nep-agr New Economics Papers
on Agricultural Economics
Issue of 2008‒03‒01
thirteen papers chosen by
Angelo Zago
University of Verona

  1. Sources of Technical Efficiency among Smallholder Maize Farmers in Southern Malawi By Ephraim W. Chirwa
  2. Agricultural adaptation to climate policies under technical change By Uwe A. Schneider; Michael Obersteiner; Erwin Schmid; Bruce A. McCarl
  3. Farm Policies and Added Sugars in US Diets By John C. Beghin; Helen H. Jensen
  4. Relative Price Variability and Inflation: Evidence from the Agricultural Sector in Nigeria By Obasi O. Ukoha
  5. The Impact of Access to Credit on the Adoption of Tobacco in Malawi By Simtowe, Franklin
  6. Are CAP Decoupling Policies Really Production Neutral? By Stelios Katranidis; Christina Kotakou
  7. Malthusian Population Dynamics: Theory and Evidence By Quamrul Ashraf; Oded Galor
  8. Crop-Based Biofuel Production under Acreage Constraints and Uncertainty By Baker, Mindy; Hayes, Dermot J.; Babcock, Bruce A.
  9. Greenhouse Gas Impacts of Ethanol from Iowa Corn: Life Cycle Analysis versus System-wide Accounting By Feng, Hongli; Rubin, Ofir; Babcock, Bruce A.
  10. An Anatomy of State Failures in The Forest Management in Pakistan By Hasan, Lubna
  12. Valuing Environmental Quality: A Space-Based Strategy By David E. Clark
  13. Enforcement Aspects of Conservation Policies: Compensation Payments versus Reserves By Rousseau Sandra

  1. By: Ephraim W. Chirwa
    Abstract: The agricultural sector in Malawi is vital to the economy for incomes and food security. The sector accounts for 35% of national income, generates 90% of foreign exchange, and provides paid and self-employment to 92% of the rural population. One constraint in achieving food security has been the small size and fragmented nature of land holdings among a large proportion of households in Malawi. Nonetheless, since independence there have been several attempts by the government to improve the productivity of food crops on small farms, particularly for maize, including the development of high yielding maize varieties, subsidization of farm inputs, provision of credit facilities, and the liberalization of both farm produce prices and farm produce marketing. While there have been several studies on food production in Malawi, the focus has mainly been on technology development and adoption, production constraints, the impact of structural adjustment policies, and the impact of price and marketing liberalization. This paper estimates technical efficiency among smallholder maize farmers in Malawi and identifies sources of inefficiency using plot-level data. We find that smallholder maize farmers in Malawi are inefficient; the average efficiency score is 46.23% and 79% of the plots have efficiency scores below 70%. The results of the study reveal that inefficiency declines on plots planted with hybrid seeds and for those controlled by farmers who belong to households with membership in a farmers club or association.
    Date: 2007–11
  2. By: Uwe A. Schneider; Michael Obersteiner; Erwin Schmid; Bruce A. McCarl (Research unit Sustainability and Global Change, Hamburg)
    Abstract: This study uses a partial equilibrium model of the US agricultural sector to examine how technical progress and carbon price levels affect land management adaptation. We find that the climate policy range, over which a more extensive agriculture is preferred, decreases as crop yields increase. Second, technical progress with traditional crops offers less mitigation benefits than progress with mitigation options themselves. Third, while agricultural producers benefit from technical progress on energy crops, they fare worse if technical progress improves traditional crops and low carbon prices.
