carbon sequestration – can advance the goals of both environmental protection and poverty reduction. A review of recent initiatives in the Americas suggests, however, that this desirable combination is not automatic. If payments for environmental services (PES) schemes are to be an effective vehicle for strengthening livelihoods in poor rural communities, they must be designed with that objective firmly in mind. This paper draws key lessons from diverse experiences in Costa Rica, Mexico, Brazil, El Salvador, and New York.
    Date: 2004
  12. By: Michael E. Conroy
    Abstract: Certification systems are becoming important tools to encourage and reward social and environmental responsibility. This paper explores whether these systems, which generally have not been designed for the explicit aim of poverty reduction, can assist poor people, either individually or in community-based and small-to-medium production units, to build their natural assets as a basis for sustainable livelihoods. The paper examines two leading certification systems – the Forest Stewardship Council™ and the Fair Trade Certified™ system – and emerging systems in tourism and mining. The results to date have been mixed. In the forestry sector, poverty reduction benefits of certification have been modest relative to its environmental benefits. In the agricultural commodity trade, where certification systems have been designed with a stronger focus on reducing poverty, the benefits have been greater. The long-term challenge is to ensure that the rapid global uptake and ‘mainstreaming’ of certification systems does not create new hurdles for low-income individuals and communities.
    Date: 2005
  13. By: Unai Pascual (Department of Land Economy, University of Cambridge); Edward Barbier (Department of Economics and Finance, University of Wyoming)
    Abstract: The availability of basic assets influences peasants’ economic behavior, their livelihood diversification strategies and their responses to land degradation. In addition, when pressed by economic hardships households can also expected to work more than better off ones. Whether this implies more or less on- or off-farm labor supply is an empirical question. This in turn can have an asymmetric effect on poverty traps and the extent of forest clearing under slash-and-burn farming. This paper examines the determinants of labor allocation among forest based shifting cultivating households in two communities from Yucatan (Mexico). The effects of wage rates and structural socio-economic factors are tested for both farming household heads and other family members and their implications discussed. While the former seems to be bound by structural factors, the latter are very sensitive to labor market signals and show a negative elasticity to off-farm labor supply. This calls for providing specialized training and education programs to increase human and social capital for household heads in order to reduce pressure on forest land and to assist households to avoid poverty traps arising from the predicted falling wage rates due to post-NAFTA liberalization of rural labor markets.
    Date: 2005–02
  14. By: Carriquiry, Miguel A.; Babcock, Bruce A.
    Abstract: Based on accepted advances in the marketing, economics, consumer behavior, and satisfaction literatures, we develop a micro-foundations model of a firm that needs to manage the quality of a product that is inherently heterogeneous in the presence of varying customer tastes or expectations for quality. Our model blends elements of the returns to quality, customer lifetime value, and service profit chain approaches to marketing. The model is then used to explain several empirical results pertaining to the marketing literature by explicitly articulating the trade-offs between customer satisfaction and costs (including opportunity costs) of quality. In this environment firms will find it optimal to allow some customers to go unsatisfied. We show that the relationship between the expected number of repeated purchases by an individual customer is endogenous to the choice of quality by the firm, indicating that the number of purchases cannot be chosen freely to estimate a customer’s lifetime value.
    Keywords: consumer satisfaction, heterogeneous customers, quality expectations, quality heterogeneity, quality management, repeated purchases
    Date: 2005–10–25
  15. By: Tom Dedeurwaerdere (Centre de Philosophie du Droit (CPDR), Université Catholique de Louvain, Belgium); Vijesh Krishna (Faculty of Agricultural Sciences, University of Hohenheim, Germany); Unai Pascual (Department of Land Economy, University of Cambridge, UK)
    Abstract: This paper examines the use the use of economic incentives for knowledge generation through biodiscovery, in the particular case of the use of a highly valuable biogenetic resource stock from the South for industrial/research input. The focus is on a dynamic approach to contracting and property rights building upon insights from institutional and ecological economics. Two important conclusions come out of this analysis. First, it highlights the necessity to go beyond standard market approaches to economic valuation in order to address the issues of future possibilities of use and innovation and the integration of the different stages in the process of value creation. Second, it shows the necessity of developing alternatives to the current intellectual property rights regime, including systems for appropriate protection of the traditional knowledge of local communities.
    Keywords: food security, Bioprospection, genetic resources, traditional knowledge, Kani model, benefit sharing
    Date: 2005–06
  16. By: Christopher Udry (Economic Growth Center, Yale University); Timothy G. Conley
    Abstract: In this chapter we examine social networks among farmers in a developing country. We use detailed data on economic activities and social interactions between people living in four study villages in Ghana. It is clear that economic development in this region is being shaped by the networks of information, capital and influence that permeate these communities. This chapter explores the determinants of these important economic networks. We first describe the patterns of information, capital, labor and land transaction connections that are apparent in these villages. We then discuss the interconnections between the various economic networks. We relate the functional economic networks to more fundamental social relationships between people in a reduced form analysis. Finally, we propose an equilibrium model of multi-dimensional network formation that can provide a foundation for further data collection and empirical research.
    Keywords: Endogenous Networks, Informal Credit, Social Learning
    JEL: O12 D85
    Date: 2004–05
  17. By: Marette, Stéphan
    Abstract: An investigation of financing an inspection policy while allowing the enforcement of a market regulation is described. A simple model shows that the intensity of controls depends on the market structure. Under a given number of firms, the per-firm probability of controls is lower than one, since firms’ incentive to comply with regulation holds under positive profits. In this case, a lump-sum tax is used for limiting distortions coming from financing with a fixed fee. Under free entry, the per-firm probability of controls is equal to one, and only a fixed fee that prevents excess entry is used to finance inspection.
    Keywords: inspection policies, market regulation, regulatory funding.
    Date: 2005–10–26
  18. By: Robert E. Evenson (Economic Growth Center, Yale University)
    Abstract: Genetically Modified Crops (GMO foods) have been widely available to farmers since 1996. The Gene Revolution, based on recombinant DNA (rDNA) genetic engineering techniques, is seen by proponents as both supplanting Green Revolution varieties, based on conventional plant breeding techniques, and potentially enabling "disadvantaged" production environments, unreached by Green Revolution varieties to achieve productivity improvements. This paper argues that the private firms supplying GM crop products have generally had little interest in selling products in disadvantaged production environments. The paper also argues that present rDNA techniques allow only static gains from specific "trait" improvements. But these GM products can be installed on Green Revolution varieties where continued dynamic varietal improvement is possible. As a consequence, the Gene Revolution complements the Green Revolution, and because trait incorporation expands area planted to Green Revolution varieties, there is potential for productivity improvement in disadvantaged environments.
    Keywords: Genetically Modified Foods, Genetic Engineering
    JEL: O1 O4 Q1
    Date: 2003–12

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