New Economics Papers
on Agricultural Economics
Issue of 2006‒10‒28
sixteen papers chosen by

  1. 2006 Precision Agricultural Services Dealership Survey Results By Linda Whipker; jay Akridge
  3. Determining What's Really Important to Lenders: Factors Affecting the Agricultural Loan Decision-Making Process By Christine Wilson; Allan Featherston; Terry Kastens; John Jones
  4. Toward Improved Maize Marketing and Trade Policies to Promote Household Food Security in Central and Southern Mozambique By David Tschirley; Danilo Abdula; Michael T. Weber
  6. Use of economic evaluation tools in environmental policymaking, with a focus on implications for children By Pascale SCAPECCHI
  7. Elder Parent Health and the Migration Decision of Adult Children: Evidence from Rural China By John Giles; Ren Mu
  8. Adjusting the CAPM for Threshold Effects: An Application to Food and Agribusiness Stocks By Christine Wilson; Allen Featherstone
  9. When Anti-Dumping Measures Lead to Increased Market Power: A Case Study of the European Salmon Market By Asche, Frank; Steen, Frode
  10. Buyer Power and Quality Improvements By Battigalli, Pierpaulo; Fumagalli, Chiara; Polo, Michele
  11. Export Promotion Agencies: What Works and What Doesn't By Lederman, Daniel; Olarreaga, Marcelo; Payton, Lucy
  12. Civil War, Crop Failure, and the Health Status of Young Children By Richard Akresh; Philip Verwimp
  13. Inequality and Growth in Rural China: Does Higher Inequality Impede Growth? By Dwayne Benjamin; Loren Brandt; John Giles
  14. the Growth Potential for the Indiana Livestock Industries By Michael Boehlje; Allan Gray; Tyler Mark
  15. Caracterización del mercado laboral rural en Colombia By José Leibovich; Mario Nigrinis; Mario Ramos
  16. Overcoming the natural resource constraint through dedicated R&D effort with heterogenous labor supply By Jean-Pierre Amigues; Michel Moreaux; Francesco Ricci

  1. By: Linda Whipker (Whipker Consulting, Cary, NC); jay Akridge (Department of Agricultural Economics, College of Agriculture, Purdue University)
    Abstract: Precision technologies are now well-integrated into the agricultural industry – both at the farm level and at the crop input dealer level. No longer are crop input dealers only using the technologies to bring new services to their customers, they are also utilizing the technology in their own businesses to improve the efficiency and effectiveness of their business operations. In early 2006, Crop Life magazine and Purdue University’s Center for Food and Agricultural Business conducted a survey for the 11th consecutive year to assess the adoption of precision agriculture practices in the U.S. from the perspective of the retail crop input dealer. The questionnaire was sent to 2500 retail crop input dealerships across the U.S. A total of 368 questionnaires were returned, with 343 being usable providing an effective response rate of 14 percent. Consistent with previous surveys, dealers were asked questions about the types of precision services they offer and/or use in their businesses, the fees they are charging for precision services, how fast their customers are adopting precision agriculture practices, how profitable they are finding precision services to be in their businesses and how their precision customers compare with their ‘traditional’ customers.
    Keywords: Precision agriculture, Crop input dealers, Variable rate application, Site-specific agriculture, Technology adoption
    JEL: Q13 Q16
    Date: 2006
  2. By: T.S Jayne (Department of Agricultural Economics, Michigan State University); Antony Chapoto
    Abstract: This note summarizes analysis of trends in net maize exports over the 1960-2005 period and examines whether these trends are being reflected in changing maize price levels in the region. We then highlight the implications of the findings for countries’ agricultural development strategies. Main findings are: 1)Both the eastern and southern Africa regions are moving towards structural maize deficit: 2) Despite the region’s increasing importation of maize, maize grain prices in most of the region have relatively remained constant over the past decade and are actually trending downward in South Africa. Retail maize meal prices are trending downward in Zambia and Kenya, thanks to greater competition at the milling and retailing end of the maize value chain: 3) In most countries of the region, maize market performance since the 1990s reflects not the impacts of “liberalized markets” but rather the mixed policy environment of legalized private trade within the context of continued strong government operations in food marketS; 4) Rising maize imports is not necessarily bad as long as small farmers can be encouraged to diversify successfully into higher-return crops and off-farm activities. Governments and donors can support this process through public goods investments, greater stability in the policy environment, and supporting commercial investment in market development.
