New Economics Papers
on Agricultural Economics
Issue of 2007‒12‒15
eleven papers chosen by

  1. A comparison of the economic and environmental performances of conventional and organic farming: Evidence from financial statements. By Josep Mª Argilés; Néstor Duch Brown
  2. Insurance, credit, and technology adoption : field experimental evidence from Malawi By Yang, Dean; Gine, Xavier
  3. Indian Agriculture in the New Economic Regime, 1971-2003: Empirics based on the Cobb Douglas Production Function By Kamat, Manoj; Tupe, Sanjay; Kamat, Manasvi
  4. Stakeholder Engagement in Land Development Decisions: A Waste of Effort? By Janmaat, Johannus A.
  5. Scope and Space for small scale poultry production in developing countries By Ahuja Vinod; Sen Arindam
  6. Burley Tobacco Clubs in Malawi: Nonmarket Institutions for Exports By Negri, Mariano; Porto, Guido
  7. Statistical analysis of rainfall insurance payouts in southern India By Vickery, James; Townsend, Robert; Gine, Xavier
  8. Implications of the WTO on Indian Marine Industry, Issues and Policy Perspectives By Kamat, Manasvi; Kamat, Manoj
  9. Cooperatives and Area Yield Insurance:A Theoretical Analysis By Pincheira, Pablo; Zeuli, Kimberly
  10. Ecology and economy in the Arctic. Uncertainty, knowledge and precaution By Iulie Aslaksen, Solveig Glomsrød and Anne Ingeborg Myhr
  11. Convergent Validity of Revealed and Stated Recreation Behavior with Quality Change: A Comparison of Multiple and Single Site Demands By John C. Whitehead; Daniel Phaneuf; Christopher F. Dumas; Jim Herstine; Jeffrey Hill; Bob Buerger

  1. By: Josep Mª Argilés (Universitat de Barcelona (UB)); Néstor Duch Brown (Institut d'Economia de Barcelona (IEB); Universitat de Barcelona (UB))
    Abstract: While conventional farming systems face serious problems of sustainability, organic agriculture is seen as a more environmentally friendly system as it favours renewable resources, recycles nutrients, uses the environment’s own systems for controlling pests and diseases, sustains ecosystems, protects soils, and reduces pollution. At the same time organic farming promotes animal welfare, the use of natural foodstuffs, product diversity and the avoidance of waste, among other practices. However, the future of organic agriculture will depend on its economic viability and on the determination shown by governments to protect these practices. This paper performs panel regressions with a sample of Catalan farms (Spain) to test the influence of organic farming on farm output, costs and incomes. It analyses the cost structures of both types of farming and comments on their social and environmental performance.
    Keywords: Organic agriculture, conventional agriculture, organic farming, conventional farming, social and environmental performance, financial performance, social and environmental accounting.
    JEL: Q01 Q12 Q51
    Date: 2007
  2. By: Yang, Dean; Gine, Xavier
    Abstract: The adoption of new agricultural technologies may be discouraged because of their inherent riskiness. This study implemented a randomized field experiment to ask whether the provision of insurance against a major source of production risk induces farmers to take out loans to invest in a new crop variety. The study sample was composed of roughly 800 maize and groundnut farmers in Malawi, where by far the dominant source of production risk is the level of rainfall. We randomly selected half of the farmers to be offered credit to purchase high-yielding hybrid maize and improved groundnut seeds for planting in the November 2006 crop season. The other half of the farmers were offered a similar credit package but were also required to purchase (at actuarially fair rates) a weather insurance policy that partially or fully forgave the loan in the event of poor rainfall. Surprisingly, take up was lower by 13 percentage points among farmers offered insurance with the loan. Take-up was 33.0 percent for farmers who were offered the uninsured loan. There is suggestive evidence that the reduced take-up of the insured loan was due to the high cognitive cost of evaluating the insurance: insured loan take-up was positively correlated with farmer education levels. By contrast, the take-up of the uninsured loan was uncorrelated with farmer e ducation.
    Keywords: ,Access to Finance,Debt Markets,Hazard Risk Management,Crops & Crop Management Systems
    Date: 2007–12–01
  3. By: Kamat, Manoj; Tupe, Sanjay; Kamat, Manasvi
    Abstract: This paper reviews the trends in Indian Agriculture before and after the introduction of the economic reforms, and the advent of WTO regime. We employ the Cobb Douglas Production Function using the OLS specification to investigate the determinants of agricultural gross domestic product for the period 1970-71 to 2002-03, during pre and post-economic reforms to document the impact of policy change (post-1992) and India’s membership of the WTO (post-1995). Our empirical findings reveal that Indian agriculture sector has witnessed Decreasing Returns to Scale after the introduction of economic reforms, indicating that the input availability is under strain during the same period.
