New Economics Papers
on Agricultural Economics
Issue of 2007‒07‒13
fourteen papers chosen by

  1. Modelling Agricultural Production Risk and the Adaptation to Climate Change By Finger, Robert; Schmid, Stéphanie
  2. The Economy of Opium and Heroin Production in Afghanistan and Its Impact on HIV Epidemiology in Central Asia By Nader Ghotbi; Tsuneo Tsukatani
  5. Horticultural Exports of Developing Countries: Prospects and Issues By Shah, Deepak
  6. Rejuvenating Rural Credit Delivery System in Maharashtra of India By Shah, Deepak
  7. Evaluating Financial Health of Credit Cooperatives in Maharashtra of India By Shah, Deepak
  8. Owner Motivations in the UK Speciality Food Sector By Andrew Bugg
  9. Coastal Groundwater Management with Nearshore Resource Interactions By Sittidaj Pongkijvorasin; James Roumasset; Thomas Kae’o Duarte
  10. Rural Cooperative Marketing Management Efficiency in the Era of Globalization: A Synthesis of Case Studies of F&V Marketing By Shah, Deepak
  12. Infrastructure Development for Agro-Processing Cooperatives in Maharashtra: An Ex-Post Evaluation By Shah, Deepak
  14. Conditions of Development of a Product Ecolabel By Alain Nadai

  1. By: Finger, Robert; Schmid, Stéphanie
    Abstract: A model that integrates biophysical simulations in an economic model is used to analyze the impact of climate change on crop production. The biophysical model simulates future plant-management-climate relationships and the economic model simulates farmers’ adaptation actions to climate change using a nonlinear programming approach. Beyond the development of average yields, special attention is devoted to the impact of climate change on crop yield variability. This study analyzes corn and winter wheat production on the Swiss Plateau with respect to climate change scenarios that cover the period of 2030-2050. In our model, adaptation options such as changes in seeding dates, changes in production intensity and the adoption of irrigation farming are considered. Different scenarios of climate change, output prices and farmers’ risk aversion are applied in order to show the sensitivity of adaptation strategies and crop yields, respectively, on these factors. Our results show that adaptation actions, yields and yield variation highly depend on both climate change and output prices. The sensitivity of adaptation options and yields, respectively, to prices and risk aversion for winter wheat is much lower than for corn because of different growing periods. In general, our results show that both corn and winter wheat yields increase in the next decades. In contrast to other studies, we find the coefficient of variation of corn and winter wheat yields to decrease. We therefore conclude that simple adaptation measures are sufficient to take advantage of climate change in Swiss crop farming.
    Keywords: climate change; robust estimation; yield variation; corn; winter wheat; market liberalization
    JEL: Q12 C61 C10 Q57 Q54
    Date: 2007–07
  2. By: Nader Ghotbi (College of Asia Pacific Studies, Ritsumeikan Asia Pacific University); Tsuneo Tsukatani (Institute of Economic Research, Kyoto University)
    Abstract: The dramatic increase of poppy cultivation and opium production in Afghanistan has led to a serious drug addiction problem in te world. The rising heroin use, because of needle sharing, may lead to a much higher incidence of HIV infection and AIDS in Afghanistan in the future. We organized two expeditions into Afghanistan itself, one through the capital, Kabul and the other through Tajik border on Amu]Darya River and along the regions bordering the Central Asian countries. These expeditions included observations on sites and taking photographs and videos, sampling of soil, vegetation and water at random locations for further analysis, interviews with local authorities, and so on. We also used the data provided by other colleagues and organizations. We compared their information with our findings and sometimes used them to enrich and/or correct our own estimates. The production and trade of illicit narcotics is one of the most significant challenges to progress in Afghanistan. As an economic challenge, it diverts agricultural land and labor from more beneficial uses and undercuts the prospects for developing more sustainable lvelihoods. However, a solution for problems associated with poppy cultivation and opium production in Afghanistan requires the inclusion of many srategies. Providing the local farmers with appropriate economic substitutes for poppy is one of such strategies. Other strategies include assistance with agricultural needs such as irrigation systems and seeds, provision of training to farmers for cultivation of other crops, revival of the agricultural infrastructure including irrigation systems, assisting with economic needs of small farmer.
