New Economics Papers
on Agricultural Economics
Issue of 2009‒05‒02
thirty papers chosen by

  1. Technology and Innovation in World Agriculture: Prospects for 2010-2019 By Huffman, Wallace
  2. Global agricultural market trends revisited: The roles of energy prices and biofuel production By von Witzke, Harald; Noleppa, Steffen; Schwarz, Gerald
  3. Supermarkets, Modern Supply Chains, and the Changing Food Policy Agenda By Peter Timmer
  4. US Baseline Briefing Book: Projections for agricultural and biofuel markets By Westhoff, Pat; Brown, Scott
  5. Impacts of FAVR Restriction Elimination on the Dry Bean Industry in the Upper Midwest By Thornsbury, Suzanne
  6. GM Technology Adoption, Production Risk and On-farm Varietal Diversity By Krishna, Vijesh V.; Zilberman, David; Qaim, Matin
  7. Strategy Options for Angola's Agricultural Sector after 27 Years of War: A Perception Based Field Study By Cambuta, Gomes A.
  8. Revitalizing and Modernizing Smallholder Agriculture for Food Security, Rural Development and Demobilization in a Post-War Country: The Case of the Aldeia Nova Project in Angola By Kimhi, Ayal
  9. Consumer Preferences for U.S. Pork in Urban China By Ortega, David L.; Wang, H. Holly; Wu, Laping
  10. Product Differentiation and Market Segmentation in Applesauce: Usnig a Choice Experiment to Assess the Value of Organic, Local and Nutrition Attributes By James, Jennifer S.; Rickard, Bradley J.; Rossman, William J.
  11. Estimating the Benefits from Improved Market Information By Kizito, Andrew
  12. Emerging food demand behaviors in Malaysia: Incorporating quality effects in demand analyses By Tey, (John) Yeong-Sheng; Shamsudin, Mad Nasir; Mohamed, Zainalabidin; Abdullah, Amin Mahir; Radam, Alias
  13. Changing Incentives to Sow Cotton for African Farmers: Evidence from the Burkina Faso Reform By Kaminski, Jonathan
  14. Coping with Rising Food Prices: Policy Dilemmas in the Developing World By Nora Lustig
  15. Production Incentives from Static Decoupling: Entry, Exit and Use Exclusion Restrictions By Just, David R.; Kropp, Jaclyn D.
  16. The Cost of Food Safety Technologies in the Meat and Poultry Industries. By Ollinger, Michael
  17. The impact of commodity price rises on consumers' food price inflation: Differences among income groups By Stavros Zografakis; Demetrios Damianos; Yiorgos Alexopoulos
  18. ACRE: A Revenue-Based Alternative to Price-Based Commodity Payment Programs By Cooper, Joseph
  19. Evaluating Marketing Channel Options for Small-Scale Fruit and Vegetable Producers By LeRoux, Matthew N.; Schmit, Todd M.; Roth, M.; Streeter, Deborah H.
  20. A managerial economist's forecast for meat consumption in Malaysia: Implications to farmers and investors By Tey, (John) Yeong-Sheng
  21. Case Studies on the Use of Crop Insurance in Managing Risk By Gloy, Brent A.; Staehr, A. Edward
  22. Evidence of Engel curves in food away from home: A study of Malaysia By Tey, (John) Yeong-Sheng; Shamsudin, Mad Nasir; Mohamed, Zainalabidin; Abdullah, Amin Mahir; Radam, Alias
  23. Land Policy and Farm Efficiency: The Lessons of Moldova By Cimpoies, Dragos; Lerman, Zvi
  24. Do I Need Crop Insurance? Self Evaluating Crop Insurance as a Risk Management Tool in New York State By Richards, Steve
  25. Context-Dependent BSE Impacts on Canadian Food-at-Home Beef Purchases By Maynard, Leigh J.; Wang, Xin
  26. How Best to Auction Natural Resources By Peter Cramton
  27. The Economic Effects of Land Reform in Central Asia: The Case of Tajikistan By Lerman, Zvi; Sedik, David
  28. Documentation of a Dynamic and Simultaneous Econometric Model of the U.S. Dairy Industry By Bailey, Kenneth
  29. On the Systemic Nature of Weather Risk By Xu, Wei; Filler, Guenther; Odening, Martin; Okhrin, Ostap
  30. Farm Debt in Transition: The Problem and Possible Solutions By Lerman, Zvi

  1. By: Huffman, Wallace
