New Economics Papers
on Agricultural Economics
Issue of 2008‒07‒14
seventeen papers chosen by

  1. Rising food prices: What should be done? By von Braun, Joachim
  2. Physical and virtual global food reserves to protect the poor and prevent market failure: By von Braun, Joachim; Torero, Maximo
  3. The Impact of Agricultural Extension Services: The Case of Grape Production in Argentina By Pedro Cerdán-Infantes; Alessandro Maffioli; Diego Ubfal
  4. Breaking the Link between Food and Biofuels By Babcock, Bruce A.
  5. High food prices: The what, who, and how of proposed policy actions By von Braun, Joachim; Ahmed, Akhter; Asenso-Okyere, Kwadwo; Fan, Shenggen; Gulati, Ashok; Hoddinott, John; Pandya-Lorch, Rajul; Rosegrant, Mark W.; Ruel, Marie; Torero, Maximo; van Rheenen, Teunis; von Grebmer, Klaus
  6. Investing in agriculture to overcome the world food crisis and reduce poverty and hunger: By Fan, Shenggen; Rosegrant, Mark W.
  7. Reducing poverty and hunger in Asia: By Islam, Nurul ed.
  8. Land Use Issues: Resort Rural Ramifications By Peter A. Groothuis
  9. The supermarket revolution in developing countries: Policies for "competitiveness with inclusiveness" By Reardon, Thomas; Gulati, Ashok
  10. An evaluation of the impact of the Natural Forest Protection Programme on Rural Household Livelihoods By Katrina Mullan; Andreas Kontoleon; Tim Swanson; Shiqiu Zhang
  11. Preference Heterogeneity and Habit Persistence: the Case of Breakfast Cereal Consumption By Thunström, Linda
  12. Urban Growth, Uninsured Risk, and the Rural Origins of Aggregate Volatility By Steven Poelhekke
  13. The influence of cultural identity on the WTP to protect natural resources: some empirical evidence. By David Hoyos Ramos; Petr Mariel Chladkova; Javier Fernández Macho
  14. The Food-Away-from-Home Consumption Expenditure Pattern in Egypt By Fabiosa, Jacinto F.
  15. Assessing the Determinants of Local Acceptability of Wind Farm Investment: A Choice Experiment in the Greek Aegean Islands By Alexandros Dimitropoulos; Andreas Kontoleon
  16. Explaining vineyard specialization in the province of Barcelona (Spain) in the mid-19th century By Enric Tello; Marc Badia-Miro; Xavier Cusso; Ramon Garrabou; Francesc Valls
  17. The impact of ethanol plants on cropland values in the Great Plains By Jason Henderson; Brent A. Gloy

  1. By: von Braun, Joachim
    Abstract: "The sharp increase in food prices over the past couple of years has raised serious concerns about the food and nutrition situation of poor people in developing countries, about inflation, and—in some countries—about civil unrest. Real prices are still below their mid-1970s peak, but they have reached their highest point since that time. Both developing- and developed-country governments have roles to play in bringing prices under control and in helping poor people cope with higher food bills. In 2007 the food price index calculated by the Food and Agriculture Organization of the United Nations (FAO) rose by nearly 40 percent, compared with 9 percent the year before, and in the first months of 2008 prices again increased drastically. Nearly every agricultural commodity is part of this rising price trend. Since 2000—a year of low prices—the wheat price in the international market has more than tripled and maize prices have more than doubled. The price of rice jumped to unprecedented levels in March 2008. Dairy products, meat, poultry, palm oil, and cassava have also experienced price hikes. When adjusted for inflation and the dollar's decline (by reporting in euros, for example), food price increases are smaller but still dramatic, with often serious consequences for the purchasing power of the poor. National governments and international actors are taking various steps to try to minimize the effects of higher international prices for domestic prices and to mitigate impacts on particular groups. Some of these actions are likely to help stabilize and reduce food prices, whereas others may help certain groups at the expense of others or actually make food prices more volatile in the long run and seriously distort trade. What is needed is more effective and coherent action to help the most vulnerable populations cope with the drastic and immediate hikes in their food bills and to help farmers meet the rising demand for agricultural products." from Author's text
    Keywords: Food prices, Food supply, Food demand, Social protection, Agricultural research, Agricultural policy, Agricultural subsidies,
    Date: 2008
  2. By: von Braun, Joachim; Torero, Maximo
