New Economics Papers
on Agricultural Economics
Issue of 2009‒03‒22
fourteen papers chosen by

  1. Market integration and structural transformation in a poor rural economy By Soderbom, Mans; Rijkers, Bob
  2. Economic Analysis of the Liberalizsation of Red Meat Markets in the Pacific Region from 1988 to 2007 By Charlebois, Pierre; Gagne, Stephen; Gendron, Carole
  3. Agriculture and trade liberalization in Vietnam By Barbara Coello
  4. Global distortions to agricultural markets : new indicators of trade and welfare impacts, 1955 to 2007 By Lloyd, Peter J.; Croser, Johanna L.; Anderson, Kym
  5. How do agricultural policy restrictions to global trade and welfare differ across commodities ? By Lloyd, Peter J.; Croser, Johanna L.; Anderson, Kym
  6. Poverty decline, agricultural wages, and non-farm employment in rural India : 1983-2004 By Lanjouw, Peter; Murgai, Rinku
  7. The Impact of Foot and Mouth Disease Outbreaks in Taiwan and South Korea on the Red Meat Industries in Canada and the United States By Charlebois, Pierre; Gagne, Stephen
  8. EU Trade Barriers in the Agri-food Sector: When Protection Breeds Dependence By Cadot, Olivier; Gallezot, Jacques; Suwa Eisenmann, Akiko
  9. Welfare impacts of rural electrification : a case study from Bangladesh By Khandker, Shahidur R.; Barnes, Douglas F.; Samad, Hussain A.
  10. Fair Trade Contracts for Some, an Insurance for Others By Claire Chambolle; Sylvaine Poret
  11. How does credit access affect children's time allocation? Evidence from rural India By Fuwa, Nobuhiko; Ito, Seiro; Kudo, Kensuke; Kurosaki, Takashi; Sawada, Yasuyuki
  12. Hedonic Markets and Explicit Demands: Bid-Function Envelopes for Public Services, Neighborhood Amenities, and Commuting Costs By John Yinger
  13. On the effects of technology improvements in multi-market models: Theory and evidence. By Dimitrios Dadakas; Stelios D Katranidis; David S. Bullock
  14. Economies of density versus natural advantage: crop choice on the back forty By Thomas J. Holmes; Sanghoon Lee

  1. By: Soderbom, Mans; Rijkers, Bob
    Abstract: By developing a simple theoretical model of the impact of market integration on sectoral output and employment in a poor rural setting, this paper demonstrates that trade can induce asymmetric growth. Under certain, plausible, assumptions, the non-farm sector will grow much faster than the agricultural sector when markets become integrated. Promoting market integration may thus be an effective way of encouraging diversification beyond agriculture and catalysing structural change in poor rural economies.
    Keywords: Food&Beverage Industry,Economic Theory&Research,Rural Poverty Reduction,Food Security
    Date: 2009–03–01
  2. By: Charlebois, Pierre; Gagne, Stephen; Gendron, Carole
    Abstract: The liberalization of red meat (beef and pork) markets since 1988 is a good example of government action that has led to significant gains for the Canadian and American agri-food industries. Japan, South Korea and Mexico are the main countries that have liberalized their red meat markets since 1988. This industry has also benefited from the agreement between Canada and the United States. It has also made gain from the liberalization of the pork market in Australia and the Philippines, and the beef market in Indonesia. This analysis captures the impact on the price received by farmers as well as on Canadian production in the absence of these increased market access. The combination of lower prices and lower production would have caused annual average decreases in farm cash receipts drawn from the cattle and hog market equal to C$776 million and C$486 million, respectively, for a grand total of C$25.7 billion over this 20-year period (1988-2007) for the entire agriculture industry. Additionally, the value added of the red meat processing industry would have dropped by an average of C$432 million per year, for a total loss of C$8.6 billion. Finally, the value of exports of the red meat supply chain would have dropped by an average of C$1.044 billion per year, for a grand total of C$21 billion over this 20-year period.