    Keywords: Poppy, heroin, Afghanistan, Tajikistan, irrigation agriculture, HIV/AIDS, Amudarya, international cooperation
    Date: 2007–07
  3. By: Shah, Deepak
    Abstract: Although the Government has introduced a number of crop-oriented schemes to improve the output of various slow growth foodgrain crops such as pulses and coarse cereals, the success of these schemes will largely depend on the extent of adoption as the farmers grow these crops on poor and unirrigated land with generally low levels of inputs like fertilizers, pesticides, etc. Further, it is to be noted that pulse crops are more susceptible to pests and diseases than the cereal crops and, therefore, involve high risk. However, a recent study has suggested a number of strategies to further increase pulses output in Maharashtra. These strategies mainly revolve around protective irrigation, soil fertility management, improved crop production technique, plant protection measures, and diversification of cropping pattern. However, these strategies have not yielded the desired results so far as pulses and coarse cereal production in the country are concerned.
    JEL: O33
    Date: 2007–07–05
  4. By: Shah, Deepak
    Abstract: Maharashtra has 720 km. of coastline with the continental shelf area of 111512 sq. km. There are as many as 32 inland varieties of fish produced in this state. Among these varieties, shrimps, prawns, harpodon neherias, ribbon fish, otalithes, pomfrets, anchoviella, mackeral and cattle fish put together account for over 70 per cent share in total inland fish production of Maharashtra. Brihan Mumbai and Thane are the only two major regions of the state accounting for bulk of the total inland fish production. Though Maharashtra accounts for a significant share in total marine fish production of India, her share in total fish production of India has declined over the past two decades mainly due to a sharp decline in her share in total marine fish production of India. The major problem faced by the marine fisheries of Maharashtra is relating to depletion of resources due to illegal presence of foreign vessels and vessels belonging to other states, which appeared to have created pressure on the coast line. As a result, the marine fish production of Maharashtra has grown at very low pace during the last two decades. In order to tackle this problem, there is need for the Government of India to introduce zonalisation of coast line in the National Fishing Policy. This will certainly help in checking the depletion of marine resources. In fact, the present fishing fleet of the state is not capable of exploiting the deep sea resources. It is to be further noted that there has been decline in inland water spread area and numerical strength of fish curing yards in the state. The number of fishery schools in the state has also stagnated over the last two decades. These are certainly disturbing features of the fisheries sector of Maharashtra. Although in order to develop fisheries sector, the department of fisheries in the state is conducting various training programme relating to carp fish seed production, fresh water prawn culture, integrated fish farming and management of aquarium, etc., there is also need to educate fishermen with respect to dissemination of information relating to modern fishing techniques and efficient marketing of fish catch. Equally important is the need for more innovative technologies in this sector, diffusion of developed technology by extension workers and adoption by the clients. Education of fishermen about modern fishing techniques has significant impact on adoption of recommended fish culture practices by the farmers. Further, extension and mass media participation have strong positive relationship with adoption of fish culture practices. Nonetheless, inadequate infrastructure and flow of information technology are the major barriers for better market integration in the existing marine fish markets of India.