    Abstract: "The current food crisis has several causes—rising demand for food and feed, biofuels, high oil prices, climate change, stagnant agricultural productivity growth—but there is increasing evidence that the crisis is being made worse by the malfunctioning of world grain markets. Given the thinness of major markets for cereals, the restrictions on grain exports imposed by dozens of countries have resulted in additional price increases. A number of countries have adopted retail price controls, creating perverse incentives for producers. Speculative bubbles have built up, and the gap between cash and futures prices has risen, stimulating overregulation in some countries and causing some commodity exchanges in Africa and Asia to halt grain futures trading. Some food aid donors have defaulted on food aid contracts. The World Food Programme (WFP) has had difficulty getting quick access to grain for its humanitarian operations. Developing countries are urgently rebuilding their national stocks and re-examining the “merits” of self-sufficiency policies for food security despite high costs. These reactions began as consequences, not causes, of the price crisis, but they exacerbate the crisis and increase the risks posed by high prices. By creating a feedback loop with high food prices, they further increase price levels and volatility, with adverse consequences for the poor and for long-term incentives for agricultural production. Because they impede the free flow of food to where it is most needed and undermine the flow of price signals to farmers, these market failures impose enormous efficiency losses on the global food system, hitting the poorest countries and people hardest." from Author's text
    Keywords: Food prices, Food policy, Markets,
    Date: 2008
  3. By: Pedro Cerdán-Infantes (Office of Evaluation and Oversight at the Interamerican Development Bank.); Alessandro Maffioli (Office of Evaluation and Oversight at the Interamerican Development Bank.); Diego Ubfal (Department of Economics, University of California at Los Angeles.)
    Abstract: In this paper we evaluate the impact of the provision of agricultural extension services to grape producers in Mendoza, Argentina, on yield and grape quality. Using fixed effects and matching techniques, we show that despite non-significant average treatment effects on yield, the program has large positive effects on productivity for producers who were in the bottom of the productivity distribution before launching of the program. There is also evidence of increased quality of their grapes, especially for large producers and those in the middle of the yield distribution ex-ante. However, large groups of producers did not see impact on yields or quality. Consistent with a previous qualitative evaluation of the program, these results point to the need to balance flexibility of the program with effective targeting mechanisms. Producers with different characteristics, such as land size, productivity or structure of production seek different objectives and have different needs, so that targeting these types of programs effectively to the different needs of producers would increase their effectiveness.
    Keywords: Technology Adoption, Productivity, Agriculture Sector, Policy Evaluation
    JEL: Q12 Q16 H43
    Date: 2008–06
  4. By: Babcock, Bruce A.
    Abstract: Production of biofuels from feedstocks that are diverted from food production or that are grown on land that could grow crops has two important drawbacks: higher food prices and decreased reduction in greenhouse gas emissions. If U.S. policy were to change and place greater emphasis on food prices and greenhouse gas reductions, then we would transition away from current feedstocks toward those that do not reduce our ability to produce food. Examples of such feedstocks include crop residues, algae, municipal waste, jatropha grown on degraded land, and by-products of edible oil production. Policy options that would encourage use of these alternative feedstocks include placing a hard cap on ethanol and biodiesel production that comes from corn and refined vegetable oil, thereby forcing growth in biofuel production to come from alternative feedstocks; differentiation of tax credits and subsidies so that the alternative feedstocks receive a higher incentive than do corn and refined vegetable oil; and greatly increased funding for research to hasten the feasibility of producing and refining alternative feedstocks.
    Keywords: biofuels, feedstocks, food prices, policy.