    Keywords: food security, food policy, maize, marketing, trade, Zambia, Eastern Africa, Southern Africa household
    JEL: Q18
    Date: 2006
  3. By: Christine Wilson (Department of Agricultural Economics, College of Agriculture, Purdue University); Allan Featherston; Terry Kastens (Department of Agricultural Economics, Kansas State University); John Jones
    Abstract: Agricultural lenders in today’s environment face many challenges when evaluating the creditworthiness of farm borrowers. To address these challenges, a survey was conducted with financial institutions in Kansas and Indiana where agricultural lenders were asked for their response to hypothetical agricultural loan requests. Each loan request differed by the borrower’s character, financial record keeping, productive standing, Fair Isaac credit bureau score, and credit risk. Lenders provided information about themselves and their financial institutions. The survey data obtained determine the relative importance of financial and non-financial information when analyzing agricultural loan applications. Tobit models are estimated to identify the borrower and lender characteristics that are important in determining loan approval while OLS models are used to investigate the factors that affect interest rates offered to farm borrowers. The results provide a comparison of agricultural lending between two important agricultural states. The results from this analysis also provide lenders with insight on the factors that influence the decision making process of other agricultural lenders.
    Keywords: Agricultural loans, Credit bureau score, Credit evaluation, Interest rates
    JEL: G2 G21
    Date: 2006
  4. By: David Tschirley (Department of Agricultural Economics, Michigan State University); Danilo Abdula; Michael T. Weber
    Abstract: In this paper we examine this challenge through the lens of the country’s primary staple, maize. We choose maize among the country’s several staple foods (including cassava, rice, and wheat products) for a combination of reasons. First, it is the most widely produced staple in the country. In no province do fewer than two-thirds of rural households produce maize; rice’s participation, in contrast, falls below 10% in four provinces, and wheat is not produced locally at all. Second, maize is the most widely sold staple in the country: cassava rivals maize in breadth and level of production, but three times more households sell maize than sell cassava. Third, maize is the only staple food in Mozambique which is regularly exported, generating substantial income for smallholder farmers in the Center and North of the country. Finally, maize is the most widely consumed staple across the country, occupying as much of the average budget share in 2002 as high as rice, cassava, wheat, sorghum, and millet combined.
    Keywords: food security, food policy, maize, marketing, trade, Mozambique, household
    JEL: Q18
    Date: 2006
  5. By: Richard Yao; Gerald Shively Author-X-Name- Gerald; William Masters Author-X-Name- William (Department of Agricultural Economics, College of Agriculture, Purdue University)
    Abstract: We investigate the Philippine government’s price stabilization policy for rice. Seemingly Unrelated Regressions are used to examine the effectiveness of the program at regional and national levels over a 21-year period (January 1983 to December 2003). Results of the regional analysis indicate some NFA-induced spatial and temporal differences in terms of producer prices. The NFA successfully increased producer prices in 5 of 13 regions through stock accumulation and paddy rice purchase at floor prices. NFA stock releases do not correlate strongly with retail prices at the national level, although results from the regional model indicate that NFA stock releases reduced retail prices in five regions, leading to perceptible spatial and temporal differences between regions. Although the NFA support price appears to have been moderately successful in increasing producer prices at a national level, on average, the support price led to an increase in consumer prices in ten regions and contributed little to price stabilization. Overall, therefore, our results indicate very limited success on the part of the NFA to achieve its major objectives at either regional or national level. We suggest the NFA should concentrate its resources in the poorest areas of the country, where it might exert greater and more useful influence in smaller and locally thin rice markets.
