New Economics Papers
on Agricultural Economics
Issue of 2008‒09‒29
fourteen papers chosen by

  1. Horticulture Exports, Agro-industrialization and Farm-nonfarm Linkages with the Smallholder Farm Sector: Evidence from Senegal By Miet Maertens
  2. Empowering Women Through Livelihoods Orientated Agricultural Service Provision: A Consideration of Evidence from Creation-date: 2008 By Charman, A.J.E.
  3. Multinational supermarket chains in developing countries: Does local agriculture benefit By Hildegunn Ekroll Stokke
  4. Impact of Bt Cotton on the Farmer’s Livelihood System in China By Guiyan Wang; Yuhong Wu; Wangsheng Gao; Michel Fok; Weili Liang
  5. Globalization and Smallholders: The Adoption, Diffusion, and Welfare Impact of Non-traditional Export Crops in Creation-date: 2008 By Carletto, Calogero; Kirk, Angeli; Winters, Paul; Davis, Benjamin
  6. Vulnerability, Trust and Microcredit: The Case of China?s Rural Poor By Turvey, Calum G.; Kong, Rong
  7. Asset-Based Poverty in Rural Tajikistan: Who Climbs out and Who Falls in? By Ivaschenko, Oleksiy; Mete, Cem
  8. How will climate change shift agro-ecological zones and impact African agriculture ? By Kurukulasuriya, Pradeep; Mendelsohn, Robert
  9. The Political Economy of the 2003 Reform of the Common Agricultural Policy By Johan F.M. Swinnen
  10. Cotton policy in SSA: a matter of institutional arrangements related to farmers' constraints By Michel Fok
  11. A Tale of Two Countries: Spatial and Temporal Patterns of Rice Productivity in China and Brazil By You, Liangzhi
  12. State and market interaction: cotton variety and seed market development in China By Michel Fok; Naiyin Xu
  13. Economic Performace in Rural England By Nigel Curry; Don Webber
  14. Seemingly competitive food retail regulations : who do they really help ? By Larue, B.; Bonroy, O.

  1. By: Miet Maertens
    Abstract: In this paper we address the question of farm-nonfarm linkages at the household level for a case-study in Senegal. We examine whether increasing off-farm employment opportunities for rural households – resulting from increased horticulture exports and associated agro-industrialization – has benefitted the smallholder farm sector through investment linkages. We use data from a household survey in the main horticulture export region in Senegal. We find that access to unskilled employment in the export agro-industry has contributed to alleviation farmers’ liquidity constraints, resulting in increased smallholder agricultural production.
    Keywords: farm-nonfarm linkages, agri-food exports, smallholder farming, rural development
    JEL: J23 O12 Q12 Q17
    Date: 2008
  2. By: Charman, A.J.E.
    Abstract: The paper considers the impact of livelihoods oriented agricultural service provision for smallholder farmers on gender relationships and food security. The paper contents that the democratization and liberalization of agricultural services towards participatory, bottom-up approaches, from the early 1990s has brought favourable gender gains to women. The paper examines the background to this shift in agricultural service provision. The resulting gender gains, we argue, should be seen in terms of Sen?s notion of entitlements. We examine evidence of these gains from developments and cases in Malawi and Zambia and draw supporting evidence from Zimbabwe and South Africa. ...
    Keywords: gender empowerment, food security, sustainable livelihoods, rural development
  3. By: Hildegunn Ekroll Stokke (Department of Economics, Norwegian University of Science and Technology)
    Abstract: There is no consensus in the empirical literature on how entry of multinational supermarket chains affects farmers in developing countries. We quantify the dynamic effects of supermarket expansion on agriculture within a structural framework that clarifies the adjustment mechanisms involved. The model specification takes the potential productivity linkage between supermarkets and local suppliers into account. While econometric analyses struggle with causality issues, we analyze the endogenous interaction between supermarkets’ choice of suppliers and agricultural productivity. Based on numerical simulations, two results emerge. First, we offer a possible understanding of the conflicting evidence in the empirical literature. Whether farmers benefit from supermarkets or get stuck in a low productivity trap depends on the extent of local constraints related to production capacity and market access. Second, supply chain development initiated by supermarkets can help farmers escape the low productivity trap. While supermarkets face a short run cost, they gradually gain from more productive local suppliers.
