New Economics Papers
on Agricultural Economics
Issue of 2009‒01‒17
twenty papers chosen by

  1. The World Food Crisis: Causes and Implications for Ontario Agriculture By Weersink, Alfons; Hailu, Getu; Fox, Glenn; Meilke, Karl; von Massow, Mike
  2. Optimal Risk Sharing Under Limited Commitment: Evidence From Rural Vietnam By Eozenou, Patrick
  3. Empirical Assessment of Nigeria’s Agricultural Export and Economic Welfare By Nwachukwu, Ifeanyi/ N; Ehumadu, Felix/C; Mejeha, Remy/C; Nwaru, Jude/C; Agwu, Nnanna/Mba; Onwumere, Joe
  4. Social Impact of Coffee Crisis on the Pasemah coffee farmers in South Sumatera By Aloysius Gunadi, Brata
  5. Agricultural strategy development in West Africa: The false promise of participation? By Resnick, Danielle; Birner, Regina
  6. Local impacts of a global crisis: Food price transmission and poverty impacts in Ghana By Cudjoe, Godsway; Breisinger, Clemens; Diao, Xinshen
  7. Agricultural Trade Reform and Poverty in the Asia-Pacific: A Survey and Some New Results By John Gilbert
  8. Farmland Ownership and Tenure in Iowa, 2007 By Duffy, Michael; Smith, Darnell
  9. On the Role of Policy Interventions in Structural Change and Economic Development: The Case of Postwar Japan By Julen ESTEBAN-PRETEL; SAWADA Yasuyuki
  10. Removing Barriers to Facilitate Efficient Water Markets in the Murray Darling Basin – A Case Study from Australia By M Ejaz Qureshi; Tian Shi; Sumaira Qureshi; Wendy Proctor; Mac Kirby
  11. Climate variability and maize yield in South Africa: Results from GME and MELE methods By Akpalu, Wisdom; Hassan, Rashid M.; Ringler, Claudia
  12. Measuring Consumer Preferences and Estimating Demand Systems. By William Barnett; Apostolos Serletis
  13. Estimation of a Censored Demand System in Stratified Sampling: An Analysis of Mexican Meat Demand at the Table Cut Level. By Lopez, Jose A.; Malaga, Jaime E.
  14. Nutritional Contributions of Nonalcoholic Beverages to the U.S. Diet: 1998-2003 By Dharmasena, Senarath; Capps Jr., Oral; Clauson, Annette
  15. The last of the American ag economists By Epperson, J.E.
  16. Linkage of Tradable Permit Systems in International Climate Policy Architecture By Robert N. Stavins; Judson Jaffe
  17. Environmental Kuznets curves for carbon emissions: A critical survey By Aslanidis Nektarios
  18. Enforcement and Environmental Quality in a Decentralized Emission Trading System By Edilio Valentini; Edilio Valentini
  19. Re-thinking on the role of business in biodiversity conservation By Barna, Cristina
  20. Has the "Farm Problem" Disappeared? A Comparison of Household and Self-Employment Income Levels of the Farm and Nonfarm Self-Employed By Peake, Whitney O.; Marshall, Maria I.

  1. By: Weersink, Alfons; Hailu, Getu; Fox, Glenn; Meilke, Karl; von Massow, Mike
    Abstract: The upheaval in the global food market involving the dramatic increases in crop prices and riots prompted by unaffordable food to many of the world’ s poorest has placed agriculture back in the public eye. Questions are being raised surrounding what has happened, why, and what can be done. This report has provided an overview of the food crisis and its potential impact on agri-food sector in Ontario. The boom in crop prices is primarily related to demand side factors rather than a supply-side shock from a production shortfall that were behind previous price spikes. There have been some supply side shifts: weather-related shortfalls occurred in the last two crop years, especially for wheat, yield increases are falling due to lagging research and development, and some countries implemented export restrictions. However, the primary push upward is due to structural shifts in demand from growing economies and biofuels (which will continue to grow albeit limited to some extent by the rising prices). Speculative activity has likely contributed to the sudden nature of the increase in price and to a bubble at the top of the market, but does not alter the fundamental demand and supply trends that have created the declining stocks. Supply cannot adjust immediately due to the annual nature of crop production, so stock levels will continue to be under pressure and crop prices supported for the next several years. The effect of higher crop prices on food prices depends on the share of the food dollar going to the farmer and the share of disposable income spent on food. These shares are large for poor households in developing countries but small for most Canadian consumers. There is a distinction between crop price and food price in Canada. Consequently, domestic food inflation will not be driven by rising crop prices but rather pushed be energy prices which will drive general price inflation.