    Keywords: Agriculture Gross Domestic Product; WTO; Economic Reforms; Trends; Determinants; Returns to Scale; Cobb Douglas Production Function; India.
    JEL: Q1 A1 B4
    Date: 2007–02
  4. By: Janmaat, Johannus A.
    Abstract: Abstract Currently, management devolution and engagement of local stakeholders - expected to have better information - is seen as key to effective environmental management. Often, the absence of clear property rights and/or supporting market institutions leaves management decisions to a political process. Where undeveloped land provides a public good, when to halt further development is modelled as a repeated lobbying contest between industry and households. Lobbying effort affects the continuation probability. Depending on how stakeholders are engaged, there may be little impact on final outcomes, or a lobbying war can be stimulated. Overall welfare is seldom enhanced.
    Keywords: Stakeholder engagement; lobbying contest; public good; water conservation; land development
    JEL: Q24 R52 R14 Q25
    Date: 2007–12–06
  5. By: Ahuja Vinod; Sen Arindam
    Abstract: In recent years there has been growing recognition among the development community of the role of small scale commercial poultry production in accelerating the pace of poverty reduction and reaching out to the poorest of the poor. There is also growing evidence to demonstrate the role of small scale poultry in enhancing the food and nutrition security of the poorest households and in the promotion of gender equality. At the same time, the market and production context of poultry production has been changing rapidly over the last two decades. Rapid economic growth and urbanization in developing countries has resulted in fast expansion of industrial large scale, vertically integrated, poultry production units, specially in Asia. Opportunities have also expanded for small scale poultry enterprises due to improved market access infrastructure and a preference structure that might still favour free range birds and eggs. As a result, there has been increased market orientation even among small scale poultry enterprises. These changes have brought large and small production systems in overlapping competitive space which has created both challenges and opportunities. These changes have raised concerns about the sustainability of small scale poultry production systems due to (i) intensified competition from large scale producers who can exercise significant control over the poultry value chain (including concentrated holding of genetic stock of industrial poultry by a few multinational corporations), and (ii) the public perception that small units of production may be dangerous reservoirs of diseases, specially in the wake of recent outbreaks of HPAI. In the light of that background, this paper attempts to summarize the nature of small scale poultry production across nations and brings together some evidence on the viability of small scale poultry production in the wake of expanding large scale production systems with substantial economies of scale, well organized and integrated supply chains and the ability to respond to various types of risks. The paper argues that the main challenge for small-scale/rural poultry is organizational, not technical. Based on a review of available evidence, the paper concludes that it is important to continue to promote village poultry to contribute towards household nutrition security and livelihood support but concerted efforts must be made to find organizational solutions to minimize public health risks and provide appropriate extension support on issues like disease prevention, predation, improving hatchability, etc. Unfortunately most government extension programs in the developing countries are not oriented towards addressing the needs of poor households. While some private sector organizations (such as Kegg Farm in India) have invested significantly towards developing fast growing and more productive birds without requiring significant additional inputs, and have also made sufficient investment for developing the distribution network for birds, extension and public health support systems continue to be the weak point, making them vulnerable to exogenous shocks. This requires a well orchestrated public policy response in support of small scale poultry production.
    Date: 2007–12–06
  6. By: Negri, Mariano; Porto, Guido
    Abstract: This paper studies nonmarket institutions that facilitate exports. In Malawi, as in many other developing countries, farmers face numerous constraints that disconnect them from export markets. We explore the role of a local institution, the burley tobacco clubs, in bridging smallholders to exports. Burley clubs potentially enable farmers to increase their tobacco farming productivity by providing services related to institutional access, collective action, economies of scale, and supporting networks. Using matching methods and instrumental variable techniques, we find that tobacco club membership causes an increase of between 40-74 percent in output per acre and an increase of between 45-89 percent in tobacco sales per acre. Instead, neither the land share allocated to tobacco nor the unit value obtained by the producers is affected by club membership.
    Keywords: institutional access; collective action and economies of scale; supporting networks; tobacco exports; trade facilitation
    JEL: F10 O17 Q17
    Date: 2007–11
  7. By: Vickery, James; Townsend, Robert; Gine, Xavier
    Abstract: Using 40 years of historical rainfall data, this paper estimates a distribution for payouts on rainfall insurance policies offered to farmers in the State of Andhra Pradesh, India, in 2006. The authors find that the contracts primarily protect households against extreme tail events; half the expected value of indemnities paid by the insurance are generated by only 2 percent of rainfall realizations. Contract payouts are significantly correlated cross-sectionally, and also inversely associated with real GDP growth. The paper discusses the implications of these findings for the potential benefits of insurance to households, the risks facing a financial institution underwriting rainfall insurance contracts, and pricing.