    Keywords: Technical Change, Producer Adaptation, Agricultural Sector Model, Carbon Sequestration, Mathematical Programming, Climate Policy Simulation
    JEL: Q11 Q55 Q58
    Date: 2007–10
  3. By: John C. Beghin; Helen H. Jensen (Center for Agricultural and Rural Development (CARD); Midwest Agribusiness Trade Research and Information Center (MATRIC))
    Abstract: Major changes in the use of US sweeteners have occurred since 1970, in both the amount and composition. Increased consumption of caloric sweeteners, especially in beverages, has been linked to excess energy intake and lower-quality diets. We examine how US farm policies (specifically agricultural research and development [R&D] expenditures and commodity programs) have affected the consumption and composition of sweeteners in the US diet. R&D expenditures have lowered the unit cost of most commodities and increased their use in food production, ceteris paribus, although corn has benefited more than sugar crops in the technical progress. Commodity programs have raised the price of sugar and decreased the price of corn; high fructose corn syrup (HFCS) became an inexpensive substitute for sugar in food beginning in 1970. However, the effect of this change in the price of ingredients has become less important over time. Today the farm value share in sweetened food is very small (below 5%), and HFCS has become a specialized input in many food items. Countries with different or no commodity programs experience similar increases in consumption of added sugar. We conclude that the current link between the US consumption of caloric sweeteners and farm policy is tenuous, although historically the link was stronger.
    Keywords: added sugar, agricultural policy, caloric, corn, diet, farm policies, HFCS, subsidy, sugar, sweetener. JEL codes: Q18, D12, I18
    Date: 2008–02
  4. By: Obasi O. Ukoha
    Abstract: The main objective of this study is to establish quantitative relationships among the relative price volatility of agricultural commodities, inflation and agricultural polices in Nigeria. The data for the study, covering the period 1970–2003, were obtained from publications of the Central Bank of Nigeria, Federal Office of Statistics, and Federal Ministry of Agriculture and Rural Development. Our results show that the effect of inflation on relative price variability among agricultural commodities in Nigeria is non-neutral. Inflation has a significant positive impact on relative price variability in both the long run and the short run. The findings suggest the need for policies that will buffer the agricultural sector from the effects of inflation in the short run, and in addition the crops subsector from the long-run effect of inflation. Similarly, policies that reduce the rate of inflation will minimize relative price variability among agricultural commodities and consequently reduce inefficiency, distortions and misallocation of resources in agriculture that might be caused by inflation. No data points in the study period showed negative inflation. As a result of this, the data could not provide evidence for the effect of deflation on relative price variability. Policies like the Green Revolution and structural adjustment programmes and post-SAP policies increased relative price variability among cash crops in the long run, but influenced food crop prices only in the short run. In addition to this, the Operation Feed the Nation project (OFN) had a significant positive short-run effect on food prices. Thus the agricultural policies under SAP, post-SAP and Green Revolution caused price changes that led to efficient reallocation of resources among cash crops in the long run and food crops in the short run. The policies should be considered in planning for the agricultural sector. On the other hand, the price control policy brought about a reduction in relative price variability among cash crops and consequently led to a misallocation of resources in the sector. Cash crop prices should be allowed to be determined by market forces of demand and supply, and no attempts should be made to fix prices administratively.
    Date: 2007–10
  5. By: Simtowe, Franklin
    Abstract: This paper investigates the impact of access to credit on the adoption of burley tobacco among households that differ in their credit constraint status using a Double hurdle model. The data used in the study is from Malawi collected by the International Food Policy Research Institute (IFPRI) in collaboration with the Rural Development Department of Bunda College of Agriculture. Results reveal that while access to credit increases adoption among credit constrained households, it has a limited effect among unconstrained households. Results further show that access to credit does not lead to an immediate increase in the likelihood of adoption for tobacco, but conditional on adoption it enables credit constrained households to allocate more land to tobacco production. Consistent with theory, results for the test for separation of consumption and production decisions indicate that household demographic factors affect demand for labor among credit constrained households while they have no effect among unconstrained households.
    Keywords: credit constraints; double-hurdle; tobacco; adoption; Malawi
    JEL: D0 O3
    Date: 2008–01–30
  6. By: Stelios Katranidis (Department of Economics, University of Macedonia); Christina Kotakou (Department of Economics, University of Macedonia)
    Abstract: This paper examines the effects of decoupling policies on Greek cotton production. We estimate a system of cotton supply and input derived demand fuctions under the hypothesis that producers face unceratinty about prices. Using our estimation results we simulate the effects on cotton production under four alternative policy scenarios; the ‘Old’ CAP regime (i.e. the policy practiced until 2005), the Mid Term Review regime, a fully decoupled policy regime and a free trade-no policy scenario. Our results indicate that cotton production gradually decreases as more decoupled policies are adopted. Moreover, the fully decoupled payment is found to be non-production neutral since it indirectly affects producers’ decisions through the wealth effect.
