New Economics Papers
on Agricultural Economics
Issue of 2007‒11‒03
fifteen papers chosen by

  1. Implications of Rainfall Shocks for Household Income and Consumption in Uganda By John Bosco Asiimwe; Paul Mpuga
  2. Agricultural producer support estimates for developing countries: measurement issues and evidence from India, Indonesia, China, and Vietnam By Orden, David; Cheng, Fuzhi; Nguyen, Hoa; Grote, Ulrike; Thomas, Marcelle; Mullen, Kathleen; Sun, Dongsheng
  3. Analysis of factors affecting the technical efficiency of arabica coffee producers in Cameroon By Amadou Nchare
  4. The role of agriculture in development: implications for Sub-Saharan Africa By Diao, Xinshen; Hazell, Peter; Resnick, Danielle; Thurlow, James
  5. The economics of a biofuel consumption mandate and excise-tax exemption: An empirical example of U.S. ethanol policy By de Gorter, Harry; Just, David R.
  6. Scale and access issues affecting smallholder hog producers in an expanding peri-urban market: Southern Luzon, Philippines By Costales, Achilles; Delgado, Christopher; Catelo, Maria Angeles; Lapar, Ma. Lucila; Tiongco, Marites; Ehui, Simeon; Bautista, Anne Zillah
  7. Reforming farmland and rangeland in Tharparkar: Suggested implementations for income generation By Herani, Gobind; Rajar, Allah Wasayo; Khaskheli, Muhammad Ali
  8. Testing for Food market integration: A study of the Vietnamese paddy market By Le Dang Trung; Tran Ngo Minh Tam; Bob Baulch; Henrik Hansen
  9. Dietary Changes, Calorie Intake and Undernourishment: A Comparative Study of India and Vietnam By Ray, Ranjan
  10. Costly Enforcement of Voluntary Environmental Agreements with Industries By David M. McEvoy; John K. Stranlund
  11. Function law in agrarian policies: Mexico 1990-2005 By Acosta Reveles, Irma Lorena
  12. The economics of U.S. ethanol import tariffs with a consumption mandate and tax credit By de Gorter, Harry; Just, David R.
  13. Using Hedonic Property Models to Value Public Water Bodies: A Note Regarding Specification Issues By Nicholas Z. Muller
  14. Eminent Domain Versus Government Purchase of Land Given Imperpect Information About Owners' Valuation By Steven Shavell
  15. Is the Food and Drug Administration Safe and Effective? By Tomas J. Philipson; Eric Sun

  1. By: John Bosco Asiimwe; Paul Mpuga
    Abstract: Much of Uganda’s agricultural production activities are rain-fed, meaning that changes in weather conditions have important implications for households’ total agricultural production and wellbeing. This study uses a basic model of household production to assess the impact of rainfall shocks (using rainfall variability) on farm income and consumption expenditure and the response of households to such shocks. Pooled cross sectional data of farm households are derived from the Uganda National Household Surveys for 1992/93, 1999/2000 and 2002/03, which provide a rich source of information on individual and household characteristics (size, age, sex, education, employment, etc.), household income, expenditure, and exposure to risk/shocks. Rainfall statistics are obtained from various issues of the Statistical Abstracts and the Background to the Budget. We show that rainfall shocks have important implications for both income and consumption of households, with strong policy implications towards cushioning agricultural households. Higher than average rainfall in the first planting and first harvest seasons is found to result in lower incomes and consumption. Given that about 40% of Uganda’s total output is obtained from rain-fed agriculture, the impact of rainfall variability on household welfare has important implications for national income. It is also noted that other factors such as ownership of land, education of the household head and household size are important in the determination of household welfare. Community characteristics such as access to electricity, markets and infrastructure in general play a very important role in the welfare of agricultural households. Programmes to protect households against rainfall shocks such as irrigation schemes, storage facilities for dry produce, staggered planting and crop diversification can provide helpful avenues to reduce income variability among agricultural households. In order to reduce welfare variability and poverty in general, it is necessary to continue the focus on education and targeting of poor and vulnerable households in terms of access to education, health care and other welfare programmes. Access to land has strong implications for both income and consumption - households with access to larger land areas are likely to have higher incomes and higher consumption expenditures - suggesting that land policies to improve access are needed so as to enhance incomes of agricultural households.