    Keywords: Philippines, rice, price supports, markets, commodity storage, food policy
    JEL: Q11 Q18
    Date: 2005
  6. By: Pascale SCAPECCHI
    Abstract: This paper focuses on the practical use of cost-benefit analysis (or, more generally, of monetary valuation and other decision-making tools) in environmental policymaking. Based on a questionnaire sent to Environmental Ministries of OECD member countries, a review of the use of such analysis in environmental policymaking is presented. Then, the discussion considers the specific case of children’s environmental health, as recent epidemiological studies have highlighted the particular vulnerability of children to environmental pollution. Indeed, most of environmental policies currently in place are based upon information related to adult populations and not accounting for risk differences between adults and children. Such a lack of consideration of the specific case of children may lead to inefficient policies, and important loss in social welfare. In light of these findings, a review of actual environmental legislation shows whether impacts of environmental degradation specifically on children’s health are taken into account in policymaking and if so, how this is done. Concluding remarks close the paper
    Keywords: decision making, cost-benefit analysis, environmental policy, valuation, environmental regulation, children’s health
    JEL: D61 D62 D64 H43 I18 Q51
    Date: 2006–10
  7. By: John Giles (Michigan State University and IZA Bonn); Ren Mu (World Bank)
    Abstract: Recent research has shown that participation in migrant labor markets has led to substantial increases in income for families in rural China. This paper asks how participation is affected by elder parent health. We find that younger adults are less likely to work as migrants when a parent is ill. Poor elder parent health has less impact on the probability of employment as a migrant when an adult child has siblings who may be available to provide care. We also highlight the potential importance of including information on non-resident family members when studying how parent illness and elder care requirements influence the labor supply decisions of adult children.
    Keywords: migration, health, aging, rural China
    JEL: O12 O15 I12 J14
    Date: 2006–09
  8. By: Christine Wilson (Department of Agricultural Economics, College of Agriculture, Purdue University); Allen Featherstone (Department of Agricultural Economics, Kansas State University)
    Abstract: The dynamics in stock returns and the market return for 21 food and agribusiness firms are estimated in a threshold switching-regression framework. Threshold adjustment levels and capital asset pricing model risk parameters are estimated and tested. Results indicate risk parameters differ for alternative regimes and are not constant over time. Accounting for periods of temporary disequilibrium leads to notably more stable risk measurement estimates.
    Keywords: CAPM, Cointegration, Risk, Threshold
    JEL: G1 G12
    Date: 2006
  9. By: Asche, Frank; Steen, Frode
    Abstract: In this paper we apply the Bresnahan-Lau (1982) model to test for market power in the European distribution of salmon. In this particular setting, the model also incorporates a test of whether dumping takes place over time. Utilising data at the import level, derived demand equations are specified rather then consumer demand. From 1997 a so-called salmon agreement that implied minimum prices, a growth ceiling and a feeding restriction program for Norwegian farmers was imposed. Here we test whether the agreement resulted in an increase in the Norwegian market power. The results suggest that Norway did not have market power prior to the salmon agreement, and we find no indication that dumping was taking place. However, the agreement led to Norwegian market power after 1997. It is interesting to note that the agreement was initiated to prevent anti dumping duty of 13% that Norwegian farmers would have to pay otherwise. The increase in mark-up from imposing the agreement is found to be in the order of 14-15%, suggesting that the Norwegian farmers saved a fee of 13% and gained a markup that was even higher.
    Keywords: anti-dumping; market power; salmon markets
    JEL: C22 C32 L13
    Date: 2006–08
  10. By: Battigalli, Pierpaulo; Fumagalli, Chiara; Polo, Michele
    Abstract: This paper analyses the sources of buyer power and its effect on sellers’ investment in quality improvements. In our model retailers make take-it-or-leave-it offers to a producer and each of them obtains its marginal contribution to total profits (gross of sunk costs). In turn, this depends on the rivalry between retailers in the bargaining process. Rivalry increases when retailers are less differentiated and when decreasing returns to scale in production are larger. The allocation of total surplus affects the incentives of the producer to invest in product quality, an instance of the hold-up problem. An increase in buyer power not only makes the supplier and consumers worse off, but it may even harm retailers, that obtain a larger share of a smaller surplus. A repeated game argument shows that efficient quality improvements can be supported as an equilibrium outcome if the producer and retailers are involved in a long-term relationship.