    Keywords: Common Agricultural Policy, decoupling, uncertainty
    JEL: D21 Q18
    Date: 2008–03
  7. By: Quamrul Ashraf; Oded Galor
    Abstract: This paper empirically tests the existence of Malthusian population dynamics in the pre-Industrial Revolution era. The theory suggests that, during the agricultural stage of development, resource surpluses beyond the maintenance of subsistence consumption were channeled primarily into population growth. In particular, societies naturally blessed by higher land productivity would have supported larger populations, given the level of socioeconomic development. Moreover, given land productivity, societies in more advanced stages of development, as reflected by their cumulative experience with the agricultural technological paradigm since the Neolithic Revolution, would have sustained higher population densities. Using exogenous cross-country variations in the natural productivity of land and in the timing of the Neolithic Revolution, the analysis demonstrates that, in accordance with the Malthusian theory, societies that were characterized by higher land productivity and an earlier onset of agriculture had a higher population density in the time period 1-1500 CE.
    Keywords: Growth; Technological Progress; Population Dynamics; Land Productivity; Neolithic Revolution; Malthusian Stagnation
    Date: 2008
  8. By: Baker, Mindy; Hayes, Dermot J.; Babcock, Bruce A.
    Abstract: A myriad of policy issues and questions revolve around understanding the bioeconomy. To gain insight, we develop a stochastic and dynamic general equilibrium model and capture the uncertain nature of key variables such as crude oil prices and commodity yields. We also incorporate acreage limitations on key feedstocks such as corn, soybeans, and switchgrass. We make standard assumptions that investors are rational and engage in biofuel production only if returns exceed what they can expect to earn from alternative investments. The Energy Independence and Security Act of 2007 mandates the use of 36 billion gallons of biofuels by 2022, with significant requirements for cellulosic biofuel and biodiesel production. We calculate the level of tax credits required to stimulate this level of production. Subsidies of nearly $2.50 per gallon to biodiesel and $1.86 per gallon to cellulosic biofuel were required, and long-run equilibrium commodity prices were high, with corn at $4.76 per bushel and soybeans at $13.01 per bushel. High commodity prices are due to intense competition for planted acres among the commodities.
    Keywords: biodiesel, biofuels, cellulosic, dynamic, ethanol, general equilibrium, Monte Carlo, market.
    Date: 2008–02–21
  9. By: Feng, Hongli; Rubin, Ofir; Babcock, Bruce A.
    Abstract: Life cycle analysis (LCA) is the standard approach used to evaluate the greenhouse gas (GHG) benefits of biofuels. However, it is increasingly recognized that LCA results do not account for some impacts—including land use changes—that have important implications on GHGs. Thus, an alternative accounting system that goes beyond LCA is needed. In this paper, we contribute to the literature by laying out the basics of a system-wide accounting (SWA) method that takes into account all potential changes in GHGs resulting from biofuel expansion. We applied both LCA and SWA to assess the GHG impacts of ethanol based on Iowa corn. Growing corn in rotation with soybeans generated 35% less GHG emissions than growing corn after corn. Based on average corn production, ethanol’s GHG benefits were lower in 2007 than in 2006 because of an increase in continuous corn in 2007. When only additional corn was considered, ethanol emitted about 22% less GHGs than gasoline. Results from SWA varied with the choice of baseline and the definition of geographical boundaries. Using 2006 as a baseline and 2007 as a scenario, corn ethanol’s benefits were about 20% of the emissions of gasoline. If we expand geographical limits beyond Iowa, but assume the same emission rates for soybean production and land use changes as those in Iowa, then corn ethanol generated more GHG emissions than gasoline. These results highlight the importance of boundary definition for both LCA and SWA.
    Keywords: biofuels, corn ethanol, greenhouse gas, life cycle analysis, system-wide accounting.
