nep-agr New Economics Papers
on Agricultural Economics
Issue of 2009‒02‒28
nine papers chosen by
Angelo Zago
University of Verona

  1. Measuring Distortions to Agricultural Incentives, Revisited By Anderson, Kym; Kurzweil, Marianne; Martin, Will; Sandri, Damiano; Valenzuela, Ernesto
  2. Finding Missing Markets (and a disturbing epilogue): Evidence from an Export Crop Adoption and Marketing Intervention in Kenya By Ashraf, Nava; Giné, Xavier; Karlan, Dean S.
  3. How coupled are decoupled farm payments? A review of the evidence By Bhaskar, Arathi; Beghin, John C.
  4. Global Distortions to Agricultural Markets: New Indicators of Trade and Welfare Impacts, 1955 to 2007 By Anderson, Kym; Croser, Johanna L; Lloyd, Peter J
  5. Inflation Dynamics and Food Prices in an Agricultural Economy: The Case of Ethiopia By Loening, Josef L.; Durevall, Dick; Ayalew Birru, Yohannes
  6. Unintended Impacts of Multiple Instruments on Technology Adoption By Coria, Jessica
  7. Compromising social justice in fairtrade?: case study of a fairtrade organization in India By Ranjana Das
  8. What is the Top Priority on Climate Change? By Klemperer, Paul
  9. The Economic Impact of Ocean Acidification on Coral Reefs By Brander, Luke M.; Rehdanz, Katrin; Tol, Richard S J; van Beukering, Pieter J.H.