    Keywords: liberalization, benefits, red meats, pork, beef, Japan, Korea, Mexico, Agribusiness, Agricultural and Food Policy, International Relations/Trade, Livestock Production/Industries,
    Date: 2008–07
  3. By: Barbara Coello
    Abstract: This paper provides an ex-post analysis of the impact of trade liberalization in Vietnam between 1993 and 1998, taking into account regional differences. First, a price pass-through analysis is performed to measure how trade liberalization influence provincial prices. These results are plugged into a farm household model in order to capture the effects on households' outcomes such as quantities produced, agricultural income and profits. An original continuous treatment assessment measures the effects of trade liberalization proportionally to the degree of initial household specialization in export crops. My findings suggest that trade liberalization has differently affected domestic prices and agricultural variables across profits groups and regions. Trade liberalization in agriculture, between 1993 and 1998 has increased inequalities in Vietnam, with a negative evolution of agricultural profits for the poorest.
    Date: 2008
  4. By: Lloyd, Peter J.; Croser, Johanna L.; Anderson, Kym
    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. The authors 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 sector policies are generated without a formal model of global markets or even price elasticity estimates.
    Keywords: Currencies and Exchange Rates,Economic Theory&Research,Agribusiness,Markets and Market Access,Trade Policy
    Date: 2009–03–01
  5. By: Lloyd, Peter J.; Croser, Johanna L.; Anderson, Kym
    Abstract: For decades the world's agricultural markets have been highly distorted by national government policies, but very differently for different commodities. Hence a weighted average across countries of nominal rates of assistance or consumer tax equivalents for a product can be misleading as an indicator of the trade or welfare effects of policies affecting that product's global market. This is especially the case when some countries tax and others subsidize its production or consumption. This article develops a new set of more-satisfactory indicators for that purpose, drawing on the recent literature on trade restrictiveness indexes. It then exploits a global agricultural distortions database recently compiled by the World Bank to generate the first set of estimates of those two indicators for each of 28 key agricultural commodities from 1960 to 2004, based on a sample of 75 countries that together account for more than three-quarters of the world's production of those agricultural commodities. These reveal the considerable extent of reforms in agricultural policies of developing as well as high-income countries over the past two decades.
    Keywords: Agribusiness,Crops&Crop Management Systems,Economic Theory&Research,Currencies and Exchange Rates,Emerging Markets
    Date: 2009–03–01
  6. By: Lanjouw, Peter; Murgai, Rinku
    Abstract: The authors analyze five rounds of National Sample Survey data covering 1983, 1987/8, 1993/4, 1999/0, and 2004/5 to explore the relationship between rural diversification and poverty. Poverty in rural India declined at a modest rate during this period. The authors provide region-level estimates that illustrate considerable geographic heterogeneity in this progress. Poverty estimates correlate well with region-level data on changes in agricultural wage rates. Agricultural labor remains the preserve of the uneducated and also to a large extent of the scheduled castes and scheduled tribes. Although agricultural labor grew as a share of total economic activity over the first four rounds, it had fallen back to the levels observed at the beginning of the survey period by 2004. This all-India trajectory masks widely varying trends across states. During this period, the rural non-farm sector grew modestly, mainly between the last two survey rounds. Regular non-farm employment remains largely associated with education levels and social status that are rare among the poor. However, casual labor and self-employment in the non-farm sector reveal greater involvement by disadvantaged groups in 2004 than in the preceding rounds. The implication for poverty is not immediately clear - the poor may be pushed into low-return casual non-farm activities due to lack of opportunities in the agricultural sector rather than being pulled by high returns offered by the non-farm sector. Econometric estimates reveal that expansion of the non-farm sector is associated with falling poverty via two routes: a direct impact on poverty that is likely due to a pro-poor marginal incidence of non-farm employment expansion; and an indirect impact attributable to the positive effect of non-farm employment growth on agricultural wages. The analysis also confirms the important contribution to rural poverty reduction from agricultural productivity, availability of land, and consumption levels in proximate urban areas.
