New Economics Papers
on Agricultural Economics
Issue of 2006‒12‒01
eighteen papers chosen by

  1. Corporate Farming in India: Is it must for Agricultural Development? By Singh Sukhpal
  2. The Hong Kong Declaration and Agriculture: Implications for Bangladesh By Uttam Kumar Deb; Narayan Chandra Das
  3. The optimal carbon sequestration in agricultural soils : does the dynamics of the physical process matter ? By Lionel Ragot; Katheline Schubert
  4. Understanding Zambia’s Domestic Value Chains for Fresh Fruits and Vegetables By Munguzwe Hichaambwa; David Tschirley
  5. The Many Paths of Cotton Sector Reform in Eastern and Southern Africa: Lessons from a Decade of Experience. By David Tschirley; Colin Poulton; Duncan Boughton
  6. Improving Production and Marketing to Enhance Food Security in Mozambique By David Tschirley; Danilo Abdula; Michael T. Weber
  7. The Quantitative and Qualitative Analysis of the Budget Cost of the Czech Supporting and Guarantee Agricultural and Forestry Fund By Karel Janda
  8. The effects of Fair Trade on Marginalised producers: an Impact Analysis Farmers By BECCHETTI LEONARDO; COSTANTINO MARCO
  9. Technological Backwardness in Agriculture: Is It due to Lack of R&D Expenditures, Human Capital and Openness to International Trade? By Rodolfo Cermeño; Sirenia Várquez
  10. Unfinished business: customary land individualization in olilit village, tanimbar islands By Shantiko, Bayuni
  11. The Quest for Productivity Growth in Agriculture and Manufacturing By María Dolores Guilló; Fidel Pérez Sebastián
  12. Price-Induced Technical Progress in Italian Agriculture By Roberto ESPOSTI; Pierpaolo PIERANI
  13. The impact of globalisation and trade on the productivity performance of the Irish food manufacturing sector By Carol Newman
  14. Resource curse or not: A question of appropriability By Anne D. Boschini; Jan Pettersson; Jesper Roine
  15. An Exercise on the Optimal Use of Groundwater Resources By CASTELLUCCI LAURA; D’AMATO ALESSIO
  16. Micro-credit, risk coping and incidence of rural-to-urban migration By Quamrul Ahsan
  17. Spatial variations in climate and Bordeaux wine prices By Sébastien Lecocq; Michael Visser
  18. The Allocation of Tradeable Emission Permits within Federal Systems (or Economic Unions) By D’AMATO ALESSIO; VALENTINI EDILIO

  1. By: Singh Sukhpal
    Abstract: Indian agriculture is under policy reforms for some time now. One of the issues it faces is that of lack of viability of smallholdings and lack of international competitiveness of its produce. In this regard, new initiatives of reorganizaing the production systems are being attempted in the form of contract farming and corporate farming. At the state level, laws are being amended to facilitate the practice of contract farming and corporate farming. Where contract farming means working with small growers most of the time and therefore, high costs for agribusinesses, the alternative of corporate farming is being seen to resolve this problem. For facilitating this, prime agricultural land and wastelands are being allowed to be bought or leased in by corporate agribusiness houses, the latter (wastelands) being given away by the state on nominal lease. This paper profiles cases of corporate farming practice and examines the rationale for allowing corporate farming in India in the context of its agriculture and rural sector. It points out that the rationale is weak and not supported by international evidence on corporate farming. It rather argues for other alternatives, like consolidation of land holdings and contract farming, for making better use of corporate resources for agricultural development.
    Keywords: corporate farming, India, wastelands, land ceilings, consolidation, contract farming, agriculture
    Date: 2006–11–27
  2. By: Uttam Kumar Deb; Narayan Chandra Das
    Abstract: This paper reviews the developments in WTO negotiation on agriculture in the light of the Hong Kong Ministerial Declaration. It has critically analysed the decisions and negotiating proposals adopted through the Declaration. The paper has also analysed possible impacts of the adopted decisions and proposals for Bangladesh’s agriculture sector and its economy. Potential impacts are measured in terms of reduction in tariff, domestic support and export subsidy. More importantly, the paper has quantified potential impacts of agricultural trade liberalisation under Doha Round negotiations on prices and welfare gains, production, consumption and trade of agricultural commodities in Bangladesh. Based on the research findings, the paper has suggested some negotiating strategies for Bangladesh to be pursued in the on-going WTO negotiations on agriculture.