    Keywords: food prices, crop prices, stock levels, Agricultural and Food Policy, International Development,
    Date: 2008–08
  2. By: Eozenou, Patrick
    Abstract: We use panel data from a household survey conducted in Vietnam to analyze the effectiveness of informal risk sharing arrangements in protecting household consumption from idiosyncratic income shocks. We focus on the effects of reported harvest shocks and of estimated shocks to agricultural revenues on adult equivalent consumption. The full-insurance allocation is tested against a specified alternative under which contracts are not fully enforceable ex-post. We find that farmers hit by unfavorable events stabilize their consumption level below the village aggregate level, irrespective of the level of realized shocks. At the same time, farmers experiencing more favorable shocks enjoy higher consumption in proportion to the realized value of idiosyncratic shocks. Together, these finding are consistent with a simple 2-period model of optimal risk sharing with one-sided limited commitment. These results hold for total consumption and for non-durable consumption. We also find however some evidence supporting the full insurance hypothesis for food consumption.
    Keywords: Consumption; Risk-sharing; Informal Insurance;Vietnam
    JEL: O1 I3 D8
    Date: 2008–09
  3. By: Nwachukwu, Ifeanyi/ N; Ehumadu, Felix/C; Mejeha, Remy/C; Nwaru, Jude/C; Agwu, Nnanna/Mba; Onwumere, Joe
    Abstract: This paper assessed empirically Nigeria’s agricultural export and economic welfare. Data used for the study were obtained from secondary sources, bulk of which was collected from institutional and national databases over 1990-2005 and were analyzed using multiple regression and growth rate analysis. The results showed that agricultural output, inflation, subsidy, exchange rate, food import and export were statistically significant at various risk levels and have major implications on the economic welfare of Nigeria. Economic welfare was found to have grown at rate of 2.9% over the period and would be expected to reach N20, 480.64 million in 2010. The study suggested that Nigerian government should adopt appropriate monetary policies to ensure stability in the foreign exchange market in view of the bizarre implications of fluctuations on economic welfare.
    Keywords: economic; agricultural exports; welfare; empirical; assessment
    JEL: B22
    Date: 2008–11–10
  4. By: Aloysius Gunadi, Brata
    Abstract: In the last two decades, the world price of coffee has fallen significantly. The crisis has suffered millions of small coffee farmers in developing countries. However, in contrast to Latin America and Africa, studies on the impact of recent coffee crisis on the farmers tend to neglect Indonesia, one of the important coffee producing countries in Asia. The purpose of this paper is to assess the impact of recent coffee crisis on the Pasemah coffee farmers. The Pasemah highland, in Lahat District, located at the Coffee Triangle or Southern Coffee Belt, which stretches across the three provinces in Sumatera, namely South Sumatera, Lampung, and Bengkulu. This highland is one of the important coffee producing areas in Indonesia and has a long history of the coffee cultivation. This study indicates that the recent coffee crisis also have a serious impact on the coffee farmers’ daily life in the Pasemah highland. The crisis depressed farmers’ level of living. The farmers used various strategies to survive their life. They changed their consumption pattern, such as substituting Dji Sam Soe—an expensive cigarette—with Gandum—a very cheap one. The story of prosperous coffee farmers has ended since the end of 1980s. Rather than ‘tunggu dusun’ (waiting the village), some of the Pasemah coffee farmers chose to stop operating their coffee farms and looked for other informal jobs, or went to Jabotabek to be urban informal workers. Other farmers preferred to make crop diversification on their farms. However, producing coffee is still an important agricultural activity for most farmers in Pasemah.
    Keywords: coffee crisis; smallholder; Pasemah; South Sumatera; Indonesia.