    Keywords: Management Fisheries Development
    JEL: Q22
    Date: 2007–07–09
  5. By: Shah, Deepak
    Abstract: This paper seeks to evaluate the present and future prospects of developing and developed countries in agricultural exports in general and in horticultural exports in particular. The study also evaluates the behaviour of international export prices for agricultural commodities, both for developing and developed nations. In general, this study provides an insight into the direction in which various developed and developing countries are heading for insofar as their agricultural and horticultural exports are concerned in the changed market conditions. The study has made a few major observations. First, the study shows decline in market share of developing countries’ in world agricultural exports in the face of marginal increase in their market share in world fruits and vegetable (F&V) exports during the period between 1981 and 1997. Second, although the study shows lower market share of developing countries’ in world F&V exports during the period between 1981 and 1997, the growth in F&V exports as proportion of total agricultural exports is noticed to be much faster for developing countries’ as against the developed countries’ during the same period. Third, though agricultural exports of Least Developed Countries (LDC) have grown only marginally between 1981 and 1997, the growth in their F&V exports is seen to have been tremendous, especially after the late eighties period. Similarly, Socialist Countries of Asia (SCA) and developing countries of Oceania have also shown sharp increases in their F&V exports after the late eighties period. Fourth, while except America, other Africa and Oceania, all the developing countries have shown decline in their market share in total F&V exports of Developing Market Economies (DME), Asia shows rise in its market share not only in agriculture but also in F&V exports of DME. Another major observation of this study is in terms of instabilities in export prices. The instabilities in export prices of agricultural commodities, including horticultural ones, are noticed to be more sharp for developing world as compared to developed world. The study, therefore, has categorically emphasized upon the fact that the future growth in horticulture production and trade, especially of developing world, will mainly depend on future price mechanism and also on the import demand of these high value crops in various regions of the world.
    Keywords: Horticultural Exports Developing Countries
    JEL: F10
    Date: 2007–07–09
  6. By: Shah, Deepak
    Abstract: An investigation into rural credit delivery system in Maharashtra shows slower growth in institutional finances through commercial banks, credit cooperatives, RRBs and LDBs, particularly during the decade of 1991- 2000, which is mainly due to adverse environment created by the financial sector reforms. Due to unfavourable policy framework, the entire rural credit delivery system encompassing rural branches of commercial banks, cooperative credit institutions and RRBs is reduced to a moribund state. High transaction costs and poor repayment performance are the twin root causes of the moribund state of rural credit delivery system. With a view to revive the agricultural credit delivery system, there is need to adopt innovative approaches like linking of Self-Help Groups (SHGs) and Non-Government Organizations (NGOs) with mainstream financial institutions. Such linkages are reported to have not only reduced transaction costs but also ensured better repayment performance. One of the recent studies conducted in Maharashtra has shown cent per cent recovery of loans through SHGs despite having excessively high rates of interest (24-36 per cent per annum) on their loan advances. One of the further disquieting features of RFIs in Maharashtra has been the high proportion of NPAs to total assets, particularly of RRBs and SCARDBs, which are estimated to hover around 36-48 per cent during the mid-to late nineties. One of the reasons for such high incidence of NPAs of RFIs has been the familiar practice of debt forgiveness, which eroded repayment and allowed defaulters to scot free with no deterrent reprimand. Political interference in issues of prudent fiscal management has got a lot to do with this unfortunate scenario. In order to rejuvenate rural credit delivery system, the twin problems facing the system, viz., high transaction costs and poor repayment performance, need to be tackled with more fiscal jurisprudence reserving exemplary punishment for willful defaults, especially by large farmers. In fact, insofar as the rural credit delivery system is concerned, the focus should be on strategies that are required for tackling issues such as sustainability and viability, operational efficiency, recovery performance, small farmer coverage and balanced sectoral development.