    Date: 2007–07
  2. By: Orden, David; Cheng, Fuzhi; Nguyen, Hoa; Grote, Ulrike; Thomas, Marcelle; Mullen, Kathleen; Sun, Dongsheng
    Abstract: "This study analyzes the evolution of agricultural policies from 1985 to 2002 in India, Indonesia, China, and Vietnam and provides empirical estimates of the degree of protection or disprotection to agriculture in these four countries, both by key commodities and in aggregate... Taken together the reported measures of support and disprotection of specific crops and agriculture in total provide a reasonable basis for assessing the stance of agricultural policies of India, Indonesia, China, and Vietnam. Attention to measurement issues provides a sensitivity analysis. The results reported are indicative of the range of outcomes likely to be found more broadly among developing countries. From regimes of heavy intervention in agricultural markets, each of the four countries in the study has undergone a substantial reform process." from text
    Keywords: Agricultural support, Agricultural policies, Reform,
    Date: 2007
  3. By: Amadou Nchare
    Abstract: This study analyses the factors influencing the technical efficiency of arabica coffee farmers in Cameroon. To carry out this analysis, a translog stochastic production frontier function, in which technical inefficiency effects are specified to be functions of socioeconomic variables, is estimated using the maximum-likelihood method. The data used were collected from a sample of 140 farmers during the 2004 crop year. The results obtained show some increasing returns to scale in coffee production. The mean technical efficiency index is estimated at 0.896, and 32% of the farmers surveyed have technical efficiency indexes of less than 0.91. The analysis also reveals that the educational level of the farmer and access to credit are the major socioeconomic variables influencing the farmers’ technical efficiency. Finally, the findings prove that further productivity gains linked to the improvement of technical efficiency may still be realized in coffee production in Cameroon.
    Keywords: Technical efficiency, stochastic production frontier, arabica coffee, Cameroon
    JEL: O13 Q18 C21 R30
    Date: 2007–01
  4. By: Diao, Xinshen; Hazell, Peter; Resnick, Danielle; Thurlow, James
    Abstract: "This report provides a nuanced perspective on debates about the potential for Africa's smallholder agriculture to stimulate growth and alleviate poverty in an increasingly integrated world. In particular, the paper synthesizes both the traditional theoretical literature on agriculture's role in the development process and discusses more recent literature that remains skeptical about agriculture's development potential for Africa. In order to examine in greater detail the relevance for Africa of both the “old” and “new” literatures on agriculture, the paper provides a typology of African countries based on their stage of development, agricultural conditions, natural resources, and geographic location... More broadly, the paper demonstrates that conventional theory on the role of agriculture in the early stage of development remains relevant to Africa. While the continent does face new and different challenges than those encountered by Asian and Latin American countries during their successful transformations, most African countries cannot significantly reduce poverty, increase per capita incomes, and transform into modern economies without focusing on agricultural development." from Authors' Abstract
    Keywords: Growth-poverty linkages, Smallholders, Poverty alleviation, Agricultural development Africa, Agriculture Economic aspects, Ethiopia, Ghana, Rwanda, Uganda, Zambia,
    Date: 2007
  5. By: de Gorter, Harry; Just, David R.
    Abstract: This paper develops a general framework to evaluate the effects on agricultural and gasoline markets of a consumption mandate and excise-tax exemption, the two most prominent public biofuel policies. Although market prices for biofuels increase under each policy, consumer fuel prices always decline with a tax exemption and increase with a mandate except under special circumstances when oil supply is inelastic relative to the supply of biofuels. A tax exemption alone is a biofuel consumption subsidy but most of the benefits go to biofuel producers because biofuels are a small share of total fuel consumption. Fuel consumers benefit indirectly to the extent gasoline prices decline with increased biofuel production. With a binding mandate in place, the tax exemption acts as a subsidy to fuel consumers instead. Biofuel producers only gain indirectly with the increased biofuel demand resulting from the increase in total fuel consumption. Most of the market effects are due to the mandate with the tax exemption only exacerbating the biofuel price increase and causing an increase in the oil price but a decrease in the consumer fuel price. An important implication is that the effects of each policy are not additive when used in combination. To illustrate the complexity and importance of the interaction between biofuel mandates and tax exemptions, we calibrate a stylized empirical model of the U.S. ethanol market. The results confirm the theoretical findings, including the special case of a mandate reducing consumer prices. The model is well suited to form a basis for evaluating the social benefits of the mandate versus the tax exemption in reducing local pollution, global warming and reliance on oil, and in enhancing farm incomes, reducing tax costs of farm subsidies and promoting rural development.
