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on Agricultural Economics |
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Issue of 2005‒11‒12
eight papers chosen by |
| By: | Hrabrin Bachev (Institute of Agricultural Economics, Sofia, Bulgaria) |
| Abstract: | This paper presents the dominating farming structure in Bulgaria on the eve of EU accession, and evaluates recent policies for farm and agricultural income support, and assesses likely consequences of CAP implementation on farming structures and sustainability. We demonstrate that a specific farming structure dominates in the country consisting of numerous subsistence and small farms; and few large farms, cooperatives, and agro-firms; and widely used informal, vertically integrated, and mix forms. Public support to farming has been in an increase in recent years but is still far bellow the European level. Besides, only a fraction of farms benefit from some form of public support most of them being large farms, cooperatives, and tobacco producers. Farming is still an important income source for a good part of population. However, there is a significant gap in the monetary income in the large and some smaller- scale (intensive) enterprises, and the great majority of farms. Besides, development programs contribute less to agrarian and rural sustainability, and to decreasing divergence between richer and poor regions of the country. Assessment of likely short-term impact of the CAP implementation in Bulgaria shows that it will increase sustainability of farms bringing net financial benefits, enhancing competitiveness, and improving environmental performance. However, the chief beneficiary from the direct payments and other support measures will be the biggest farms in the most developed regions of the country. CAP programs will also give new possibility for extending activities of existing forms and bring to a life new organizational arrangements. All that will create more employment and income opportunities, and revitalize agrarian and rural economy. On the other hand, some effective smaller-size and family structure and livestock farms will have no or limited access to EU funding. Consequently, income and performance gap between farms of different types, sub-sectors and regions will widened unless special supplementary measures (“coupled” with production and regions) are taken. Besides, CAP will likely support “ineffective” and non-market modes (such as part-time and subsistence farming, production cooperatives), and therefore raise their sustainability and delay further restructuring. Last but not least important, there will be significant difficulties for introducing CAP and EU standards which will require more costs than in other countries, and will be associated with some time lag until “full” implementation, and would not involve less commercialized and subsistent farming. |
| Keywords: | farms structures, support to farms, impact on CAP implementation on farm sustainability |
| JEL: | O P |
| Date: | 2005–11–06 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpdc:0511006&r=agr |
| By: | Hrabrin Bachev (Institute of Agricultural Economics, Sofia, Bulgaria) |
| Abstract: | In this paper an attempt has been made to identify dominant forms and factors for land supply in Bulgarian farms. The New Institutional and Transaction Costs Economics framework is adapted to transitional agrarian economy. Institutional, behavioral, and transaction costs factors for evolution and sustainability of different forms of subsistent, cooperative, and commercial land supply in Bulgaria have been analyzed. Comparative efficiency of various forms for land supply in market-oriented farms of different type (unregistered, cooperatives, agro-firms) and sizes (small, middle, large) has been estimated. The study is based on original microeconomics data collected through interviews with managers of 0.5% of commercial farms in the country. First of all, a general characteristics and development of different kind of farms in Bulgaria has been presented. That analysis comprises: the kind of new commercial farms; the type of transactions under their management; the pace of evolution of market oriented farms; and factors for emergence of large-scale subsistent farming. Institutional and transaction costs origin of existing forms of farming has been underlined. Secondly, an analysis is made on major modes for land supply in commercial farms. It includes: the type of land supply (e.g. own land, leased land, cultivation in groups); modes of acquisition of land ownership (restitution, privatization, purchase); extend of lease-in contracts; forms for reduction of land “supply” (sell off and lease-out land). Dominating modes of land supply are found to relate to critical dimensions and costs of transacting. Thirdly, an analysis of the transaction costs in land supply has been made. In encompasses: the specific features of land supply contracts; the type of rent; extend of a third-party involvement in land transactions; and problems in land supply deals. Preferred contract forms depend on attributes of transactions and aim at protecting and minimizing costs of land deals. Finally, factors for enlargement of Bulgarian farms have been specified. It is proved that the reduction of land supply and the expansion of size of commercial farms, both have been determined by the transaction costs reasons. Presently, the high marketing, credit supply, and contract enforcement costs are the major factors restricting farms enlargement. A good part of cooperatives and middle-size farms also spend significant “time and efforts for finding partners selling or leasing-out land” On the other hand, the most important factors for farm development in the future relates to improvement of the institutional environment, and managerial experience of farm entrepreneurs. According to the farm managers there are no specific factors related to land supply which could impede farm development in the country. |
| Keywords: | governing of land supply, New Institutional and Transaction Costs Economics, transitional farm organization |
| JEL: | O P |
| Date: | 2005–11–06 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpdc:0511008&r=agr |
| By: | Hrabrin Bachev (Institute of Agricultural Economics, Sofia, Bulgaria) |
| Abstract: | The New Institutional and Transaction Costs Economics framework is incorporated to transitional Bulgarian agriculture, and level of sustainability of dominating subsistent farming, production cooperatives, small-scare commercial farms, and large agro-firms assessed. New framework for assessing sustainability of farms and for governing of sustainable development is suggested taking into account: role of specific institutional environment, comparative efficiency of various market, private, public and hybrid governing modes, transaction costs and critical factors (frequency, uncertainty, asset specificity, and appropriability) of farm transactions. Analysis of sustainability of different types of Bulgarian farms is made, and further domination of subsistence farming, cooperatives, large agro-firms, and some part of small commercial farms projected. |