    Keywords: Rejuvenation Rural Credit Delivery in India
    JEL: R11
    Date: 2007–07–09
  7. By: Shah, Deepak
    Abstract: An analysis encompassing two case studies conducted in forward and backward regions of Maharashtra (India) has shown deterioration in the financial health of central level credit cooperatives (Sangli District Central Cooperative Bank (SDCCB)) in forward region and gross inefficiency in their functioning (Buldana District Central Cooperative Bank (BDCCB)) in the backward region of the state, due mainly to their mounting NPAs or overdues’. Because of substantially high NPAs, the fixed expenses of these institutions have been adversely affected, which in turn have grossly affected the break-even levels of loan advances and deposits of these credit institutions, so much so that there has been huge gap between the break-even levels of loan advances and deposits and the actual loan advances and deposits. In the case of BDCCB, the deficit between actual and the break-even levels are so high (about 60 per cent) that it will be well-nigh impossible for it to overcome this situation. High transaction costs, poor repayment performance, and mounting NPAs are the root causes of the moribund state of rural credit delivery through these cooperatives. Further, it is to be noted that the estimated trend over the past two decades in Maharashtra shows a slower growth in institutional finances through credit cooperatives and also in their membership during the decade of economic reforms (1991-2000) as against the decade preceding it (1980-1990). On the other hand, the outstanding loans of these cooperatives have grown at much faster rate as compared to their loan advances during both pre- and post economic reform periods. The slower growth in institutional finance through credit cooperatives during the decade of 1991-2000 is mainly due to adverse environment created by the financial sector reforms. Due to unfavourable policy framework, much of the deposits of the credit cooperatives are going into investments, instead of advancing loans to the farming sector. As a result, the C-D ratios of these credit cooperatives have been adversely affected. With a view to revive agricultural credit delivery through cooperatives, the need of the hour is to adopt innovative approaches like linking of SHGs and NGOs with mainstream financial institutions, including cooperatives. Such linkages are reported to have not only reduced transaction costs but also ensured better repayment performance. In brief, in order to rejuvenate rural credit delivery system through cooperatives, the root problems facing the system, viz., high transaction cost, poor recovery performance, and NPAs, need to be tackled with more fiscal jurisprudence reserving exemplary punishment for willful defaults, especially by large farmers, and the individual cases who have borrowed credit from these institutions. In fact, insofar as rural credit delivery through credit cooperatives is concerned, the focus should be on strategies that are required for tackling issues such as sustainability and viability, operational efficiency, recovery performance, small farmer coverage and balanced sectoral development.
    Keywords: Financial Health Credit Cooperatives
    JEL: R11
    Date: 2007–07–09
  8. By: Andrew Bugg
    Abstract: This paper investigates empirically whether owner motivations are consistent with neoclassical models of profit maximisation. Contrary to the neoclassical model, in some markets owners gain private benefits from supplying products with certain characteristics. To consider this issue, a full theoretical model that allows owners to consider not only profit, but also utility, in their choices of price, product quality, and the use of an owner-specific production method was developed. Information was gathered on owner motivations from the UK speciality food sector to test the propositions of the theoretical model. Evidence of systematic utility maximisation is found and utility maximising owners set higher profit maximising prices and produce a higher quality product. These findings have implications for the UK speciality food sector.
    Keywords: Speciality food, objective function heterogeneity, factor analysis, seemingly unrelated regressions.
    JEL: C1 C3 L1 L2 L7 Q1
    Date: 2007–03
  9. By: Sittidaj Pongkijvorasin (Department of Economics, University of Hawaii at Manoa); James Roumasset (Department of Economics, University of Hawaii at Manoa); Thomas Kae’o Duarte (Department of Botany, University of Hawaii at Manoa)
    Abstract: This paper develops a regional hydrologic-ecologic-economic model of groundwater use and a nearshore ecosystem. Particularly, we model coastal groundwater management and its effects on discharge, nearshore water quality, and marine biota (e.g., indigenous marine algae). We show that incorporating the external effects on nearshore resources increases the optimal steady-state head level. Numerical simulations are illustrated using data from the Kuki’o region on the island of Hawaii. Two different approaches for incorporating the nearshore resource are examined. We find that including algae’s market value directly in the objective function calls for lower, albeit slightly lower, water extraction rate in all periods. If a minimum constraint is placed on the stock of the keystone species, greater conservation may be indicated. The constraint also results in non-monotonic paths of water extraction, head level, and water price in the optimal solution.