    Keywords: Rural Poverty Reduction,Labor Markets,Labor Policies,Crops&Crop Management Systems
    Date: 2009–03–01
  7. By: Charlebois, Pierre; Gagne, Stephen
    Abstract: In addition to trade liberalization, other factors have contributed to the strong growth of red meat production in Canada since the end of the 1980s. In particular, the outbreaks of foot and mouth disease (FMD) in Taiwan and in South Korea eliminated two competitors in the Japanese market. This reduction in supply caused an increase in the price of hogs in the United States and Canada of 2.5% and 3% respectively during the 1997 to 2007 period. The higher price stimulated Canadian production by an average of 5%, and by 2% in the United States. Annual agricultural farm receipts from the hog market were greater by an average of $CD 276 million (9%) for a grand total of $CD 3 billion over the 11 years. Moreover, the value added in the red meat processing industry was on average $CD 158 million higher (5%) for a cumulative total of $CD 1.7 billion. Finally, the value of exports of the red meat supply chain is on average $CD 239 million higher (4.4%) for a grand total of $CD 2.6 billion during these 11 years.
    Keywords: red meats, Japan, South Korea, Taiwan, foot and mouth disease, economic impact, pork, Agribusiness, Agricultural and Food Policy, International Relations/Trade, Livestock Production/Industries,
    Date: 2008–07
  8. By: Cadot, Olivier; Gallezot, Jacques; Suwa Eisenmann, Akiko
    Abstract: This paper looks for firm-level evidence that high rates of protection breed concentration of firm activities into highly protected sectors, endogenously generating vested interests in the maintenance of protection. We combine data on the EU’s trade protection for food and agricultural products measured by ad-valorem equivalents (AVEs) with survey data on France’s agri-food sector to show that indeed, small and mid-size firms and cooperatives in that sector are heavily concentrated in product lines protected by tariff-rate quotas (TRQs) at high rates. Those firms and cooperatives can be expected to be at the forefront of resistance to multilateral tariff cuts, in particular in the meat and dairy sectors. Overcoming their resistance would call for targeted adjustment assistance.
    Keywords: agriculture; concentration; trade protection
    JEL: F13
    Date: 2009–03
  9. By: Khandker, Shahidur R.; Barnes, Douglas F.; Samad, Hussain A.
    Abstract: Lack of access to electricity is one of the major impediments to growth and development of the rural economies in developing countries. That is why access to modern energy, in particular to electricity, has been one of the priority themes of the World Bank and other development organizations. Using a cross-sectional survey conducted in 2005 of some 20,000 households in rural Bangladesh, this paper studies the welfare impacts of households'grid connectivity. Based on rigorous econometric estimation techniques, this study finds that grid electrification has significant positive impacts on households'income, expenditure, and educational outcomes. For example, the gain in total income due to electrification can be as much as 30 percent and as low as 9 percent. Benefits go up steadily as household exposure to grid electrification (measured by duration) increases and eventually reach a plateau. This paper also finds that rich households benefit more from electrification than poor households. Finally, estimates also show that income benefits of electrification on an average exceed cost by a wide margin.
    Keywords: Energy Production and Transportation,Access to Finance,Engineering,Electric Power,Rural Poverty Reduction
    Date: 2009–03–01
  10. By: Claire Chambolle (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X, INRA - ALISS); Sylvaine Poret (Department of Economics, Ecole Polytechnique - CNRS : UMR7176 - Polytechnique - X, INRA - ALISS)
    Abstract: This article analyzes the impact of Fair Trade contracts between sub-groups of farmers and a Fair Trade organization on the spot market price. We analyze a three level vertical chain gathering perfectly competitive farmers upstream who offer their raw product on a spot market to manufacturers who then sell finished products to a downstream retailer. Absent Fair Trade, the entire raw product is sold on the spot market. When a Fair Trade organization offers a Fair Trade contract to a sub-group of farmers, it gathers a Guaranteed Minimum Price clause and a straight relationship between the sub-group of farmers and the retailer. This article highlights several conditions such that a snowball effect exists, i.e farmers outside of the Fair Trade contract also benefit from a higher spot market price.