    Date: 2008–09–08
  4. By: Guiyan Wang (HEBAU-DA - Department of Agronomy of HEBAU - Hebei Agricultural University); Yuhong Wu (HEBAU-DA - Department of Agronomy of HEBAU - Hebei Agricultural University); Wangsheng Gao (HEBAU-DA - Department of Agronomy of HEBAU - Hebei Agricultural University); Michel Fok (Annual crop systems - CIRAD : UPR102); Weili Liang (HEBAU-DA - Department of Agronomy of HEBAU - Hebei Agricultural University)
    Abstract: In order to analyze the impacts of Bt cotton on the farmers’ livelihood system, we interviewed 169 farmers and extension personnel in the main cotton production areas in Hebei province in the year 2002 and 2003. An integrative method was used in which a multidisciplinary approach was employed including agronomy, economics and sociology. The results showed that the application of Bt cotton increased the cotton growing area as well as farmers' income. For 67% of the farmers interviewed, cotton area has been continuously increasing since 1997. The cotton net margin in one cropping cycle came out to be higher than the combined net margins of wheat and corn in two cropping cycles. The income from cotton played a significant role in the investment to education, leisure and health care. The socio-economic impacts of cotton production are nevertheless not yet optimal because there were still many factors limiting them. Lack of labor and land were the main limiting factors. Productivity is restrained by the high price of Bt cotton seeds which pushed farmers to keep seeds from their own cotton production (42% of the farmers in 2002 and 2003). Farmers are still lacking technical command in using Bt-cotton: 78% of the farmers admitted that while more than 94% of the farmers complained not getting information from local extension and technical services. More success in using Bt-cotton calls upon going beyond providing seeds and asks for continuous assistance from research and extension department, notably to achieve a full knowledge of the Bt-cotton characteristic so as to optimally integrate it into the farmers’ system.
    Keywords: China; Bt Cotton; biotechnologies; impact evaluation; Livelihood
    Date: 2008–05–14
  5. By: Carletto, Calogero; Kirk, Angeli; Winters, Paul; Davis, Benjamin
    Abstract: This paper uses a duration analysis based on adoption data spanning over 25 years from six communities in the Central Highlands of Guatemala to explore how household characteristics and external trends play into both the adoption and diffusion processes of non-traditional exports among smallholders. Adoption was initially widespread and rapid, which led NTX to be hailed as a pro-poor success, reaching all but the smallest landholders. However, over time more than two-thirds of the adopters eventually dropped out from NTX production. Based on the analysis, NTX production appeared to have delivered less prosperity to adopters than initially promised. While smallholders may be enticed into entering into NTX markets when conditions are favourable, they may lack the capacity to overcome difficulties that inevitably arise in complex types of cultivations and in highly variable global agricultural markets. Governmental and non-governmental organizations can attempt to mitigate these difficulties, but market forces may overwhelm these efforts, with some adopters still unable to compete in global markets.
    Keywords: globalization, land, smallholders, non-traditional exports
  6. By: Turvey, Calum G.; Kong, Rong
    Abstract: This paper investigates the economic conditions of rural households in China. Historical survey data indicate that over 80 per cent of rural households earn less than 4,500 yuan in net disposable income each year, that for the vast majority of rural households disposable income is insufficient to meet food consumption needs, and that in terms of economic growth rural households are receiving an ever decreasing percentage of China?s growing economy with rural household incomes being only 31 per cent of urban household income in 2004. To reduce vulnerability and food insecurity, this paper investigates the role of microcredit in China. It is argued that in China the conventional wisdom is to provide credit using traditional means, but we provide a model that shows how a microcredit market based on trust can co-exist with a commercial collateral-based market. This model is developed in detail and certain propositions are supported using dominant strategies in a trust-honour game based on the prisoner?s dilemma. The theoretical model is then applied to the case of microlending in China. It explains why, in the absence of trust, rural credit corporations do not make loans to the very poor. Furthermore, the model explains how Central party policies on rural credit can actually crowd out micro finance institution (MFI) and NGO microlending in China, and also explains why moneylenders dominate in many of the poorer regions of the country. From a policy point of view, the theoretical model indicates that trust-based lending, coupled with certain incentives, can go far in supporting growth opportunities in rural China. It is argued that Chinese policy should be flexible enough to permit trust-based microlending to the poor, regardless of how counterintuitive this must appear to the conventional wisdom. Indeed, in the absence of flexible credit strategies, China?s rural poor will remain in a persistent food-insecure poverty gap.