| Keywords: | assessment of sustainability of farms, governing of agrarian sustainability, sustainability of Bulgarian farms |
| JEL: | O P |
| Date: | 2005–11–06 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpdc:0511007&r=agr |
| By: | Sarbajit Chaudhuri (Dept. of Economics, Calcutta University) |
| Abstract: | In this paper, a model of interaction of formal and informal credit markets has been developed where the bank official (the ultimate provider of formal credit) faces a lending constraint. The bank official takes a bribe from the borrowers to disburse formal credit and he deliberately debars some potential borrowers from getting bank credit. Inadequate supply of formal credit and exclusion of a few borrowers by the official create a market for informal credit. The bank official and the moneylender (the supplier of informal credit) play a non-cooperative game in determining the bribing rate and the informal interest rate simultaneously. The central objective of the paper is two-fold. First, it shows that an agricultural credit subsidy policy may be counterproductive even when formal and informal credits are substitutes. This is contrary to the Gupta and Chaudhuri (1997) result that a credit subsidy policy is counterproductive only when the two types of credit are complementary to each other. Secondly, the paper considers two alternative ways of formulating a credit subsidy policy: (1) through an increase in the aggregate volume of formal credit supplied to the borrowers, keeping the formal sector interest rate at a reasonable level; and, (2) through a decrease in the rate of interest charged on this type of credit. The paper shows that if a credit subsidy policy is undertaken via the first path, it is actually able to lower the informal sector interest rate and improve both the agricultural productivity and welfare of the farmers. This result is crucial because all the earlier papers in this line have analyzed the effects of a credit subsidy policy through the second route and found it to be counterproductive in the presence of corruption in the distribution of formal credit. |
| Keywords: | Farmer; moneylender; bank official; formal credit; non- cooperative game; informal interest rate; credit subsidy policy |
| JEL: | Q15 D89 |
| Date: | 2005–11–09 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpga:0511001&r=agr |
| By: | Hrabrin Bachev (Institute of Agricultural Economics, Sofia, Bulgaria) |
| Abstract: | Attempt has been made to identify dominant forms and factors for finance supply in Bulgarian farms. New Institutional and Transaction Costs Economics framework is used to estimate comparative efficiency of various modes for financing of short-term and long-term activities of farms of different type and size. Study is based on a large-scale microeconomic data collected through interviews with managers of 0.5% of commercial farms in the country. Big transitional institutional, economic and behavioral uncertainty combined with high asset specificity and low recurrence of transactions, have blocked use of market debt financing of farms. Great variety of specific private modes have emerged to overcome funding difficulties and to govern dependant transactions (internal investment, personal contacts, share investment, interlinked organization). However, vast development and maintenance costs (“free riding”) have prevented formation of effective collective credit supply forms. Large third-party (Government, international assistance, NGO) intervention has also taken place to finance (directly or indirectly) farms or to assist market and private modes of funding of farm activities. Nevertheless, for majority of Bulgarian farms external funding is still either too expensive (high interest rate, unaffordable collateral requirements, immense paper work and bureaucratic procedures, big “side payments”) or not accessible at all. High transaction costs for “credit supply”, and “marketing”, and “contract enforcement” are the major factors limiting farm enlargement at present stage of transition. Along with further credit support, public involvement should be directed to enhancement of efficiency of State lending programs and improvement of general institutional environment (legislative framework, contract enforcement system, market infrastructure etc.). |
| Keywords: | governing of finance in farms; transaction cost economics; transitional farm organization |
| JEL: | G |
| Date: | 2005–11–06 |
| URL: | http://d.repec.org/n?u=RePEc:wpa:wuwpfi:0511003&r=agr |
| By: | Karsten Neuhoff; Michael Grubb; Kim Keats |
| Abstract: | Successful cap and trade programs for SO2 and NOx in the US allocate allowances to large emitters based on a historic base line for a period of up to thirty years. National Allocation Plans in Europe allocate CO2 allowances in an iterative approach first for a three then for a five-year period. The potential updating of the base line creates perverse incentives for operation and investment. Some allowances are also reserved for new entrants further distorting the scheme. We use analytic models and numeric simulations for the UK power sector to illustrate and quantify how these effects contribute to an inflation of the allowance price while reducing utilisation and investment in efficient technologies. The inflated allowance prices are likely to increase the European allowance budget and emissions, e.g. through the Linking Directive. As a result opportunity costs of emitting CO2 are reduced relative to an efficient cap and trade program. |
| Keywords: | : Emission Trading, Allowance Allocation, Investment Decision, Operation, Inefficiencies. |
| JEL: | D24 D92 Q28 L10 |
| Date: | 2005–11 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:0552&r=agr |
| By: | Yue, Chengyan; Beghin, John C.; Jensen, Helen H. |
| Abstract: | The price-wedge method yields a tariff-equivalent estimate of technical barriers to trade (TBT). An extension of this method accounts for imperfect substitution between domestic and imported goods and incorporates recent findings on trade costs. We explore the sensitivity of this revamped TBT estimate to its key determinants (substitution elasticity, preference for home good, and trade cost). We use the augmented approach to investigate the ongoing US-Japan apple trade dispute and find that removing the Japanese TBT would yield limited export gains to the United States. We then draw policy implications of our findings. |
| Keywords: | apple, Japan, SPS, TBT, technical barriers to trade, trade cost, trade dispute, WTO. |
| Date: | 2005–11–01 |
| URL: | http://d.repec.org/n?u=RePEc:isu:genres:12453&r=agr |
| By: | Pawlina,G.; Renneboog,L. (TILEC (Tilburg Law and Economics Center)) |
| Date: | 2005 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:kubtil:200501&r=agr |