    Keywords: buyer power; hold-up; non-cooperative bargaining
    JEL: L13 L4
    Date: 2006–09
  11. By: Lederman, Daniel; Olarreaga, Marcelo; Payton, Lucy
    Abstract: The number of national export promotion agencies (EPAs) has tripled over the last two decades. While more countries made them part of their national export strategy, studies criticized their efficiency in developing countries (Hogan, Keesing and Singer, 1991). Partly in reaction to these critiques, EPAs have been retooled (see ITC, 1998 or 2000 for example). This paper studies the impact of existing EPAs and their strategies, based on a new data set covering 104 developing and developed countries. Results suggest that on average they have a strong and statistically significant impact on exports. For each $1 of export promotion, we estimate a $300 increase in exports for the median EPA. However, there is heterogeneity across regions, levels of development and types of instruments. Furthermore, there are strong diminishing returns, suggesting that as far as EPAs are concerned small is beautiful.
    Keywords: developing countries; export promotion agencies
    JEL: F13 O19
    Date: 2006–08
  12. By: Richard Akresh (University of Illinois at Urbana Champaign and IZA Bonn); Philip Verwimp (Institute of Social Studies, The Hague)
    Abstract: Economic shocks at birth have lasting impacts on children’s health several years after the shock. We calculate height for age z-scores for children under age five using data from a Rwandan nationally representative household survey conducted in 1992. We exploit district and time variation in crop failure and civil conflict to measure the impact of exogenous shocks that children experience at birth on their height several years later. We find that girls born after a shock in a region experiencing these events exhibit 0.72 standard deviations lower height for age z-scores and the impact is worse for poor households. There is no impact of these shocks on boys’ health status. Results are robust to using household level production and rainfall shocks as alternative measures of crop failure. The analysis also contributes to the debate on the economic conditions prevailing on the eve of the Rwandan genocide.
    Keywords: child health, economic shocks, civil war, rainfall shocks, Africa
    JEL: I12 J13 O12 O15
    Date: 2006–10
  13. By: Dwayne Benjamin (University of Toronto); Loren Brandt (University of Toronto); John Giles (Michigan State University and IZA Bonn)
    Abstract: We explore the relationship between the level of village inequality in 1986, and the subsequent growth of household incomes from 1986 to 1999. Using a detailed householdlevel data set from rural China, we find robust evidence that initial inequality is negatively related to subsequent household income growth. We are able to address a number of econometric issues that affect the use of aggregate data for this exercise, especially measurement error and aggregation: Our results strongly suggest that village inequality has an external adverse impact on household-level income trajectories. However, once we account for possibly fixed village-level unobserved heterogeneity, we find no evidence that changes in inequality are correlated with household income growth: Whatever factor drives the inequality-growth relationship only operates in the “long run.” We explore several possible avenues by which initial inequality – or an unobserved variable correlated with it – affects household income growth. While we do not find the precise mechanism, our findings point toward a class of explanations based on collective choice (like the provision of public goods or determination of local taxes), and away from credit-market based explanations.