    Date: 2008–02–21
  10. By: Hasan, Lubna
    Abstract: Deforestation remains one of the most intractable environmental problems of today. Pakistan also faces serious problem of depletion of its forest reserves.The general perception among planners is that over population is the primary culprit behind forest degradation. Moreover, people living close to forestlands, and using it for their needs, show an imprudent behaviour towards these forests and use it in an unsustainable manner. So there is tendency among the policy makers to find ways of keeping people away from this resource, and to strengthen government’s hold over it. This is a rather simplistic conception of the issue since most of the forests in Pakistan are state owned/managed, and responsibility for the protection/conservation of these forests rests with the state, therefore, any inquiry into the causes of forest degradation in Pakistan must analyse the state’s role in it. Putting the entire burden of deforestation on ‘other factors’ shifts attention away from more important causes (namely, failure of government to manage forests), and leads to wrong policy conclusions. This study intends to focus attention on this important factor behind deforestation - the role of state in forest degradation in Pakistan.
    Keywords: State Failures; Deforestation
    JEL: Q23 Q58
    Date: 2008–02
  11. By: Acosta Reveles, Irma Lorena
    Abstract: This article proposes a joint reading of the structural changes that are common in the Latin-American agriculture, and that operate in opposition to the labour equitable incorporation of the women in the rural zones. To observe better the process we refer to empirical information about Mexican agro. A conclusion is that nowadays the women of the rural way have more work charge. But the remuneration isn't sufficient to improve substantially their standard of living. El artículo pretende una lectura conjunta de los cambios estructurales que son comunes en la agricultura latinoamericana, y que operan en contra de la inclusión laboral equitativa de las mujeres en las zonas rurales. Para observarlo mejor recurrimos a referentes empíricos en el agro mexicano. Del análisis se desprende que hoy en día las mujeres que residen del medio rural hacen enormes esfuerzos por atender quehaceres que atañen tanto a la reproducción doméstica como a la reproducción social —en virtud de una participación más activa al mercado de trabajo—. Pero la retribución que obtienen de sus múltiples ocupaciones no resulta suficiente para que ellas y sus familias puedan mejorar sustancialmente su nivel de vida.
    Keywords: Agriculture; labour; woman; rural area
    JEL: Q1 O18 J3 O13 J16
    Date: 2008
  12. By: David E. Clark (Department of Economics, Marquette University; U.S. Department of Hoursing and Urban Development)
    Abstract: This paper develops and applies a space-based strategy for overcoming the general problem of getting at the demand for non-market goods. It focuses specifically on evaluating one form of environmental quality, distance from EPA designated environmental hazards, via the single-family housing market in the Puget Sound region of Washington State. A spatial two stage hedonic price analysis is used to: (1) estimate the marginal implicit price of distance from air release sites, hazardous waste generators, hazardous waste handlers, superfund sites, and toxic release sites; and (2) estimate a series of demand functions describing the relationship between the price of distance and the quantity consumed. The analysis, which represents a major step forward in the valuation of environmental quality, reveals that the information needed to identify second-stage demand functions is hidden right in plain site — hanging in the aether of the regional housing market.
    Keywords: Environmental Quality, Hedonic Price Analysis
    JEL: Q53 R21
    Date: 2007–02
  13. By: Rousseau Sandra (K.U.Leuven-Center for Economic Studies)
    Abstract: This model explicitly incorporates the dynamic aspects of conservation programs with incomplete compliance and it allows landholders’ behavior to change over time. A distinction is made between initial and continuing compliance. We find that incomplete and instrument-specific enforcement can have a significant impact on the choice between subsidy schemes and reserves for conservation policies. The results suggest that it is useless to design a conservation scheme for landholders, if the regulator is not prepared to explicitly back the program with a monitoring and enforcement policy. In general, the regulator will prefer to use compensation payments, if the cost of using government revenues is sufficiently low, the environmental benefits are equal, and the cost efficiency benefits exceed the (possible) increase in inspection costs. If the use of government funds is too costly, the reserve-type instruments will be socially beneficial.
    Keywords: Monitoring and enforcement; Policy instruments; Conservation policy
    Date: 2008–02

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