    Date: 2008–07–08
  5. By: von Braun, Joachim; Ahmed, Akhter; Asenso-Okyere, Kwadwo; Fan, Shenggen; Gulati, Ashok; Hoddinott, John; Pandya-Lorch, Rajul; Rosegrant, Mark W.; Ruel, Marie; Torero, Maximo; van Rheenen, Teunis; von Grebmer, Klaus
    Abstract: "The complex causes of the current food and agriculture crisis require a comprehensive response. In view of the urgency of assisting people and countries in need, the first set of policy actions— an emergency package—consists of steps that can yield immediate impact: 1. expand emergency responses and humanitarian assistance to food-insecure people and people threatening government legitimacy, 2. eliminate agricultural export bans and export restrictions, 3. undertake fast-impact food production programs in key areas, and 4. change biofuel policies. A second set of actions—a resilience package—consists of the following steps: 5. calm markets with the use of market-oriented regulation of speculation, shared public grain stocks, strengthened food-import financing, and reliable food aid; 6. invest in social protection; 7. scale up investments for sustained agricultural growth; and 8. complete the Doha Round of World Trade Organization (WTO) negotiations. Investment in these actions calls for additional resources. Policymakers should consider mobilizing resources from four sources: the winners from the commodity boom among countries; the community of traditional and new donor countries; direct or indirect progressive taxation and reallocation of public expenditures in the affected countries themselves; and mobilization of private sector finance, including through improved outreach of banking to agriculture. Because of countries' diverse situations, the design of programs must be country driven and country owned. Accountability for sound implementation must also rest with countries. At the same time, a new international architecture for the governance of agriculture, food, and nutrition is needed to effectively implement the initiatives described, and especially their international public goods components. Global and national action is needed, through existing mechanisms, well-coordinated special initiatives, and possibly a special fund." from Text
    Keywords: Food prices, Food supply, Food demand, Social protection, Agricultural research, Agricultural policy, Agricultural subsidies,
    Date: 2008
  6. By: Fan, Shenggen; Rosegrant, Mark W.
    Abstract: "In many parts of the world, increased agricultural growth will play a key role in addressing the current world food crisis, in contributing to overall economic growth, and in helping to achieve the first Millennium Development Goal of halving the proportion of poor and hungry people by 2015 (MDG1). The challenge of meeting MDG1 under the current circumstances is considerable, especially in Sub-Saharan Africa (SSA). Of the means used to promote agricultural growth, sound government spending can be one of the most direct and effective. This brief presents ranges of estimates of the costs involved using two different approaches. There have been numerous attempts to estimate the costs of achieving MDG1, mostly at the global or regional level, including the United Nations' Zedillo Report and studies by the World Bank and the United Nations Development Programme. These estimates have varied widely, mostly because of different methodologies, assumptions, coverage, measures, and interpretations. The two primary methodologies used in these studies have involved unit costs and growth-poverty elasticities (determining the extent to which poverty declines as growth increases). There has been no consistent basis of analysis for the first method, and studies using the second have been limited by data availability. We have attempted to address some of these issues by providing improved, research-based estimates of the global and regional investments required to achieve MDG1. Because this is a complex issue and each of the approaches mentioned above has distinct merits, we have decided to produce estimates based on both approaches to provide a fuller picture. Expanding on the two approaches, we also present estimates of the costs of financing the inputs required for accelerating agricultural production in SSA." from Author's text
    Keywords: Food prices, Millennium Development Goals, Agricultural growth, Poverty reduction, Agricultural Investment,