    Keywords: Guaranteed Minimum Price Contracts, Disintermediation, Fair Trade, Vertical Chain, Two-part Tariff Contracts
    Date: 2009–03–11
  11. By: Fuwa, Nobuhiko; Ito, Seiro; Kudo, Kensuke; Kurosaki, Takashi; Sawada, Yasuyuki
    Abstract: Using a unique dataset obtained from rural Andhra Pradesh, India that contains direct observations of household access to credit and detailed time use, results of this study indicate that credit market failures lead to a substantial reallocation of time used by children for activities such as schooling, household chores, remunerative work, and leisure. The negative effects of credit constraints on schooling amount to a 60% decrease of average schooling time. However, the magnitude of decrease due to credit constraints is about half that of the increase in both domestic and remunerative child labor, the other half appearing to come from a reduction in leisure.
    Keywords: Child labor, Schooling, Gender bias, Credit constraint, Household models
    JEL: I21 I22 J22 O12 O16
    Date: 2009–01
  12. By: John Yinger (Center for Policy Research, Maxwell School, Syracuse University, Syracuse, NY 13244-1020)
    Abstract: Hedonic regressions with house value as the dependent vaqriable are widely used to study the value of public services and amenities. This paper builds on the theory of household bidding and sorting to derive a bid function envelope, which provides a form for these regressions. This approach uses a general characterization of household heterogeneity, yields estimates of the price elasticities of demands for services and amenities directly from the hedonic with no need for a Rosen two-step procedure, and provides tests of key hypotheses about household sorting. An application to data from Cleveland in 2000 yields precise estimates of price elasticities for school quality, distance from environmental hazards, and neighborhood ethnic composition. The results support the sorting hypotheses and indicate that household preferences are very heterogeneous, with some households placing a negative value on many "amenities."
    Keywords: Hedonics, capitalization, bidding, sorting
    JEL: H73 R21
    Date: 2009–03
  13. By: Dimitrios Dadakas (Department of Economics, University of Macedonia); Stelios D Katranidis (Department of Economics, University of Macedonia); David S. Bullock (Department of Agricultural and Consumer Economics, University of Illinois)
    Abstract: The purpose of this paper is to develop the methodology that allows the inclusion of a technology variable in multi-market welfare models. We compare the price induced welfare effects obtained from a multimarket technology-inclusive model, a multimarket technology-exclusive model and a single-market model. An application to the Greek cotton market shows that the omission of the effects of technology biases the estimated welfare effects. Moreover, welfare estimates from the multi-market approach carry superior statistical properties than estimates obtained from the single-market approach.
    Keywords: Multi-Market, Single Market, Technology, Bootstrap, Trade Liberalization.
    JEL: D6 F1 C0
    Date: 2009–03
  14. By: Thomas J. Holmes; Sanghoon Lee
    Abstract: We estimate the factors determining specialization of crop choice at the level of individual fields, distinguishing between the role of natural advantage (soil characteristics) and economies of density (scale economies achieved when farmers plant neighboring fields with the same crop). Using rich geographic data from North Dakota, including new data on crop choice collected by satellite, we estimate the analog of a social interactions econometric model for the planting decisions on neighboring fields. We find that planting decisions on a field are heavily dependent on the soil characteristics of the neighboring fields. Through this relationship, we back out the structural parameters of economies of density. Setting an Ellison-Glaeser dartboard level of specialization as a benchmark, we find that of the actual level of specialization achieved beyond this benchmark, approximately two-thirds can be attributed to natural advantage and one-third to density economies.
    Date: 2009

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