    Keywords: biofuels; mandate; tax exemption; ethanol
    JEL: Q42 Q18 Q17 F17
    Date: 2007–10–24
  6. By: Costales, Achilles; Delgado, Christopher; Catelo, Maria Angeles; Lapar, Ma. Lucila; Tiongco, Marites; Ehui, Simeon; Bautista, Anne Zillah
    Keywords: Pork industry and trade, Swine breeders, Agriculture and state, small farms, Peri-urban areas, Market access,
    Date: 2007
  7. By: Herani, Gobind; Rajar, Allah Wasayo; Khaskheli, Muhammad Ali
    Abstract: This paper is the analysis of farming and rangeland of rain-fed area of Tharparkar and it is desert area, but the concept is general and applicable for every part of the world’s desert where agriculture is rain-fed dependant. It is disadvantaged area of Pakistan. Its’ main source of income is livestock, people like agriculture, but agriculture is not sustainable source of income due to shortage of rainfall. There is need of awareness of reforming of farmland and rangeland; fencing is the best way for farmland reform. Only this practice can help the farmers supplying the fodder in drought conditions. Rangeland also should be conserved for the natural vegetation providing, fodder. Increase in livestock would lead Thar to agro-based industrial economy. We should get the lesson from the example of Denmark where previous condition was like Tharparkar.
    Keywords: Farming; Rain Fed; Livestock; Farmland; Rangeland; Forecast; Reform; Natural-Vegetation; Sustainable; Organization
    JEL: Q15 Q12
    Date: 2007
  8. By: Le Dang Trung (Centre for Analysis and Forecasting, Vietnam Academy of Social Sciences); Tran Ngo Minh Tam (Centre for Analysis and Forecasting, Vietnam Academy of Social Sciences); Bob Baulch (Institute of Development Studies at the University of Sussex); Henrik Hansen (Institute of Food and Resource Economics, University of Copenhagen)
    Abstract: <p>This paper examines whether there is spatial integration between and within paddy markets in the North and South of Vietnam. The empirical model developed uses estimates of transfer costs to generalize Ravallion’s model of spatial market integration to allow for threshold effects. A sequential testing strategy is used to test for market segmentation, the number of threshold, long-run integration, in-formational efficiency, and the ‘Law’ of One Price within an error-correction frame-work. We find no threshold effects and weak evidence of paddy market integration between northern and southern Vietnam. There is, however, evidence of both threshold effects and stronger market integration within a Red and Mekong River deltas. Whenever price spreads exceeds their threshold at least 60 percent of price changes are transmitted between regional market within a month. None-the-less, the instantaneous version of the ‘Law’ of One Price only holds for a few regimes and market pairs.</p><p>These result suggest that national level policies cannot be relied upon to stabilize or support paddy prices in Vietnam. Instead, policies need to be designed with the specific production, consumption and marketing characteristics of northern and southern Vietnam in mind.</p>
    Keywords: Market integration; Paddy market; Error-correction; Spatial integration; Vietnam
    Date: 2007–07
  9. By: Ray, Ranjan (School of Economics and Finance, University of Tasmania)
    Abstract: This paper examines the changes in the nature and quantity of Food consumption in India during the reforms decade of the 1990s, and analyses their implications for calorie intake and undernourishment. The study documents the decline in cereal consumption, especially in the urban areas, and provides evidence that suggests an increase in the prevalence of undernourishment over the period, 1987/88 – 2001/2002. The results also point to a significant number of households, even in the top expenditure decile, suffering from under nourishment. This calls for a reassessment of the current strategy of directing the Targetted Public Distribution System (TPDS) exclusively at households below the poverty line (BPL). This study shows that, both as a source of subsidised calories and as a poverty reducing instrument, the PDS is of much greater importance to the female headed households than it is to the rest of the population. Another important result is that, notwithstanding the sharp decline in their expenditure share during the 1990s, Rice and Wheat continue to provide the dominant share of calories, especially for the rural poor. The Indian experience is in sharp contrast to that in Vietnam which witnessed a large increase in calorie intake and, consequently, a decrease in the prevalence of ndernourishment in the late 1990s. The Vietnamese diet displayed increased diversification during the 1990s with a greater role for protein rich animal products and a more balanced diet of nutrients than in India.