    Date: 2008
  7. By: Islam, Nurul ed.
    Abstract: Investment Priorities for Economic Growth and Poverty Reduction in Asia Shenggen Fan, Joanna Brzeska, and Ghada Shields
    Keywords: Agricultural development, Rural development, Hunger, Poverty reduction, economic growth, Agricultural policy, Technology transfer, infrastructure, Decentralization, rural areas, Millennium Development Goals, Sustainable development, Climate change,
    Date: 2008
  8. By: Peter A. Groothuis
    Abstract: Migration causes changes to land use patterns in rural areas with environmental amenities. Newcomers’ preferences differ from long term residents. Conflicts sometimes arise. To explore land use issues among various groups, a survey of opinions on mountain views was developed and administered to Watauga County residents in the western North Carolina. It is found that individuals who retire to the mountain are most interested in mountain-view amenities, while individuals who have ancestors from the county are most concerned with maintaining the status quo in regards to mountain views. These preferences lead to agreement on some land use issues and disagreements on others. Key Words: stable coalitions, self-enforcing agreements, compliance, enforcement, public goods
    Keywords: Scenic Amenities, Contingent Valuation, Land Use, Wind Energy, Billboards
    Date: 2008
  9. By: Reardon, Thomas; Gulati, Ashok
    Abstract: "A “supermarket revolution” has been underway in developing countries since the early 1990s. Supermarkets (here referring to all modern retail, which includes chain stores of various formats such as supermarkets, hypermarkets, and convenience and neighborhood stores) have now gone well beyond the initial upper- and middle-class clientele in many countries to reach the mass market. Within the food system, the effects of this trend touch not only traditional retailers, but also the wholesale, processing, and farm sectors. The supermarket revolution is a “two-edged sword.” On the one hand, it can lower food prices for consumers and create opportunities for farmers and processors to gain access to quality-differentiated food markets and raise incomes. On the other hand, it can create challenges for small retailers, farmers, and processors who are not equipped to meet the new competition and requirements from supermarkets. Developing-country governments can put in place a number of policies to help both traditional retailers and small farmers pursue “competitiveness with inclusiveness” in the era of the supermarket revolution. Some countries are already taking such steps, and their experiences offer lessons for others." from Author's text
    Keywords: Supermarkets, Wholesalers, Modern retail, Small farmers, Traditional retail, Supply chains, Competitiveness, Inclusiveness,
    Date: 2008
  10. By: Katrina Mullan (University of Cambridge, Department of Land Economy); Andreas Kontoleon (University of Cambridge, Department of Land Economy); Tim Swanson (University College London, Department Economics and School of Laws); Shiqiu Zhang (Peking University, College of Environmental Sciences)
    Abstract: In this paper, we estimate the impact on local household livelihoods of the Natural Forest Protection Programme (NFPP), the largest logging ban programme in the world that aims to protect watershed and conserve natural forests. In doing so we use a series of policy evaluation micro-econometric techniques to assess the impacts of the NFPP on two interrelated facets of household livelihoods, namely income and off farm labour supply. We find that the NFPP has had a negative impact on incomes from timber harvesting but has actually had a positive impact on total household incomes from all sources. Further, we find that off farm labour supply has increased more rapidly in NFPP areas than non-NFPP areas. This result is strongest for employment outside the village. On the basis of these results policy implications for household livelihoods are drawn.
    Keywords: Natural Forest Protection Programme, policy evaluation, difference in differences, propensity score matching, China, income impacts, off farm labour
    Date: 2008
  11. By: Thunström, Linda (Department of Economics)
    Abstract: This paper estimates the strength and heterogeneity across households in state dependence associated with breakfast cereal consumption, where positive state dependence implies habit persistence and negative state dependence implies variety-seeking in consumption. The analysis relies on a discrete choice model and finds that breakfast cereal consumption is generally highly habitual, but the degree of habit persistence exhibits heterogeneity across households. In addition, some households can be characterized as variety-seeking. The strength of habit persistence is similar across income and educational groups. The strength of habit persistence seems to be weaker for households with several adults and children compared to one-adult-households.
    Keywords: consumer choice; habit persistence; food consumption; preference heterogeneity
    JEL: C35 D12
    Date: 2008–07–07
  12. By: Steven Poelhekke
    Abstract: The level of urbanization has increased by over 5 percentage points per decade outside the developed world since 1960. Rapid urbanization was accompanied by fast economic growth and job creation in most parts of the world. However, notably Africa (and Latin America after 1980) has had a different experience: while growth in GDP per capita slowed significantly or even reversed, the rate of urbanization continued its fast pace. This paper aims to explain this by introducing an aggregate risk differential between the countryside and the city. Uninsurable expected risk will lead to rural-urban migration as a form of ex-ante insurance if households are liquidity constrained in incomplete markets and cannot overcome adverse shocks. Macroeconomic volatility finds its origins in risk-prone natural resource production including agriculture and has a robust positive effect on urban growth, especially when economic growth is slow. The effect stands up to the transitional view on urbanization of economies shifting from an agricultural to an industrial base.