    Keywords: Agriculture, WTO, Hong Kong Ministerial, Bangladesh
    Date: 2006–05
  3. By: Lionel Ragot (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I], MÉDEE - [Université de Lille 1]); Katheline Schubert (CES - Centre d'économie de la Sorbonne - [CNRS : UMR8174] - [Université Panthéon-Sorbonne - Paris I])
    Abstract: The Kyoto Protocol, which came in force in February 2005, allows countries to resort to «supplementary activities» consisting particularly in carbon sequestration in agricultural soils. Existing papers studying the optimal carbon sequestration recognize the importance of the temporality of sequestration, but overlook the fact that it is a dissymmetric dynamic process. This paper takes explicitely into account the temporality of sequestration. Its first contribution is technical : we solve an optimal control problem with two stages and a dissymmetric dynamic process. The second contribution is empirical : we show that the error made when sequestration is supposed immediate can be very significant, and we exhibit numerically the optimal path of sequestration/de-sequestration for specific benefit, damage and cost functions, and a calibration that mimics roughly the world conditions.
    Keywords: Environment, agriculture, carbon sequestration, Kyoto Protocol, optimal control.
    Date: 2006–11–22
  4. By: Munguzwe Hichaambwa (Department of Agricultural Economics, Michigan State University); David Tschirley
    Abstract: The proportion of smallholder households selling horticultural produce is very low suggesting that new demand points could enjoy substantial supply response if they link effectively to the smallholder sector. The small-scale traditional marketing system continues to dominate fresh produce flows in the country. Prices for consumers in this system are much lower, and quality is comparable and sometimes superior to supermarkets. Yet these markets suffer from serious structural problems due to a lack of public investment and little collaboration between public officials and traders in market management. The Urban Markets Development Program represents a major and impressive effort to improve wholesale and retail markets in the country, but has run into problems as legislative reform has stalled. In addition, UMDP was not designed to address key issues of improved linkages between rural farmers and urban markets. These need to be addressed with improved market information and marketing extension. Zambia’s horticultural sector operates in a regional market, exporting and importing every year. Understanding and quantifying this trade will be the first step in ensuring that policies and programs are conducive to continued high rates of growth. Major new supermarket outlets are in the market to stay, and their effects on smallholder farmers and the traditional marketing system need to be better understood. Where appropriate, programs to facilitate direct marketing by smallholders to these chains should be supported, but should not distract from an overall focus on improving urban wholesale and retail markets and linking these more effectively to farmers.
    Keywords: food security, food policy, Zambia, horticulture
    JEL: Q18
    Date: 2006
  5. By: David Tschirley (Department of Agricultural Economics, Michigan State University); Colin Poulton; Duncan Boughton (Department of Agricultural Economics, Michigan State University)
    Abstract: While African cotton sectors face common technical challenges, the structure of the market for seed cotton strongly influences which of these challenges are most difficult to meet and which types of institutions need to emerge if the system is to be sustainable. Institutional innovation is the key to improving performance in cash crop sectors; large injections of public capital are not needed. Direct state management of funds from industry levies is problematical. Vesting regulatory and coordination functions within multi-stakeholder bodies – where government is one actor among many -- may be the most promising approach for many sectors. Regular “deliberative fora” are invaluable for building trust between stakeholders and seeking innovative solutions to tackling sector-wide problems.
    Keywords: food security, food policy, cotton sector reform
    JEL: Q18
  6. By: David Tschirley (Department of Agricultural Economics, Michigan State University); Danilo Abdula; Michael T. Weber
    Abstract: Food system challenges are examined from the standpoint of the country’s principal staple food: maize. Steps are identified that the country could take in the short-run to improve the situation, and also emphasize the long-term challenges the country faces. The focus is principally on the Center and South of the country because, with South Africa, they form a natural market area due to production patterns and transport costs; maize north of the Zambezi River flows almost entirely to northern cities or to Malawi, or feeds net buyers in the North.
    Keywords: food security, food policy, Mozambique, maize
    JEL: Q18
    Date: 2005
  7. By: Karel Janda (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic; University of Economics, Department of Banking and Insurance, Prague, Czech Republic)
    Abstract: The paper analyzes the government budget cost of credit guarantees and subsidies. The analysis is done both in a general qualitative manner and quantitatively for the case of Czech Supporting and Guarantee Agricultural and Forestry Fund (SGAFF). In the quantitative part of the paper we show that the portfolio of the SGAFF has a sufficient value to cover expected costs of credit guarantees and subsidies provided by the SGAFF. The qualitative theoretical model is dealing with government interventions designed to decrease the credit rationing of good farmers. The theoretical model shows that with uniform non-targeted supports the budget cost minimizing government unambiguously prefers lump-sum guarantees to interest rate subsidies. With supports targeted fully to disadvantaged farmers the government is indifferent between lump-sum guarantees, proportional guarantees and interest rates subsidies as far as the government budget costs are concerned.