  1. By: Anderson, Kym; Kurzweil, Marianne; Martin, Will; Sandri, Damiano; Valenzuela, Ernesto
    Abstract: Notwithstanding the tariffication component of the Uruguay Round Agreement on Agriculture, import tariffs on farm products continue to provide an incomplete indication of the extent to which agricultural producer and consumer incentives are distorted in national markets. As well, in developing countries especially, non-agricultural policies indirectly impact on agricultural and food markets. Empirical analysis aimed at monitoring distortions to agricultural incentives thus need to examine both agricultural and non-agricultural policy measures including import or export taxes, subsidies and quantitative restrictions plus domestic taxes or subsidies on farm outputs or inputs and consumer subsidies for food staples. This paper addresses the practical methodological issues that need to be faced when attempting to undertake such a measurement task in developing countries. The approach is illustrated in two ways: by presenting estimates of nominal and relative rates of assistance to farmers in China for the period 1981 to 2005; and by summarizing estimates from an economy-wide CGE model of the effects on agricultural versus non-agricultural markets of the project’s measured distortions globally as of 2004.
    Keywords: non-tariff barriers; agricultural and trade policies; distorted incentives; tariffs
    JEL: F13 F14 Q17 Q18
    Date: 2008–07
  2. By: Ashraf, Nava; Giné, Xavier; Karlan, Dean S.
    Abstract: In much of the developing world, many farmers grow crops for local or personal consumption despite export options which appear to be more profitable. Thus many conjecture that one or several markets are missing. We report here on a randomized controlled trial conducted by DrumNet in Kenya that attempts to help farmers adopt and market export crops. DrumNet provides smallholder farmers with information about how to switch to export crops, makes in-kind loans for the purchase of the agricultural inputs, and provides marketing services by facilitating the transaction with exporters. The experimental evaluation design randomly assigns pre-existing farmer self-help groups to one of three groups: (1) a treatment group that receives all DrumNet services, (2) a treatment group that receives all DrumNet services except credit, or (3) a control group. After one year, DrumNet services led to an increase in production of export oriented crops and lower marketing costs; this translated into household income gains for new adopters. However, one year after the study ended, the exporter refused to continue buying the cash crops from the farmers because the conditions of the farms did not satisfy European export requirements. DrumNet collapsed in this region as farmers were forced to sell to middlemen and defaulted on their loans. The risk of such events may explain, at least partly, why many seemingly more profitable export crops are not adopted.
    Keywords: Export Crop; Field Experiment; Food safety standards
    JEL: F13 O12 Q17
    Date: 2009–01
  3. By: Bhaskar, Arathi; Beghin, John C.
    Abstract: This survey paper explores the literature on decoupling of farm programs that has emerged in the last 10 years. The paper identifies and assesses the various channels of potential coupling of decoupled farm payments and provides a taxonomy of coupling mechanisms found in theoretical and empirical papers. Coupling of decoupled payments is pervasive but effects when measurable are small, with the exception of the impact on land values. The paper points to unresolved issues on potential coupling mechanisms for further research. JEL classification: Q18, Q12, Q17
    Keywords: agricultural policy, decoupled, decoupling, farm payments, programs program, subsidies, support
    JEL: Q1
    Date: 2009–02–20
  4. By: Anderson, Kym; Croser, Johanna L; Lloyd, Peter J
    Abstract: Despite recent reforms, world agricultural markets remain highly distorted by government policies. Traditional indicators of those price distortions can be poor guides to the policies’ economic effects. Recent theoretical literature provides indicators of trade- and welfare-reducing effects of price and trade policies which this paper builds on to develop more-satisfactory indexes. We then exploit a new Agricultural Distortion database to generate estimates of them for developing and high-income countries over the past half century. These better approximations of the trade and welfare effects of sectoral policies are generated without a formal model of global markets or even price elasticity estimates.
    Keywords: agricultural and trade policies; Distorted incentives; trade restrictiveness index
    JEL: F13 F14 Q17 Q18
    Date: 2009–02
  5. By: Loening, Josef L. (World bank); Durevall, Dick (Department of Economics, School of Business, Economics and Law, Göteborg University); Ayalew Birru, Yohannes (University of Sussex)
    Abstract: Ethiopia has experienced a historically unprecedented increase in inflation, mainly driven by cereal price inflation, which is among the highest in Sub-Saharan Africa. Using monthly data over the past decade, we estimate error correction models to identify the relative importance of several factors contributing to overall inflation and its three major components, cereal prices, food prices and non-food prices. Our main finding is that, in the long run, domestic food and non-food prices are determined by the exchange rate and international food and goods prices. In the short to medium run, agricultural supply shocks and inflation inertia strongly affect domestic inflation, causing large deviations from long-run price trends. Money supply growth affects food price inflation in the short run, though excess money supply does not seem to drive inflation in the long run. Our results suggest a challenging time ahead for Ethiopia, with the need for a multipronged approach to fight inflation. Forecast scenarios suggest monetary and exchange rate policies need to take into account the cereal sector, as food staple growth is among the key determinants of inflation, assuming a decline in global commodity prices. Implementation of successful policies will be contingent on the availability of foreign exchange and the performance of agriculture.<p>
    Keywords: Agriculture; Cointegration analysis; Ethiopia; Exchange rate; Money demand; Food prices; Forecast; Inertia; Inflation
    JEL: E31 E37 E52 O55
    Date: 2009–02–23
  6. By: Coria, Jessica (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: There are many situations where environmental authorities use a mix of environmental policy instruments, rather than one single instrument, to address environmental concerns. For example, one instrument may be used to reduce overall emissions of a pollutant while another is used to address specific seasonal concerns. Very little work has been done on the economic impacts of the application of multiple instruments. This paper investigates the unintended impacts of the interaction of a tradable permits scheme with direct seasonal regulations on the rate of adoption of advanced abatement technologies.<p>
    Keywords: Technology adoption; environmental policy; tradable permits; emission standards; interaction of policies
    JEL: O33 Q53 Q55 Q58
    Date: 2009–02–23
  7. By: Ranjana Das
    Abstract: The study investigates whether Fair Trade Organizations (FTOs) are able to adhere to their principles of social justice and development goals as they enter mainstream markets which are dominated by neo-liberalism, unequal terms of trade and propagation of the ‘free market’ principle. Through a case study of Kala-a craft marketing Fair Trade Organization in West Bengal, India, the paper shows shifts in the development of the FTO, the introduction of a certification regime and the emerging contradiction between the intentions of the FTO and its actual practice in the contemporary period. The implications of shifts in orientation from solidarity based notions of social justice to market oriented social justice, in particular on the weakest link and most vulnerable section who are women craft workers at the bottom of the production chain are investigated. A production chain analysis of handicraft production gives evidence of violation of FT principles and ILO’s decent work norms and also reveals characteristics of the informal economy with producers having no entitlements to minimum wages, or social security benefits. There remains gender bias in the employment of women in the fair-trade production chain. The data shows that there is no challenge to gender segmentation and in fact a reinforcement of the feminine stereotype. Declining partnership with cooperatives, rising partnership with large scale NGOs and setting up of a Business Development Unit within the organization are some of the strategic shifts in the FTO. These shifts and the lack of implementation of FT principles indicate that the FTO is succumbing to the logic of the neo liberal mainstream market resulting in a drift away from the social justice principles within the Fairtrade Network. While onstage FTO’s use the principle of ‘fairness’ particularly in relation to Northern Corporations, this notion of fairness is not extended to the lower end producers through which they are expanding in the global market.
    Keywords: fair trade, social justice, neoliberal market, gender, production chain
    Date: 2009
  8. By: Klemperer, Paul
    Abstract: What should be the West's top priority for climate-change policy? This article is a revised and updated version of my talk to the Potsdam Global Sustainability Symposium (which drafted the Potsdam Declaration presented to the 2007 UN Climate Change Conference in Bali).
    Keywords: climate change mitigation; sustainability
    JEL: Q5 Q54 Q56 Q58
    Date: 2009–01
  9. By: Brander, Luke M. ((Vrije Universiteit) Amsterdam); Rehdanz, Katrin ((Kiel Institute for the World Economy) Germany); Tol, Richard S J (ESRI); van Beukering, Pieter J.H. ((Vrije Universiteit) Amsterdam)
    Abstract: Because ocean acidification has only recently been recognised as a problem caused by climate change, impact studies are still rare and estimates of the economic impact are absent. This paper estimates the economic impact of ocean acidification on coral reefs which are generally considered to be economically as well as ecologically important ecosystems. First, we conduct an impact assessment in which atmospheric concentration of CO2 is linked to ocean acidity causing coral reef area loss. Next, a meta-analysis is applied to determine the economic value of coral reefs around the world. Finally, these two analyses are combined to estimate the economic impact of ocean acidification on coral reefs for the four IPCC marker scenarios. We find that the annual economic impact rapidly escalates over time, because the scenarios have rapid economic growth in the relevant countries and coral reefs are a luxury good. Nonetheless, the annual value in 2100 in still only a fraction of total income, one order of magnitude smaller than the previously estimated impact of climate change. Although the estimated impact is uncertain, the estimated confidence interval spans one order of magnitude only. Future research should seek to extend the estimates presented here to other impacts of ocean acidification and investigate the implications of our findings for climate policy.
    Keywords: Ocean acidification, coral reefs, economic value
    JEL: Q51 Q54 Q57
    Date: 2009–02

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