New Economics Papers
on Agricultural Economics
Issue of 2006‒10‒21
seven papers chosen by

  1. Economic Liberalization and Rural Land and Labour Markets in India: A Study By Gandhi Vasant P.
  2. Political Economy of Electricity Subsidy: Evidence from Punjab By Jain, Varinder
  3. Wheat Marketing and its Efficiency in India By Gandhi Vasant P.; Koshy Abraham
  4. The Adoption and Economics of Bt Cotton in India: Preliminary Results from a Study By Gandhi Vasant P.; Namboodiri N.V.
  5. Comparing Environmental Impact of Alternative CAP Scenarios Estimated Through an Artificial Neural Network By Andrea BONFIGLIO
  6. Determining the Regional Economic Values of Ethanol Production in Iowa Considering Different Levels of Local Investment By Swenson, David A.; Eathington, Liesl
  7. Does Health Information Matter for Modifying Consumption? A Field Experiment Measuring the Impact of Risk Information on Fish Consumption By Jutta Roosen; Stephan Marette; Sandrine Blanchemanche; Philippe Verger

  1. By: Gandhi Vasant P.
    Abstract: The paper examines the rural land and labour markets in the context of economic liberalization in India. Land and labour are the two fundamental resources available to the rural people for income generation. The access to land and to employment for labour become basic determinants of well-being for the rural households. Reforms are often seen as hostile to rural areas and the poor, although they should be beneficial not only for overall growth, but also rural growth and poverty alleviation. The study based on primary household data examines the land and labour markets in the reform period and the underlying linkages of these to different characteristics of the household. The study finds that over the reform period in India the land markets are leading to less landlessness rather than more, and growth in marginal and medium farm sizes rather than large. Lease markets are leading to operated land in more hands. Land purchase behaviour is related to less land, more education, greater crop diversification, and higher crop and livestock revenues. Leasing-in is also related to many of the same variables and is showing great diversity in lease agreements involving outputs, inputs and rent. Labour-employment is showing diversity of occupations but the primary dependence on agriculture is still about 80 percent. There has been some change in the occupational structure. Non-farm employment is associated with higher overall employment. Own-farm employment is strongly related to crop diversification and livestock activity; other farm employment to number of male and female family members and irrigation; and non-farm employment to education. Broadly, liberalization does not show adverse consequences but rather some positive impact on rural land and labour markets.
    Date: 2006–09–29
  2. By: Jain, Varinder
    Abstract: The electricity subsidy distribution pattern needs to be scrutinised to assess whether the policy benefits small producers, a normative argument often made while granting any input subsidy. In Punjab, this policy is found to ignore equity considerations while granting non-discriminatory electricity subsidies to the agricultural sector. This study highlights the existence of disparities in the flow of electricity subsidy between the advanced and backward regions. While the medium and large farmers reap the major benefits of the subsidy, the poor small farmers, especially in the backward areas, remain excluded due to their non-possession of electricity connections. In a nutshell, this paper questions the justification for introducing such a policy and puts forward the case for user charges based on open access to electricity.
    Keywords: Political economy; Electricity Subsidy; Agriculture
    JEL: P26 H23
    Date: 2006–09–23
  3. By: Gandhi Vasant P.; Koshy Abraham
    Abstract: The study examines the marketing of wheat in India, focusing on the private marketing system, the marketing efficiency and quality. Wheat is now a major food staple in India, crucial to India’s food economy and security. With production reaching 70 to 75 million tons and a large demand, India’s wheat economy is the second largest in the world. The efficiency of marketing is crucial to farmer incomes, consumer welfare, as well as government budgets and the economy. Substantial changes are taking place in the marketing of wheat. The study finds that the farmers now almost invariably sell in the nearby primary markets rather than to village traders. The farmer choice of varieties is now becoming market oriented with quality and market acceptance becoming as important as yield. The typically market intermediary provides hardly any special, value adding or developmental services in return for the commissions and margins. The farmers see considerable scope for improvement in the marketing system. The consumer demand for wheat varies considerably across the country. But wheat has made inroads into food consumption in the east and the south. The retailers are increasingly conscious of consumer demand and quality, and keep a varietiy of wheat and wheat products. Direct buying of wheat grain, storing, and own recourse to processing are common in the north and the west, whereas direct purchase of wheat products such as flour is the norm in the east and the south. The trend is towards direct purchase of processed wheat products, and within this from loose to packaged branded wheat products. The estimated average total marketing cost of wheat is found to be of the order of Rs. 266 per quintal, and in this transport has the largest share of 40 percent, commission and taxes make up 25 percent, and wastage another 15 percent. When compared to the consumer-farmer price spread, the marketing costs account for 74 percent of the spread, leaving 26 percent for margins – this is fairly efficient but there is significant scope for improvement. On an average, the farmers receive 66 percent of what the consumer pays. The government channel marketing cost is reported to be Rs. 309 per quintal, but this does not cover the whole chain and is not strictly comparable. Examination of the question of market integration for wheat is difficult due to data and quality difference problems. Co-integration analysis using monthly price data for eight markets for the period April 1997 to June 2004 indicates that nationally the markets are integrated but the LOP (Law of One Price) does not hold, and the presence of six common stochastic trends implies the absence of full pair-wise co-integration.