    JEL: Z1 Q17 O13
    Date: 2007
  5. By: Resnick, Danielle; Birner, Regina
    Abstract: "Participatory approaches are an increasingly prominent technique for designing agricultural strategies within Sub-Saharan Africa. However, such approaches are frequently criticized for either not involving enough stakeholders or limiting the scope of their participation. By analyzing the role of stakeholder participation in the formulation of agricultural and rural development strategies in West Africa, this paper finds that a lack of broad-based participation in these strategies was not a major problem. Rather, the real challenge lies in transforming the outcomes of participatory processes into policies that can be feasibly implemented. The paper highlights why an emphasis on participatory processes can sometimes result in disappointment among stakeholders and discusses a range of measures to help overcome this dilemma. " from authors' abstract
    Keywords: Agricultural and rural development strategies, Policy process, Participation, Representative democracy, Governance,
    Date: 2008
  6. By: Cudjoe, Godsway; Breisinger, Clemens; Diao, Xinshen
    Abstract: "This paper takes a local perspective on global food price shocks by analyzing food price transmission between regional markets in Ghana. It also assesses the impacts of differential local food price increases on various household groups. Taking the recent global food crisis as an example, we find that prices for domestic staples within all regional markets are highly correlated with prices for imported rice. However, price transmission between pairs of regional markets is limited; it is complete for local rice and maize only when more rigorous cointegration analysis is applied. Our findings also show the important role of seasonality in the determination of market integration and price transmission. The welfare effect for households as consumers appears relatively modest at the aggregate national level due to relatively diverse consumption patterns. However, the national average hides important regional differences, both between regions and within different income groups. We find that the poorest of the poor—particularly the urban poor—are the hardest hit by high food prices. The negative effect of the food crisis is particularly strong in the north of Ghana. Different consumption patterns, in which grains account for a larger share of the consumption basket in the north compared to the rest of the country, together with much lower initial per capita income levels, are the main explanations for this regional variation in the price effect. " from authors' abstract
    Keywords: Food crisis, Price transmission, Poverty, Development strategies,
    Date: 2008
  7. By: John Gilbert (Department of Economics and Finance, Utah State University)
    Abstract: We review the literature on the relationship between agricultural trade policy reform and poverty, and the results of recent detailed simulation studies applied to economies in the Asia- Pacific region. We then use the GTAP model to evaluate the possible impacts of the most recently proposed modalities for agricultural trade reform under Doha on the economies of the Asia-Pacific region, which we compare to a benchmark of comprehensive agricultural trade reform. The current proposal does not result in significant cuts to applied tariffs, and has very modest overall effects on welfare. Poverty in the region would decrease overall, but the distribution across countries is uneven. By contrast, comprehensive agricultural trade reform, with developing economies fully engaged, tends to benefit most economies in the region in the aggregate, and to consistently lower poverty.
    Keywords: Agricultural trade, Doha, Asia-Pacific, Poverty
    JEL: F13 F17 C68 O53
    Date: 2008–12–19
  8. By: Duffy, Michael; Smith, Darnell
    Abstract: This paper presents the results of the 2007 Iowa Farmland Ownership survey
    Date: 2009–01–09
  9. By: Julen ESTEBAN-PRETEL; SAWADA Yasuyuki
    Abstract: In this paper, we study the structural change occurring in Japan's post-World War II era of rapid economic growth. We use a two-sector neoclassical growth model with government policies to analyze the evolution of the Japanese economy in this period and to assess the role of such policies. Our model is able to replicate the empirical behavior of the main macroeconomic variables. Three findings emerge from our policy analysis. First, neither price and investment subsidies to the agricultural sector, nor industrial policy play a crucial role in the rapid postwar growth. Second, while a government subsidy for families in urban areas could have facilitated migration from the agricultural to the non-agricultural sector, such a policy would not have improved the overall performance of the Japanese economy. Finally, had there existed a labor migration barrier, the negative long-run level effect on output would have been substantial.
    Date: 2009–01
  10. By: M Ejaz Qureshi; Tian Shi; Sumaira Qureshi; Wendy Proctor; Mac Kirby (CSIRO Sustainable Ecosystems, Australia)
    Abstract: Water markets have been seen as an effective way of addressing water scarcity and allocation issues. In this paper we discuss the role and characteristics of water markets in facilitating efficient water allocation. Administrative, regulatory and/or political barriers to effective functioning of water markets are reviewed with a focus on southern Murray-Darling Basin in Australia. A mathematical model is developed to estimate the costs of existing restrictions and the benefits from potential changes in the water markets (eg. removing barriers in temporary water market). The modelling results reveal that when expanding trade from intraregional only to interregional trade, mean annual net returns increased from $2,502 million to $2,590 million (i.e. an increase of $88 million). When the current volume restrictions, exchange rates, and trading charges are in place, mean annual net returns reduced from $2,590 million to $2,573 million (i.e. a reduction of $17 million). The exclusion of any state from the interstate water trading market imposes significant costs. If South Australia, New South Wales or Victoria withdraws from the market, it reduces net returns by $27 million, $31 million and $63 million, respectively, from water trading. In conclusion, the policy implications on strategies to removing market barriers are outlined to facilitate efficient and effective water trading.