    Keywords: Transition; Credit; Subsidies; Guarantees
    JEL: D82 G28 P31
    Date: 2005
    Abstract: We analyse the impact of affiliation to Fair Trade (FT) on monetary and non monetary measures of well-being in a sample of Kenyan farmers. Our econometric findings document significant differences in terms of price satisfaction, monthly household food consumption, (self declared) income satisfaction, dietary quality and child mortality for Fair Trade and Meru Herbs (first level local producers organisation) affiliated with respect to a control sample. Methodological problems such as the FT vis à vis Meru Herbs relative contribution, control sample bias and local cooperative and fair trade selection biases are carefully discussed and addressed. After reconstructing the dynamics of human capital investment in the observed households we show that affiliation to the younger vintage FT project is associated with a significantly higher schooling investment.
    Date: 2005–10
  9. By: Rodolfo Cermeño; Sirenia Várquez
    Abstract: In this paper we investigate the relationship between the agricultural technological level and R&D expenditures, human capital and openness to international trade using cross country information for a sample of 104 countries and various sub samples over the period 1961-1991. We first model the unobservable technological level as a dynamic stochastic process in the context of a general translog production function, and then we relate the implied technological levels to the aforementioned variables. For comparison, alternative specifications of the production and its associated technological process are also considered. We find that the proposed model outperforms all of the alternative specifications. The results suggest that the technological gap between developed and less developed countries in agriculture has increased considerably over this period of time and that, overall, the technological levels are directly related to R&D expenditures, human capital and openness, although this relationship is not robust across the different groups of countries considered.
    Keywords: Agricultural production function, Agricultural technology, Dynamic error components models, Non-linear models, R&D expenditures, Human capital, Openness
    Date: 2005–06
  10. By: Shantiko, Bayuni
    Abstract: This research discusses the transformation in customary tenure toward commercialization and appropriation in Olilit village, Tanimbar Islands. The study analyzes several factors leading to the customary institutional change. It also looks at the roles of actors shaping the changes and how the actor mostly the elites usurp the benefit from the process. Since the process of individualization has been a widespread trend and seems to be inevitable in the future, the research suggests the community to think carefully regarding their decision toward customary land. Any decisions they made should be based on voluntary with sufficient information at hand. This research also suggests the community to invest themselves in order to deal with the livelihood change after having no access to the land.
    Keywords: customary land; commercialization; individualization; rural development; urban development; land use
    JEL: Q15
    Date: 2006–12–20
  11. By: María Dolores Guilló; Fidel Pérez Sebastián
    Abstract: We develop a theory to explain the transition from stagnation to modern growth. We focus on the forces that shaped the evolution of total factor productivity in agriculture and manufacturing across history. More specifically, we build a multisector model of endogenous technical-change and economic growth. We consider an expanding-variety setup with rising labor specialization and two different R&D technologies, one for agriculture and another for manufacturing. As a consequence, total factor productivity in the model can increase via two different channels. First, population growth allows larger levels of specialization of land and labor in the economy that bring efficiency gains. This type of productivity improvement is capital saving, but can not generate sustained growth. Technical change is also possible by investing in R&D. Unlike specialization, new technologies generated in this way are land and labor augmenting, and are the key to modern growth. In the model, the economy has not incentives to invest in R&D until a minimum knowledge base is available to researchers. This is in line with ideas contained in Mokyr (2005). To make possible the accumulation of this minimum knowledge base, we assume that learning-by-doing is the implicit underlying force that leads to specialization. However, land and labor specialization is based on knowledge whose nature differs in agriculture and in manufacturing. More specifically, whereas this knowledge is farm-specific in agriculture, mainly concern with the acquisition of uncodified information about local conditions of soil and whether, specialization in manufacturing is the result of general knowledge, mainly codified, that contributes at a larger extent to the knowledge base.
    Keywords: stagnation, modern growth, specialization, learning-by-doing, R&D, Knowledge base
    JEL: O13 O14 O41
    Date: 2006–06
  12. By: Roberto ESPOSTI (Universita' Politecnica delle Marche, Dipartimento di Economia); Pierpaolo PIERANI ([n.a.])
    Abstract: In this paper we aim at investigating the price-induced innovation hypothesis in Italian agriculture. We generalize the framework of analysis proposed by Peeters and Surry (2000). The generalization includes a short-run specification of the dual technology as well as a quadratic spline in a time variable. We argue that the temporary equilibrium setting gives a more realistic representation of how relative prices may steer innovation and variable input bias over time, while the quadratic function has desirable properties with respect the splined variable, i.e., a more flexible treatment of exogenous technical change.;Results provide evidence in favour of price-induced innovation in Italian agriculture over the years 1951 to 1991.