    Keywords: urbanization, risk, natural resources, volatility, rural-urban migration
    JEL: O1 R11 R23 R51 D81
    Date: 2008
  13. By: David Hoyos Ramos (Unidad de Economía Ambiental, Instituto de Economía Pública); Petr Mariel Chladkova (Departamento de Economía Aplicada III); Javier Fernández Macho (Departamento de Economía Aplicada III)
    Abstract: This paper shows that cultural identity may have considerable influence on the WTP to protect natural resources. The Basque Country, the region with the highest ethnic homogeneity in Europe, serves as an example to illustrate how important this issue can be in the environmental valuation of natural resources. The rationale for this influence may be found in the deep roots of the Basque culture, a culture where amalurra (mother Earth), i.e. the natural environment, has a central role, as studies from diverse disciplines such as anthropology, psychology and political science have shown. Simulated full distribution of the WTP to protect a Basque natural area using a random parameter logit model reveals that mean marginal WTP to protect its environmental attributes is approximately 60% higher if the cultural identity of the respondent is Basque. To our knowledge, this is the first application to show the influence of cultural identity on the WTP to protect natural resources. Our findings have some methodological and policy implications. On the one hand, failure to take into account cultural identitary issues could result in significantly biased results in benefit transfer applications. On the other hand, policies aimed at conservation natural resources should consider the cultural context in which they will be implemented.
    Keywords: choice modelling; willigness to pay; valuation; identity
    JEL: Q51
    Date: 2008–07–03
  14. By: Fabiosa, Jacinto F.
    Abstract: This study characterizes the household food-away-from-home (FAFH) expenditure pattern in Egypt. Specifically, a standard Tobit model was estimated to quantify the responsiveness of Egyptian household FAFH expenditures to changes in their income and selected household demographic characteristics. We found that the proportion of households with a positive FAFH expenditure is small, at 36% to 38% of the total number of households. These households spent 5% to 8% of their total expenditure on FAFH. Households that are located in urban areas, with more family members, and whose household head is young and male had generally higher levels of FAFH expenditure. The estimated conditional income elasticity is only 0.02, and the unconditional income elasticity is 0.52, suggesting that most of the growth in this sector will be driven by new households participating for the first time in FAFH expenditures. These elasticity estimates are relatively low when compared to those of other countries. However, preliminary estimates from more recent data seem to suggest a higher income elasticity, which is consistent with the expansion of the sector of hotels, restaurants, and other institutions in Egypt.
    Keywords: conditional and unconditional elasticity, demand, Egypt, food away from home, HRI (hotels, restaurants, and other institutions).
    Date: 2008–07–08
  15. By: Alexandros Dimitropoulos (Institute of Energy for South-East Europe, Athens, Greece); Andreas Kontoleon (University of Cambridge, Department of Land Economy)
    Abstract: This paper aims at analysing the factors which motivate communities to resist the installation of wind farms in their vicinity. To this end, the choice experiment methodology was employed in communities in two Greek Aegean Islands to assess the determinants of preferences towards different wind farm projects. Unlike other studies the willingness to accept welfare measure was adopted. The results of our analysis show that the conservation status of the area where the wind farms are to be installed, along with the governance characteristics of the planning procedure are the most important determinants of local community welfare in relation to wind farms. In contrast to other studies, we find that the physical attributes of wind farms appear to be of less relative importance from a local community welfare point of view. Implications for the EU’s future energy policy are drawn
    Keywords: wind farms; local acceptability; willingness to accept
    Date: 2008
  16. By: Enric Tello; Marc Badia-Miro; Xavier Cusso; Ramon Garrabou; Francesc Valls (Universitat de Barcelona)
    Abstract: We present a statistical model of agrarian vineyard specialization in the province of Barcelona towards 1860, that combines the Boserupian push of population increase, the demand pull of a Smithian-type of growth (measured by the time-distances to the nearest seaport), and the agrological lands suitability for sowing grain or growing vines (as measured by water stress, slopes and frost risk). The overall outcome of the adjusted R2 levels, which range from 0.608 to 0.826, can be considered very successful. The inequality in land ownership is another factor that we believe to have played an important role, but has had to be omitted for the moment due to the lack of statistical data. Further research is also needed to deal with a possible endogeneity problem that working with socio-demographic variables entails.
    Keywords: wine international market integration, regional land-use patterns, vineyard specialization, population pressure, agrological suitability
    JEL: N74 R14 O13 Q56 N53 O18 Q15 Q17 Q13 R12
    Date: 2008
  17. By: Jason Henderson; Brent A. Gloy
    Date: 2008

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