    Keywords: Calorie Intake, Prevalence of Undernourishment, Calorie Price Inflation, Public Distribution System, Backward Classes, Female headed Households.
    Date: 2007–07
  10. By: David M. McEvoy (Department of Economics, Appalachian State University); John K. Stranlund (Department of Resource Economics, University of Massachusetts Amherst)
    Abstract: Although the theoretical literature on the performance of voluntary approaches to environmental protection has progressed quite far in the last decade, no one has rigorously addressed the obvious point that even voluntary emissions control policies must be enforced. This paper examines the consequences of the need for costly enforcement of voluntary environmental agreements with industries on the ability of these agreements to meet regulatory objectives, the levels of industry participation with these agreements, and the relative efficiency of voluntary and regulatory approaches. We find that enforcement costs that are borne by the members of a voluntary emissions control agreement limit the circumstances under which an agreement can form in place of an emissions tax. However, if an agreement does form, member-financed enforcement induces greater participation than if compliance with the agreement could be enforced without cost to its members. Moreover, a voluntary emission control agreement with an industry can be a more efficient way to achieve an environmental quality objective than an emission tax, but only if: (1) the members of an agreement bear the costs of enforcing compliance with the agreement; (2) there exists member-financed agreements that reach the government’s environmental quality target while leaving the members of the agreement at least as well off as they would be under an emissions tax, and (3) the enforcer of the agreement has a significantly better monitoring technology or a higher sanction available to it than the government.
    Keywords: Voluntary agreements, self-enforcing agreements, emissions tax, enforcement
    JEL: L51 Q58
    Date: 2007–10
  11. By: Acosta Reveles, Irma Lorena
    Abstract: In support of public policy, the law anticipates Government projects so as to pave the way for them, or is adjusted along the way in order to adapt the institutional framework to the processes which in fact prevail. A typical case is that of Mexican Agrarian legislation in the late 20th and early 21st centuries. We propose here that recent developments in Agrarian legislation reveal the limitations of the modernizing strategy of the 1990s, which resulted in a call for the rural population to enter into alternative economic activities, as agriculture ceases to be the way of life for numerous families. We conclude that the restructuring of agricultural production in Mexico has excluded the productive and social dimensions. The reformulation of agrarian legal discourse demonstrates the structural limitations of advancement in terms of the agribusiness model. Now the sector’s economic policy priorities of growth and yield shift towards the instruments of social policy related to territorial construction.