    Keywords: equilibrium, game theory, rural, credit, China
    Date: 2008
  7. By: Ivaschenko, Oleksiy; Mete, Cem
    Abstract: Tajikistan?s rural sector has witnessed substantial development since the country began to emerge from civil conflict in 1999. Gross agricultural output increased 64 per cent from 1999 to 2003, and there were significant developments in the agricultural reform agenda. This paper uses the panel component of two surveys conducted in Tajikistan at a one-year interval (2003 and 2004) to explore the major determinants of the transition out of/into poverty of rural households. Poverty status is measured in the asset space, thus indicating structural rather than transitory poverty movements. The empirical analysis reveals several interesting findings that are also important from a policy perspective: first, cotton farming seems to have no positive impact on poverty levels, nor on mobility out of poverty. Second, the rate of increase in the share of private farming at the district level had little impact on poverty levels and poverty mobility. Third, there is strong evidence of geographic poverty mobility traps in Tajikistan. Higher levels of poverty in a district appear to reduce significantly the chance of a household shedding poverty. Living in a region with overall slow economic growth is also found to undermine the odds of exiting poverty and to increase the risk of falling into poverty. Finally, several key household-level factors, such as the share of adults, education level, health status and participation in wage employment, also emerge as significant predictors of poverty mobility.
    Keywords: welfare, poverty, Tajikistan
    Date: 2008
  8. By: Kurukulasuriya, Pradeep; Mendelsohn, Robert
    Abstract: The study develops a new method to measure the impacts of climate change on agriculture called the Agro-Ecological Zone (AEZ) Model. A multinomial logit is estimated to predict the probability of each AEZ in each district. The average percentage of cropland and average crop net revenue are calculated for each AEZ. Then an estimate of the amount of cropland in Africa and where it is located is provided. Using current conditions, the model calculates baseline values of cropland and crop net revenue, and estimates the future impact of climate change using two scenarios-harsh and mild. Total cropland does not change much across the two climate scenarios. However, the predicted change in African crop revenue ranges from a loss of 14 percent in the mild climate scenario to 30 percent in the harsher climate scenario. The analysis reveals that the greatest harm from climate change is that it will shift farms from high to low productive AEZs. The approach not only identifies the aggregate impacts, but also indicates where the impacts occur across Africa. The central region of Africa is hurt the most, especially in the harsher climate scenario. The Agro-Ecological Zone Model is a promising new method for valuing the long-term impacts of climate change on agriculture.
    Keywords: Climate Change,Common Property Resource Development,Forestry,Crops&Crop Management Systems,Global Environment Facility
    Date: 2008–09–01
  9. By: Johan F.M. Swinnen
    Abstract: The 2003 reform of the European Union’s Common Agricultural Policy (CAP) under Commissioner Fischler was the most radical in the history of the CAP. This paper analyzes the causes and constraints of the reform. The paper argues that an unusual combination of pro-reform factors came together in the first years of the 21st century, making this reform possible.
    Date: 2008
  10. By: Michel Fok (Annual crop systems - CIRAD : UPR102)
    Abstract: Cotton production in the Francophone African Countries (FACs) derives exclusively from smallholders whose holding size is less than 5 ha on average. From the 1990s, the FACs are globally ranking third to second in exporting cotton to the world market. Such an achievement could be regarded as the result of an institutional construction which took place for four decades in dealing with the smallholders' constraints and concerns. Since the mid-1990s, the FACs are engaged into processes of privatization/liberalization, at distinct modalities, within the implementation of globalization-oriented policies. Drastic changes are now observed in pricing mechanisms, provision of inputs and credit to farmers...etc. These changes imply modifications in the responsibilities sharing between stakeholders, with modalities which are implying sometimes disharmony and uncertainty within the sector. This is an illustration of the construction-feature of new institutional arrangements which can hardly be automatically acceptable to all. The paper provides an analysis of the institutional construction in dealing with few major constraints or concerns faced by the smallholders in the FACs.