    Keywords: market barrier, opportunity cost, temporary water market, efficient water market, Australia
    JEL: Q20 Q21 Q25
    Date: 2008–12
  11. By: Akpalu, Wisdom; Hassan, Rashid M.; Ringler, Claudia
    Abstract: "This paper investigates the impact of climate variability on maize yield in the Limpopo Basin of South Africa using the Generalized Maximum Entropy (GME) estimator and Maximum Entropy Leuven Estimator (MELE). Precipitation and temperature were used as proxies for climate variability, which were combined with traditional inputs variables (i.e., labor, fertilizer, seed, and irrigation). We found that the MELE fits the data better than the GME. In addition, increased precipitation, increased temperature, and irrigation have a positive impact on yield. Furthermore, results of the MELE show that the impact of precipitation on maize yield is stronger than that of temperature, meaning that the impact of climate variability on maize yield could be negative if the change increases temperature but reduces precipitation at the same rate and simultaneously. Moreover, the impact of irrigation on yield is positive but with a lower elasticity coefficient than that of precipitation, which supposes that irrigation may only partially mitigate the impact of reduced precipitation on yield. " from authors' abstract
    Keywords: Yield function, maize, Generalized maximum entropy, Maximum entropy Leuven estimator, Climate variability, Climate change,
    Date: 2008
  12. By: William Barnett (Department of Economics, The University of Kansas); Apostolos Serletis (Department of Economics, University of Calgary)
    Abstract: This chapter is an up-to-date survey of the state-of-the art in consumer demand analysis. We review (and evaluate) advances in a number of related areas, in the spirit of the recent survey paper by Barnett and Serletis (2008). In doing so, we only deal with consumer choice in a static framework, ignoring a number of important issues, such as, for example, the effects of demographic or other variables that affect demand, welfare comparisons across households (equivalence scales), and the many issues concerning aggregation across consumers.
    Keywords: Demand systems, Consumer preferences, Theoretical regularity.
    JEL: D12 E21
    Date: 2009–01
  13. By: Lopez, Jose A.; Malaga, Jaime E.
    Abstract: Evidence of meat trade in the form of table cuts suggests that consumer preferences and tastes vary across meat cuts. Unlike previous studies, this paper estimates demand elasticities at the table cut level from a Mexican survey of household incomes and expenditures, which is a stratified sample. The study uses the two-step estimation of a censored demand system proposed by Shonkwiler and Yen (1999) but incorporates stratification variables into the estimation procedure. Parameter estimates are reported and its standard errors are approximated by using the bootstrap procedure.
    Keywords: censored demand system, two-step estimation procedure, stratified sampling, Mexican meat demand, elasticities, adult equivalent scales, bootstrap standard errors, Consumer/Household Economics, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, Q11,
    Date: 2009–02
  14. By: Dharmasena, Senarath; Capps Jr., Oral; Clauson, Annette
    Keywords: nonalcoholic beverages, nutritional elements, calories, calcium, vitamin C, caffeine, and econometric analysis, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety,
    Date: 2009
  15. By: Epperson, J.E.
    Abstract: It has become more and more difficult to recruit prospective American Ph.D. students in Agricultural and Applied Economics. The purpose of this study was to determine the extent of the problem, to ascertain why with respect to location and other important factors, and hopefully deduce recruiting solutions. Results indicate that the paramount factors in a profile of those willing to pay the price in terms of sacrifice and effort to obtain a Ph.D. encompass willingness to accept a relatively low starting salary with a Ph.D., likely to be a Foreign National, prone to be in a Midwestern university, and willing to relocate globally. Generally, the Ph.D. starting salary would have to increase dramatically to change the minds of graduate students not intending to pursue a Ph.D. including most American graduate students. A change in public policy appears to be the only real solution.