    Keywords: Law; agrarian policies; neoliberalism; rural development; Mexico
    JEL: Q10 A14 R10 K00
    Date: 2007
  12. By: de Gorter, Harry; Just, David R.
    Abstract: This paper analyzes the impact of an ethanol import tariff in conjunction with a consumption mandate and tax credit. A tax credit alone acts as a subsidy to ethanol producers, equally benefiting exporters like Brazil. If an import tariff is imposed to offset the tax credit, world prices of ethanol decline by less than the tariff (unless oil prices are unaffected). Eliminating the tariff with a tax credit in place results in a significant gain to exporters like Brazil but eliminating the tax credit too reduces the initial benefits to Brazil of the tariff reduction substantially. The results change however if there is “water” in the tax credit. Then exporters benefit much more with the elimination of both the tariff and tax credit compared to a situation of both policies in place. If only a mandate was in place, exporters like Brazil again benefit as much as domestic ethanol producers do. Eliminating the tariff with a mandate results in an increase in domestic ethanol prices (even if oil prices do not change) because more domestic supply is required to maintain the mandate. The tariff therefore has a smaller negative impact on world ethanol prices with a mandate compared to a tax credit. A tax credit with a binding mandate is a subsidy to fuel consumers and only indirectly benefits ethanol producers if ethanol prices increase due to increased demand for ethanol with the increase in fuel consumption). Therefore, eliminating the tax credit with a binding mandate has little effect on market prices of ethanol – domestic and foreign producers alike benefit very little with a tax credit in this situation. Brazil would much prefer the elimination of the tax credit and the so-called offsetting import tariff when a mandate is binding. Hence, the protective effects of an import tariff are not additive with either a tax credit or the price premium due to a mandate.
    Keywords: biofuels; mandate; tax credit; ethanol; tariff
    JEL: Q42 F13 Q18 Q17
    Date: 2007–10–24
  13. By: Nicholas Z. Muller
    Abstract: The hedonic literature has established that public water bodies provide external benefits that are reflected in the value of nearby residential real estate. The literature has employed several approaches to quantify these nonmarket services. With a residential hedonic model, this paper tests whether model specification affects resource valuation using an actively managed reservoir in Indiana and a passively managed lake in Connecticut. The results indicate that valuation is quite sensitive to model specification,and that omitting either the waterview or waterfront variables from the hedonic function likely results in a misspecified model. The findings from this study are important for researchers and public agencies charged with managing water resources to bear in mind as the external benefits from existing or man-made lakes anr reservoirs are estimated. Therefore, while it requires considerably more effort to determine which properties are in waterfront locations and which properties have a view, the potential misspecification of distance-only models likely justifies these extra research costs. Further, the findings in this analysis callinto question results from distance-only models in the literature.
    Date: 2007
  14. By: Steven Shavell
    Abstract: Governments employ two basic policies for acquiring land: taking it through exercise of their power of eminent domain; and purchasing it. The social desirability of these two policies is compared in a model in which the government's information about landowners' valuations is imperfect. Under this assumption, the policy of purchase possesses the market test advantage that the government obtains land only if an owner's valuation is low enough that he is willing to sell it. However, the policy suffers from a drawback when the land that the government needs is owned by many parties. In that case, the government's acquisition will fail if any of the owners refuses to sell. Hence, the policy of eminent domain becomes appealing if the number of owners of the land is large. This conclusion holds regardless of whether the land that the government seeks is a parcel at a fixed location or instead may be located anywhere in a region.
    JEL: D8 H1 H4 K11
    Date: 2007–10
  15. By: Tomas J. Philipson; Eric Sun
    Abstract: In the United States, drug safety and efficacy are primarily regulated by the Food and Drug Administration (FDA) and the legal system, which gives manufacturers large incentives to produce safe drugs and provide proper warnings for side effects, since patients can sue manufacturers that provide unsafe drugs and/or insufficient warnings. <br><br>In this paper, we begin by examining the efficiency implications of this joint regulation of drug safety. We find that joint regulation of drug safety can be inefficient when the regulatory authority mandates a binding and well enforced level of safety investment. In this case, product liability has no effect on a firm's safety investment, but affects welfare by raising a firm's costs and therefore prices. Using these results, we calibrate a model of the pharmaceutical market and find that, depending on the share of liability costs in marginal costs, a product liability exemption for activities that are well regulated by the FDA could increase consumer welfare by $47.8-$754.7 billion annually (4-66 percent of sales) and producer welfare by $11.9-$173.9 billion annually (1-15 percent of sales). <br><br>In addition, we summarize the welfare effects of recent legislation, the Prescription Drug User Fee Acts (PDUFA), which mandated faster FDA review times in exchange for user fees levied on the pharmaceutical industry. Overall, we find that the faster review times mandated by PDUFA raised social surplus by $18-31 billion, and that at most, the concomitant cost of reduced drug safety was $5.6-$16.6 billion.
    JEL: I0 I11 I18
    Date: 2007–10

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