    Abstract: The objective of this paper is to assess prospects for increasing agricultural productivity through advances in technology and innovation in farming techniques for developed and selective developing and transition countries over 2010-2019. Over this period of time, the net impact of climate change is expected to be small, perhaps positive on cereal yields. However, environmental concerns (carbon dioxide release from bringing new lands into crop production and erosion on marginal lands brought into crop production, additional agricultural chemicals applied, and less biodiversity) may grow if meeting future demand for food, feed, fiber and bio-fuels require the conversion of forests and pastureland to cropping. The paper first provides a review of agricultural TFP growth for OECD countries and other large developing or transition economies. Second, a discussion of the organization of science and technology for agriculture is presented. Third, new agricultural technologies for cereal, oilseed, and potato production and for livestock production are discussed and their impacts assessed. Fourth, the contributions of public and private agricultural research capital to agricultural productivity are summarized. Fifth, prospects for new agricultural technologies primarily developed by the private sector over the next decade are described and evaluated. Although not everything is rosy for future developments of agricultural technologies for farmers in developed countries to 2019, the combined efforts of public and private agricultural research will provide a steady stream of new crop and to a lesser extent livestock technologies for farmers over this time period.
    Keywords: world Ag
    Date: 2009–04–16
  2. By: von Witzke, Harald; Noleppa, Steffen; Schwarz, Gerald
    Keywords: Global agricultural market, trends energy prices, biofuel production, Agribusiness, Agricultural and Food Policy, Agricultural Finance, Crop Production/Industries,
    Date: 2009–03
  3. By: Peter Timmer
    Abstract: There is great interest among policy makers in how to influence the behavior of supermarkets in ways that serve the interests of important groups in society, especially small farmers and the owners of traditional, small-scale food wholesale and retail facilities. Two broader issues are also important: (1) finding a way for food prices to “internalize” the full environmental costs of production and marketing; and (2) finding a way for supermarkets to be part of the solution, rather than part of the problem, to the health problems generated by an “affluent” diet and lifestyle. There are concerns over the growing concentration in global food retailing and the potential market power that concentration implies. But the evidence of fierce competition at the retail level, and the high contestability for food consumers’ dollars, have kept this issue in the background. The ultimate impact of supermarkets in developing countries will be on the level and distribution of improved welfare for consumers. What happens to small farmers, traditional traders and mom-and-pop shops will be factors in both the size of welfare gains and their distribution, but many other factors will also come into play. Our judgment on the impact of the supermarket revolution must incorporate all of those factors. This paper places the supermarket debate in the broader evolution of food policy analysis, which is a framework for integrating household, market, macro and trade issues as they affect hunger and poverty. Increasingly, supermarkets provide the institutional linkages across these issues.
    Keywords: Food policy; agricultural diversification; structural transformation; poverty
    JEL: O13 O30 Q13
    Date: 2009–03
  4. By: Westhoff, Pat; Brown, Scott
    Abstract: This report presents a summary of ten year baseline projections for U.S. agricultural markets, farm program spending, farm income, and a variety of other indicators.
    Keywords: Agricultural and Food Policy,
    Date: 2009–03
  5. By: Thornsbury, Suzanne
    Keywords: Farm Policy, Planting Flexibility, Agricultural and Food Policy, Q18,
    Date: 2008–09
  6. By: Krishna, Vijesh V.; Zilberman, David; Qaim, Matin
    Abstract: This paper examines the impact of transgenic technology adoption on varietal diversity. Transgenic pest-resistant varieties are hypothesized to reduce farmersâ demand for on-farm diversity through an act of substitution, as both serve as production risk reducing instruments. This adverse agro-biodiversity impact might be partially counteracted by an expanding seed sector, supplying a large number of transgenic varieties. The case of Bt cotton in India is taken for empirical illustration. The production function analyses show that both Bt technology and on-farm varietal diversity enhance yield, while reducing the production risk. With few Bt varieties available in the first years, technology adoption entailed a reduction in on-farm varietal diversity. This effect, however, was partially offset by more Bt varieties becoming available over time.