    Keywords: groundwater management, submarine groundwater discharge, stock externality, nearshore resources, safe minimum standard, marine algae, dynamic optimization model
    JEL: Q25 Q28 C61 D62
    Date: 2007–07–07
  10. By: Shah, Deepak
    Abstract: The present study, carried out in the state of Maharashtra during 2003-04, has its foci on the cooperative leadership and characteristics in cooperative success and failure, especially with respect to fruit marketing societies operating in Maharashtra. The study concentrates on two societies dealing with the marketing of banana in the state of Maharashtra – one showing success (NCFSS) and the other failure (KGFSS) due to positive and negative leadership qualities and characteristics associated with societies. Due to strong financial position, the NCFSS showed autonomy/independence in its functioning. This society had shown perfect knowledge about the market forces and its business activities in accordance to the new domestic as well as global market environment. The KGFSS showed poor grasp either in terms of studying the market forces or shown inefficiency because of its own internal drawbacks in terms of managing the society or its own personal interests involved in the functioning of the society. The KGFSS is unable to generate allies for lobbing to safeguard as well as promoting its own interests and the interests of its members, whereas NCFSS is quite successful in such lobbing and promotional interest related activities. Since a significant number of fruit marketing societies operating in Maharashtra have shown a falling trend in their amount of extension of loan and its recovery, and also in respect of higher amount of losses in proportion to profit, efforts should be made to rectify these deficiencies in the functioning of these societies dealing with the marketing of high value crops. Some remedial measures and strategies framed or initiated by these marketing societies, particularly in respect of recovery of their loan advances, will certainly improve the efficiency and functioning of these societies in the future. Government support in this respect will have a catalytic effect in improving the overall efficacy and efficiency, as well as functioning
    Keywords: Rural Cooperative Marketing Management Efficiency and Era of Globalization
    JEL: R11 P13
    Date: 2006–12–10
  11. By: Shah, Deepak
    Abstract: Developing countries like India should find potentiality in non- traditional exports at a time when growth in the traditional ones is foundering. At the same time, it deserves mention that the future growth in horticultural production in developing world mainly depend on future price mechanism and also on the import demand of these high value crops in various regions of the world. The production deficit of various regions in fruits and vegetables will act as engine of export growth of the same for developing nations. Import demand for fruits and vegetables has already been predicted to grow sharply in developed region of the world in the near future. This will lead to rise in export prices, especially for fruits. Production deficit of other countries and regions and a likelihood of rise in export prices of these high value crops may serve as a catalyst for significant expansion in the production of horticultural crops, particularly in developing world. India is expected to take advantage of this situation and cooperatives are likely to play a key role in shaping India’s exports. However, in order to exploit this situation cooperatives have to be developed as economically effective organizations, capable of meeting the challenges of the new, liberalized economic environment. Besides, they have to achieve full utilization of the existing infrastructural facilities with due emphasis on scaling up of the economy through expansion of production capacity and upgradation of technology.
    Keywords: Cooperative Institutions Horticultural Exports
    JEL: F10
    Date: 2007–07–09
  12. By: Shah, Deepak
    Abstract: Although India is blessed with diverse agro-climatic conditions and so has the ability to produce a wide variety of fruits, vegetables, flowers and a host of other agro-based products, a substantial quantity of horticultural produce of our country is lost due to poor post harvest processing, handling, transportation and storage operations. In order to curb these losses, some of the agencies like National Horticulture Board (NHB) and National Cooperative Development Cooperation (NCDC) are making sincere efforts to create adequate infrastructure facilities for horticultural crops. Among various schemes introduced by NCDC and NHB, the Soft Loan Scheme (SLS) of NHB is noteworthy. Under SLS, an assistance is provided to cooperative societies, public and private limited companies, and farmers association with a maximum limit of Rs.1.00 crore at 4 per cent service charges per annum with one year moratorium period to set up projects related to infrastructure development. Maharashtra is noticed to be the only state which has received about 52 per cent of the total soft loan distributed by NHB to 26 beneficiaries in the country. Majority of the beneficiaries of SLS in Maharashtra are processing cooperatives. The present study attempts to evaluate not only the NHB’s soft loan scheme but also the impact of the scheme on development of post-harvest infrastructure (PHI) for horticulture crops in Maharashtra. The focus of this study is on two processing-cum-export oriented grape growers’ cooperative societies. The study shows a positive impact of SLS towards development PHI facilities since such facilities have not only increased the export trade of the selected societies but they have also helped in increasing the productivity levels of the crops grown in the area, besides helping in reducing the post harvest losses of the produce. Nonetheless, with a view to further improve the efficiency of SLS, the study has made a few major suggestions, which mainly revolve around simplification of loan procedure adopted by the NHB, timely disbursement of the loan, financing of the entire comprehensive project rather than for certain specific components, subsidization of electricity tariffs for the processing units, subsidization of sea freight, provision of funds for setting up of Research and Development unit for the marketing of produce, provision of foreign market intelligence, etc. However, how best these suggestions are taken care of by the NHB and various other organizations will depend on their future strategies and policies relating to financing of PHI related facilities for horticultural crops.