    Keywords: inequality, growth, rural China, panel data
    JEL: O12 O15 P20
    Date: 2006–09
  14. By: Michael Boehlje; Allan Gray; Tyler Mark (Department of Agricultural Economics, College of Agriculture, Purdue University)
    Abstract: Feed, processing capacity, population density versus animal density, and environmental capacities are the four different dimensions of livestock location and growth potential analyzed for Indiana. These four dimensions provide livestock producers, government officials, and livestock associations a valuable perspective on the constraints that could limit Indiana’s livestock growth potential. Comparisons among 21 states on these dimensions indicated that Indiana is a second choice of states for livestock growth; Kansas and Iowa are the only first choices. Indiana’s strength in the state comparison is its ability to assimilate the phosphorus produced by livestock and commercial phosphorus. As environmental regulations continue to tighten and shift from nitrogen to phosphorus based application standards for manure, the ability to assimilate phosphorus will continue to be one of Indiana’s strengths, along with its abundance of feed and swine processing capacity. Population density is the key dimension that is a disadvantage for Indiana. Within the state of Indiana, the West Central district has key advantages compared to other districts of the state. This district has an abundance of feed, the second lowest population density in the state, and excess phosphorus assimilation capacity. This district does not have processing capacity for any species, but the adjoining districts do have adequate processing capacity. Overall, the results show that Indiana has the potential to grow the livestock sector. However, there will be constraints such as population density that require more in-depth study to determine how to address this potential limitation on growth.
    Keywords: Livestock Growth, Animal Waste, Feed Capacity, Livestock Processing Capacity, Animal Density, Population Density
    JEL: O1 O13
    Date: 2006
  15. By: José Leibovich; Mario Nigrinis; Mario Ramos
    Abstract: Este trabajo se concentra en analizar las características predominantes del empleo rural en Colombia. Con análisis de las ECH de 2005 se concluye que el problema no es de desempleo, sino de baja calidad de empleo y bajos ingresos. Estimaciones de la productividad laboral y de la PTF del sector agropecuario permiten confirmar que los bajos ingresos laborales están asociados a baja productividad laboral. Con ayuda de un modelo teórico en la tradición de las teorías de desarrollo (Lewis (1954), Harris-Todaro (1970)), se caracteriza el mercado laboral rural como un mercado segmentado: un segmento moderno, pequeño, con una productividad del trabajo elevada, donde se cumple la regulación; un segmento tradicional, abundante, donde el mercado se ajusta vía precios y se viola la regulación; y un segmento que migra a las cabeceras por razones económicas. Las estimaciones econométricas permiten explicar de qué depende la probabilidad de pertenecer al segmento moderno y al tradicional y en el caso de los migrantes, evaluar el impacto que éstos tienen en la participación laboral en las cabeceras y en los ingresos. Se observa de manera general que la probabilidad de pertenecer al segmento moderno en el campo es baja. En términos de género, nivel educativo, parentesco y región, las probabilidades son mayores para el hombre, para los que tienen secundaria completa o superior, para los jefes de hogar y para los pobladores de la región atlántica. De otra parte, en las cabeceras, los migrantes provenientes del campo tienen una probabilidad del 75% de estar en el sector moderno. Las implicaciones de política son de gran calado. El objetivo de mejorar los ingresos en el campo, requiere desarrollar una estrategia de aumento de la productividad laboral, sobre todo en el sector agropecuario, que debe ir acompañado de aumentos notables en la producción para evitar caídas del empleo. Esto es factible con una estrategia de exportaciones de bienes agropecuarios.
    Date: 2006–10–19
  16. By: Jean-Pierre Amigues (Université de Toulouse 1 and INRA (IDEI and LERNA)); Michel Moreaux (Université de Toulouse 1 (IUF, IDEI and LERNA)); Francesco Ricci (Université de Cergy-Pontoise (THEMA) and LERNA)
    Abstract: The effective labor possibility frontier (ELPF) is defined as the set of statically efficient allocations of labor imputs in the competing tasks of production and R&D. It summaries the labor scarcity constraint. We show that the dynamically efficient paths of R&D, resource extraction and consumption depend on the shape of the ELPF, while their steady state levels do not. In the case of an initial low endowment of resources, the transition to the stationary state is characterized by lower R&D effort, slower growth of per-capita consumption and a longer transition when labor is relatively specialized than when it is more flexible. We analyse policy options for modifying the shape of the ELPF, such as increasing the size of the labor force, subsiding higher education or lifelong learning.
    Keywords: Exhaustible resources and R&D, Labor allocation, Education policy
    JEL: Q01 Q30 I20 J00
    Date: 2006

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