    Keywords: Globalization; institutional arrangement; liberalization; cotton; history
    Date: 2008–05–14
  11. By: You, Liangzhi
    Abstract: This paper looks at differences in spatial and temporal variation of rice yields in China and Brazil. We find that rice yields in China have converged over time and that rice production has become more and more homogeneous. In contrast, rice yields in Brazil have diverged over time, primarily due to variations in upland rice yields. Three hypotheses are put forward to explain the different behaviour of rice yields in Brazil and China: (i) differences in production systems (i.e., irrigated in China versus upland in Brazil); (ii) changes in rainfall patterns and (iii) bias in agricultural R&D favouring irrigated rice. Our empirical analysis provides support to the first two hypotheses by establishing that upland rice is subjected to much greater variation in yields than irrigated rice and that changing rainfall patterns affect mostly upland rice. We also provide evidence of the bias towards irrigated systems by looking at the patterns of varietal release.
    Keywords: rice productivity, spatial convergence, technology spillover, China, Brazil
    Date: 2008
  12. By: Michel Fok (Annual crop systems - CIRAD : UPR102); Naiyin Xu (RIIC - Research Institute of Industrial Crops - Jiangsu Academy of Agricultural Sciences)
    Abstract: China is ranking first in cotton production for more than 20 years. The adoption of GM cotton, since 1997, through the marketing of many varieties, has enabled it to maintain its rank by overcoming the pest resistance to insecticide. The varietal contribution has resulted from a radical change in the legal framework to enhance the variety and seed markets. Nevertheless, today, all cotton sector stakeholders do recognize that there is a big issue of excessive competition from a great number of varieties leading to variety and seed mixture. This situation has led the Chinese Government to decide on a new support policy called "quality seed subsidy policy". The Chinese policy in the areas of varieties and seeds hence is providing an interesting case of interaction between policy and market within less than twenty years.Our paper is a contribution to analyse the cotton variety and seed market development of the last twenty years by focussing on the interaction between State intervention and market. A change in the cotton policy, consisting of liberalizing the variety and seed markets, could prove to be quite successful where the capacities for breeding and investment exist prior to the policy change. This success nevertheless will remain a short term one if no regulation is provided to prevent the market development from excessive and unfair competition. The case analysed is a good illustration of the shortfalls of unregulated competition. It is however ineffective to regulate by imposing what farmers should use. Such a direct intervention in the market is showing undesired effects on the viability of seed companies.
    Keywords: China; cotton; Bt; seed market; property right; variety; regulation; competition
    Date: 2008–05–14
  13. By: Nigel Curry (Countryside and Community Research Institute, Cheltenham); Don Webber (School of Economics, University of the West of England, Bristol)
    Abstract: English economic policy requires different levels of government to pursue incommensurate, urban-centric, objectives. Rural areas are characterised by ‘softer’ development approaches centring on relocalisation. Measuring rural economic performance is obscured by the simultaneous use of two spatial platforms: the ‘city-region’ and the ‘rural definition’. The characteristics of these spatial platforms for measuring rural economic performance are explored through plant level productivity data. In general, English rural districts are less productive but particularly where they are both lagging and fall outside city regions. The city-region platform makes the rural productivity performance look worse than it really is but since 2000, rural districts have not been charged with pursuing productivity objectives anyway.
    Keywords: Rural economic policy; productivity; skills; industrial structure
    JEL: R3 O18
    Date: 2008–08
  14. By: Larue, B.; Bonroy, O.
    Abstract: The food distribution and retail sectors in Quebec are highly concentrated and integrated as large food distributors are also involved in food retailing. As such, they are competing with small grocery and convenience stores they sell inputs to. A review of the industry suggests that there are important economies of size in distribution, but that smaller stores offering convenience face a more inelastic demand. Concerns over the survival of smaller stores in Quebec have motivated two types of regulations. The first type aims at reducing the cost advantage of dominant retailers by restricting the number of employees that they are allowed to use during specific time periods. The second type restricts retail prices. We develop a simple model capturing the main features of the industry to ascertain the impact of these regulations on retail and wholesale prices. Our results suggest that these regulations reduce welfare and may induce both tighter margins and lower surplus for small retailers.
    JEL: L22
    Date: 2008

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