    Keywords: Infrastructure Development Agro-Processing Cooperatives
    JEL: R11
    Date: 2007–07–08
  13. By: Shah, Deepak
    Abstract: The study conducted during 1994-95 in Jalgaon and Kolhapur districts of Maharashtra showed two differing scenarios insofar as the impact of milk cooperatives on production and marketed surplus is concerned. While milk cooperatives had positive and significant impact on both production and marketed surplus of milk in Kolhapur district, such impact could not be ascertained in Jalgaon district. The study also showed lower production and marketed surplus during summer season followed by rainy and winter seasons. However, the percentage marketed surplus was the highest in summer season followed by winter and rainy seasons. The higher percentage of marketed surplus in summer season was due to lower milk production, higher demand and higher prices offered by various agencies compared to other seasons. On an average, nearly three-fourths of milk produced was sold in extension and two-thirds in control area of both the selected districts. However, this proportion differed in different seasons and herd size categories. An analysis drawn from Marketed Surplus Function (MSF) also showed that total milk production in the household was the single most significant factor contributing to marketed surplus of milk. The next important variable positively affecting the marketed surplus of milk was the education level of the head of the household, particularly in control area of both the districts. Further, the negative impact of family size on the marketed surplus of milk could be ascertained only in Kolhapur district. In general, price of milk had very little influence on the marketed surplus of milk. Relatively small variation in price of milk within a season could be one of the reasons for lack of impact of price on marketed surplus of milk. Since in the short run there was no possibility of increasing milk production despite variation in prices, the MSF did not show significant influence of prices on marketed surplus of milk.
    Keywords: Milk Cooperatives Marketed Surplus
    JEL: R11
    Date: 2007–07–05
  14. By: Alain Nadai (CIRED - Centre international de recherche sur l'environnement et le développement - [CIRAD : UMR56][CNRS : UMR8568] - [Ecole des Hautes Etudes en Sciences Sociales][Ecole Nationale des Ponts et Chaussées][Ecole Nationale du Génie Rural des Eaux et des Forêts])
    Abstract: Since the early 1990s, national ecolabelling programmes have proliferated worldwide. The European Union (EU) implemented such a regional program in 1991. This decision was part of a broader orientation towards Integrated Product Policy approach in the EU. Since 1991, the development of European ecolabels has been slow and difficult. This paper examines industrial strategies vis-à-vis the EU ecolabel in order to understand the problems faced by the regulator in the development of this ecolabel.<br /><br />The first part of the paper defines and uses the concept of credence good in order to argue that the consumer cannot assess the ecolabel. Based on the examination of the development of the European ecolabel, the second part points out three variables that seem to influence the development of product eco-labels : i) the type of industry (i.e. the degree of heterogeneity between the sets of products sold by the different firms); ii) the threat of direct governmental regulation on the environmental quality of the product; and, iii) the magnitude of the final demand for a green variant of the product. The paper concludes with a discussion of on policy implications for policy makers interested in considering or promoting the use of ecolabels.
    Keywords: quality, eco-labeling, voluntary environmental regulation.
    Date: 2007–07–04

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