    Date: 2006–09–29
  4. By: Gandhi Vasant P.; Namboodiri N.V.
    Abstract: The paper presents preliminary results from a study of the economics and adoption of Bt cotton in India. Biotech crops, which made their appearance in the world about a decade ago, have gained substantial popularity and acceptance in many parts of the world including US, China, Australia, Mexico, Argentina and South Africa. However, their introduction in India has been relatively late and controversial and they still have considerable ground to cover in the country. Cotton is a major commercial crop in India but has substantial problems particularly from extensive pest damage and poor yields. Bt cotton offers a promising solution to these serious problems. Data from the survey, which covered the important cotton states of Gujarat, Maharashtra, Andhra Pradesh and Tamil Nadu, and 694 farmers, indicates that Bt cotton offers good resistance to bollworms as well as several other pests. The incidence of these pests is reported to be considerably lower in Bt cotton as compared to Non-Bt cotton. The yields of Bt cotton are found to be higher and the yield increase/ difference statistically significant in all the states under both irrigated and rain-fed conditions. As a result, given the good market acceptance of the product, the value of output per hectare is higher in all the states and conditions. The question of higher cost of cultivation exists, and is confirmed, mainly because of high seed cost and not commensurate reduction in pesticide cost. However, the profit is found to be higher in all the states to the estimated extent of about 80-90 percent on an average when the effects of associated inputs are included. The returns are highest in Maharashtra followed by Gujarat and then Andhra Pradesh. Subjective assessment indicates that farmers see advantage in Bt cotton in pest incidence, pesticide cost, cotton quality, yield and profit. Almost all farmers indicate that they plan to plant Bt cotton in the future. To increase the benefits from the technology, the farmers strongly urge reduction in the seed cost, greater field extension and demonstration work on the correct practices, and more Bt cotton varieties to suit the diverse agro-ecological settings.
    Date: 2006–09–29
  5. By: Andrea BONFIGLIO ([n.a.])
    Abstract: The paper aims to assess environmental impact produced by alternative Common Agricultural Policy (CAP) scenarios in the Italian Marche region for the period 2000-2002. Scenarios concern alternative hypotheses about direct payments for arable crops related to Agenda 2000. For this aim, a Multilayer Feedforward Neural Network model (MFNN) was applied. Different from traditional models, MFNN is able to analyze complex patterns quickly and with a high degree of accuracy. Moreover, MFNN makes assumptions about neither the underlying population nor the existence of optimising behaviour and uses the data to develop an internal representation of the complexity characterising the system analysed. The results indicate that direct payments produced positive environmental effects compared to the hypothesis of absence of direct payments. Moreover, they show that it would have been even better, from an environmental point of view, if Agenda 2000 had been more radical in comparison to the 1992 Mac Sharry reform, by introducing decoupled direct payments.
    Keywords: common agricultural policy, direct payments, environmental impact, neural networks
    JEL: C45 Q18 Q21
    Date: 2006–10
  6. By: Swenson, David A.; Eathington, Liesl
    Abstract: This study develops a baseline economic impact model for a 50MGY ethanol plant considering all new production inputs and estimated net new output in the new economy. The baseline scenario presupposes no local ownership in the plant. The research next allocates payments to investors back into the study economy to simulate different levels of "local" investment and, concomitantly, local receipt of profits. For each 25 percent increase in local ownership, the model added 29 more jobs to the local economy.
    JEL: A1 B4
    Date: 2006–10–09
  7. By: Jutta Roosen; Stephan Marette (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); Sandrine Blanchemanche; Philippe Verger
    Abstract: A field experiment was conducted in France to evaluate the impact of health information on fish consumption. A warning given to the treatment group revealed the risks of methylmercury contamination in fish and also gave consumption recommendations. Using difference-in-differences estimation, we show that this warning led to a significant but relatively weak decrease in fish consumption. However, consumption of the most contaminated fish did not decrease despite advice to avoid consumption of these types of fish. Accompanying questionnaires show that consumers imperfectly memorize the fish species quoted in the warning. The results point to the relatively poor efficacy of a complex health message, despite its use by health agencies around the world.
    Keywords: econometrics, field experiment, fish consumption, health information, nutrition. JEL Classification: C9, D8, I1.
    Date: 2006–10

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