    Keywords: Agribusiness, Agricultural and Food Policy, Agricultural Finance, Teaching/Communication/Extension/Profession,
    Date: 2008–12–23
  16. By: Robert N. Stavins (Harvard University); Judson Jaffe (Analysis Group)
    Abstract: Cap-and-trade systems have emerged as the preferred national and regional instrument for reducing emissions of greenhouse gases throughout the industrialized world, and the Clean Development Mechanism — an international emission-reduction-credit system — has developed a substantial constituency, despite some concerns about its performance. Because linkage between tradable permit systems can reduce compliance costs and improve market liquidity, there is great interest in linking cap-and-trade systems to each other, as well as to the CDM and other credit systems. We examine the benefits and concerns associated with various types of linkages, and analyze the near-term and long-term role that linkage may play in a future international climate policy architecture. In particular, we evaluate linkage in three potential roles: as an independent bottom-up architecture, as a step in the evolution of a top-down architecture, and as an ongoing element of a larger climate policy agreement. We also assess how the policy elements of climate negotiations can facilitate or impede linkages. Our analysis throughout is both positive and normative.
    Keywords: Linkage, Cap-and-Trade, Tradable Permits, Global Climate Change
    JEL: F50 Q20 Q40 Q50
    Date: 2008–10
  17. By: Aslanidis Nektarios
    Abstract: The empirical finding of an inverse U-shaped relationship between per capita income and pollution, the so-called Environmental Kuznets Curve (EKC), suggests that as countries experience economic growth, environmental deterioration decelerates and thus becomes less of an issue. Focusing on the prime example of carbon emissions, the present article provides a critical review of the new econometric techniques that have questioned the baseline polynomial specification in the EKC literature. We discuss issues related to the functional form, heterogeneity, “spurious” regressions and spatial dependence to address whether and to what extent the EKC can be observed. Despite these new approaches, there is still no clear-cut evidence supporting the existence of the EKC for carbon emissions.
    Date: 2009–01
  18. By: Edilio Valentini (Università "G. D'Annunzio" di Chieti-Pescara); Edilio Valentini (Università "G. D'Annunzio" di Chieti-Pescara)
    Abstract: This paper addresses the issue of whether the powers of monitoring compliance and allocating tradeable emissions allowances within a federation of countries should be appointed to a unique federal regulator or decentralized to several local regulators. To this end, we develop a two stage game played by environmental regulator(s) and the polluting industries of two countries. Regulator(s) choose the amount of emission allowances to be issued and set the level of monitoring effort to achieve full compliance, while regulated firms choose actual emissions and the number of permits to be held. We identify various, possibly conflicting, spillovers among states in a decentralized setting. We show that cost advantage in favor of local regulators is not sufficient to justify decentralization. Nevertheless, cost differential in monitoring violations can imply lower emissions and greater welfare under a decentralized institutional setting than under a centralized one. However, while a better environmental quality under decentralization is a sufficient condition for higher welfare under the same regime, it is not also a necessary condition.
    Keywords: Emissions Trading, Environmental Federalism, Enforcement, Monitoring Cost
    JEL: F18 K42 Q53
    Date: 2008–12
  19. By: Barna, Cristina
    Abstract: Today we face the challenge of building biodiversity business. There is a need to develop new business models and market mechanisms for biodiversity conservation, while also raising awareness and persuading the public and policy-makers that biodiversity can be conserved on a commercial basis. In this context the present paper is analyzing the arise of a new economic concept ‘business biodiversity’, focusing on the strategic importance of biodiversity for business and also presenting some business biodiversity models which have already began to have success in the global economy.
    Keywords: sustainable development; biodiversity; business biodiversity; economics of biodiversity
    JEL: Q57
    Date: 2008–12
  20. By: Peake, Whitney O.; Marshall, Maria I.
    Abstract: This study tests the impact of household and demographic factors on the economic well-being of the farm and nonfarm self-employed using data from the Integrated Public Use Microdata Series. Parametric and nonparametric techniques are used to test for statistical differences in self-employment and household income levels. Further, household and demographic factors are tested for their effect on self-employment income using a censored tobit regression model. The farm self-employed report significantly higher levels of self-employment income. Results reveal that several household and demographic factors significantly impact self-employment income levels for the farm and nonfarm self-employed, with key differences in impacts.
    Keywords: self-employment, farm households, Community/Rural/Urban Development,
    Date: 2009

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