    Keywords: Debt Markets,Deposit Insurance,Labor Policies,,Emerging Markets
    Date: 2007–12–01
  8. By: Kamat, Manasvi; Kamat, Manoj
    Abstract: The outcomes of WTO negotiations under the Doha round, Hong Kong development round and the changing European Union regulations are likely to place new hurdles on the marine exports emerging from developing economies like India. In the light of the above, we attempt to discuss the impact of WTO-GATS on the Indian Marine Trade and Service industry, analyze the challenges faced by the developing countries, and suggest way-outs to respond them. Many other WTO-GATS related aspects have repercussions on the marine exports from the developing countries in Asia and India in particular; namely the outcomes from the Dispute Settlement Mechanism (DSM), the relation between trade rules and Multilateral Environmental Agreements (MEAs), Technical Assistance and Capacity Building (TA & CB) and the provisions for Special and Differential Treatment (SDT). The impact of GATS and the implications on Indian marine trade & services are specifically assessed in context of Tariff barriers, Non-tariff measures, Subsidies and Eco-labeling. Relevant policy implications follow the issues discussed.
    Keywords: WTO; GATS; India; Marine Industry; Fisheries; Trade and Non-trade Barriers; NAMA; Implications; Policy Suggestions
    JEL: P5 F2 F1 L7
    Date: 2007–06–21
  9. By: Pincheira, Pablo; Zeuli, Kimberly
    Abstract: The purpose of this paper is to theoretically investigate the potential benefits that arise from a cooperative selling a government subsidized area-yield contract (i.e., the Group Risk Plan). The indeminities in area-yield contracts are triggered by a geographically determined yield (e.g., a county-wide yield average) instead of the more conventional individual actual production history. Therefore, an area-yield contract would be appropriate for managing the cooperative's systemic throughput risk. The cooperative would also capture some of the substantial government subsidies that are normally given to a private insurance company. Our primary finding is that farmers should be indifferent when considering the decision to purchase area-yield insurance from a private company or encompass that business in their cooperative. We derive this result for the specific case of costless insurance and assume a Pareto Optimal contract. Under these assumptions, the government subsidies that the cooperative would hope to capture are simply a net deduction in their premiums. In other words, the benefit they capture from the subsidies is the same when they purchase the insurance from an outside firm or internally.
    Keywords: Cooperatives; Area Yield Insurance; Optimal indemnity.
    JEL: D6 L3 Q13 D8
    Date: 2007–12
  10. By: Iulie Aslaksen, Solveig Glomsrød and Anne Ingeborg Myhr (Statistics Norway)
    Abstract: Climate change impacts in the Arctic require that complex relationships between the economy, the environment, and the living conditions of indigenous and local people be taken into account. While traditional approaches to economic valuation may not be sufficient to capture these relationships, the research area of ecological economics suggests broader approaches to environmental uncertainties, taking into account ethical values and conflicts of interest. Increased activity in petroleum exploration, manufacturing, transportation, tourism and other services have the potential to alter the Arctic environment and societies considerably. Application of the precautionary principle is suggested as a way to manage situations with large degrees of environmental uncertainty and potentially irreversible consequences. Precautionary approaches require the development of processes for acknowledgement of uncertainties, facilitation of stakeholder participation, recognition of ethical values, and taking into account the traditional ecological knowledge of indigenous people of the Arctic. Combining traditional and scientific knowledge about nature is an important part of understanding the resilience capacity of ecological and social systems, and of enhancing the potential for sustainable development.
    Keywords: Arctic; Environmental uncertainty; Ecological Economics; Precaution
    JEL: Q54 Q57
    Date: 2007–12
  11. By: John C. Whitehead; Daniel Phaneuf; Christopher F. Dumas; Jim Herstine; Jeffrey Hill; Bob Buerger
    Abstract: We consider the convergent validity of several demand models using beach recreation data. Two models employ multiple site data, the linked site-selection and trip frequency demand model and the Kuhn-Tucker demand system model. We exploit the effect of the existing variation in beach width on trip choices to analyze a 100 foot increase in beach width. We compare these models to a single site model where we jointly estimate revealed and stated preference data focusing on a hypothetical scenario that directly considers a 100 foot increase in beach width. In each case we develop estimates of the increased number of beach trips with an increase in beach width and the value of beach width. The trip estimates from each of the three models are similar and convergent valid. The convergent validity statistical test on willingness to pay suggests that the estimates converge between these models. However, the difference in magnitude is large. Key Words: Recreation Demand, Travel Cost Method, Convergent Validity
    JEL: Q51
    Date: 2007

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