    Keywords: SGM restricted cost function, induced innovation, italian agriculture
    JEL: O30 Q16
    Date: 2006–11
  13. By: Carol Newman
    Abstract: Globalisation and international integration can yield efficiency gains through the promotion of competition and trade in markets for internationally traded goods. At the firm level, exposure to competitive pressures has created a necessity for firms to operate as close as possible to the technology frontier in order to survive. Furthermore, increased integration has lead to an influx of investment by Multinational corporations who bring with them technological innovations. This has the effect of improving overall productivity by shifting the best practice technology frontier while at the same time making it increasingly difficult for smaller competitors to survive. In an Irish context, the food industry has recently been acknowledged in national policy as an important sector for future development. The aim of this paper is to measure the productivity performance of the food processing industry in Ireland and establish the extent to which globalisation has brought about efficiency and productivity gains to the industry.
    Keywords: Food Industry, Ireland, Productivity, Stochastic Production Function
    Date: 2006–11–16
  14. By: Anne D. Boschini; Jan Pettersson; Jesper Roine
    Abstract: This paper shows that whether natural resources are good or bad for a country’s development crucially depends on the interaction between institutional setting and the type of resources possessed by the country. Some natural resources are, for economical and technical reasons, more likely to cause problems such as rent-seeking and conflicts than others. This potential problem can, however, be countered by good institutional quality. In contrast to the traditional resource curse hypothesis, we show the impact of natural resources on economic growth to be non-monotonic in institutional quality. Countries rich in minerals are cursed only if they have low quality institutions, while the curse is reversed if institutions are sufficiently good.
    Keywords: Natural Resources, Appropriability, Property Rights, Institutions, Economic Growth, Development
    JEL: O40 O57 P16 O13 N50
    Date: 2006–06
    Abstract: -
    Date: 2005–10
  16. By: Quamrul Ahsan
    Abstract: The focus of this paper is on the rural poor of south Asia and their struggle to cope with the seasonal risk of unemployment and the ensuing income risks. In the absence of formal credit or insurance markets the rural poor typically resort to, among other options, the following informal strategies to cope with seasonal income risks: (i) seasonal rural-to-urban migration, and (ii) mutual (ex-post) transfers between families of friends and relatives. Access to credit through a microfinance institution could also provide a competing source of insurance. The question raised in this paper is how the access to credit may affect the more traditional/time honoured means of risk coping, such as seasonal migration. Given that credit, i.e., a credit-financed activity, is potentially a substitute for seasonal migration, it is reasonable to argue that easy access to credit (or high return on credit) will lower the incidence of migration. However, there also exists a potential complementarity between the two activities (if implemented jointly) in terms of gains due to diversification of income risks. That is, given that income from migration is not typically subject to the same shocks as income generated by a credit-financed activity, a joint adoption of both activities creates opportunities for diversification of risk in the family incomes portfolio. If the diversification gains are large enough then the adoption of both activities jointly will be preferred to adopting either of the activities individually. In that event, introduction of microfinance in rural societies may result in raising the incidence of migration. The joint adoption case for rural households is modelled using a choice theoretic framework, and exact conditions are derived for when joint adoption is preferable to adoption of a single project. The model of joint adoption is estimated by applying a Bivariate Probit regression model on a single cross-section of household survey data from rural Bangladesh. Our preliminary results show that indeed the probability of participation in migration by household members is positively related to the probability of the household being a credit recipient.
    Keywords: Development, South Asia, Poverty, Microfinance, Rural labour markets, Rural-to-urban migration, Risk-coping strategies
    JEL: D1 D81 J43 J61 O1 Q12 R23
    Date: 2005–06
  17. By: Sébastien Lecocq; Michael Visser
    Abstract: The purpose of this paper is to study the impact of climate conditions on Bordeaux wine prices. Unlike previous studies (based on data from the main weather station in Mérignac), we use climatological variables from many local stations. Two models are compared: one where prices are related to Mérignac weather conditions, and one where prices are related to local conditions (weather variables measured in the station the nearest to the château). Although a non-nested test suggests that the model based on local weather data is the preferred one, regressions of the two speciÞcations lead to very similar results. This is reassuring news for researchers interested in the relationship between climate and wine prices, but who do not have access to small-scale spatial variations in climate.
    Keywords: Bordeaux, France, Wine price, climate conditions
    JEL: Q19
    Date: 2006–09
    Abstract: This paper deals with the issue of whether the power of allocating tradeable emission permits within a federal system (or an economic union) should be centralized or delegated to the single states/nations. To this end, we develop a simple two stage game played by two governments and their respective industries producing a homogeneous output that is sold in a third country. We show that when emission permits are traded competitively at a federal (or economic union) level, a decentralized emission trading system (DETS) would result in a lower than optimal price of permits, as well as in an aggregate emission target which is larger than the socially optimal target that would arise under a centralized system (CETS). This result partly hinges on standard international externality considerations; on the other hand, we find a new ”channel” through which decentralized permits distribution could lead to distortions: under a DETS, national governments play a Cournot game, and choose the amount of allowances to be distributed to domestic firms without accounting for the spillover such distribution generates on the other country via the price of allowances.
    Date: 2006–05

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