    Keywords: Agro-biodiversity, Bt cotton, production risk, transgenic technology, Agricultural and Food Policy, Crop Production/Industries, Environmental Economics and Policy, Farm Management, Productivity Analysis, Risk and Uncertainty,
    Date: 2009
  7. By: Cambuta, Gomes A.
    Abstract: The decline in agricultural output over the years and the subsequent pervasive food crisis in most of Africa have motivated governments and international organizations to develop a variety of strategies, policy alternatives and programs aimed at promoting agricultural production and food security. Many of these strategies have been conceived and implemented by international organizations, and in some cases the strategies have fail to address the root cause of failure of the agricultural sector to perform to its potential. Therefore, this field study uses scenario analysis to engage key players in the agriculture industry to identify causes of Angolaâs loss of production capacity over the years, the factors needed to revitalize the agricultural-led economy, factors that can help stabilize the agricultural sector and conditions required for the development and coordination of the food supply chain in Angola. The framework provided in the paper was based on an evaluation of perceptions of future demand for locally produced agricultural products; the countryâs supply response capability; the role of the informal and formal markets; infrastructure needs; and the development of formal supply chains for domestic and export markets. The methodology used was an adaptation of a methodology used in Industry Strategic Planning and Coordination, and the Technological Demands Determination by Prospective Analysis. The study revealed that in spite of its high resource endowment, Angola will first need to address institutional and structural agricultural development constraints and develop systems that allow better coordination of development efforts among institutions, before it is able to produce food for export markets. The development priority for the next five years includes creating conditions that stimulate local production, help the country produce enough to become food self sufficient, and gradually reduce food imports. Nevertheless, the production for import substitution should not preclude efforts towards targeting export niche markets.
    Keywords: Agricultural and Food Policy,
    Date: 2009
  8. By: Kimhi, Ayal
    Abstract: The Aldeia Nova project aimed at demobilizing ex-combatants to remote areas and settling them in modern agricultural communities. Three years since the first settlers arrived at the Waku-Kungu valley, 600 families are using modern agricultural technology to produce milk, eggs and vegetables which are marketed in the urban centers of Angola. These families earn a decent living and provide employment to hundreds of others. The entire area was revitalized with thousands of families pouring in to enjoy the benefits of the booming local economy. This paper presents the concept of the Aldeia Nova project, describes its evolution, and discusses its strengths and weaknesses. It concludes that the benefits of the project go far beyond its measureable economic impact, and that its ambitious goals are not beyond the reach of the Angolan people.
    Keywords: Smallholder agriculture, Rural development, Food security, Technology adoption, Cooperation, Demobilization, Reconciliation, Angola., Food Security and Poverty,
    Date: 2009
  9. By: Ortega, David L.; Wang, H. Holly; Wu, Laping
    Abstract: Chinaâs transition into a developed economy is driving changes in consumer preferences and demand for foods. To evaluate consumer preferences for U.S. pork in urban China, primary data were collected in two metropolitan areas- Beijing and Shanghai. Estimated logit models revealed that an individualâs age, shopping location and food safety concerns significantly influenced their willingness-to-pay for U.S. pork. A proportional linear model was developed to evaluate factors affecting purchasing behavior of western-style pork cuts vs. traditional Chinese cuts. Food safety concerns were linked to a previous lean-meat additive scare and a lack of consumer confidence on the Chinese food inspection system.
    Keywords: China, U.S. Pork, Willingness-to-pay, Ordered Logit, food safety, Agricultural and Food Policy, Consumer/Household Economics, Marketing, D120, D190, M390, Q130, Q180,
    Date: 2009
  10. By: James, Jennifer S.; Rickard, Bradley J.; Rossman, William J.
    Abstract: Recently there is much interest among horticultural producers concerning the marketing of organically- and locally- produced food. Here we developed a consumer survey that asked respondents to choose an applesauce product from a list of products differentiated by price and four attributes. The products were differentiated by labels that described fat content, nutrition content, and whether the product was grown organically and/or locally. The survey was distributed to 3,000 residents in rural Pennsylvania and over 1,500 responses were collected yielding a response rate of 56%. Survey results were used to assess consumersâ willingness to pay for the product attributes in applesauce, and we found that consumers were willing to pay more for locally-grown applesauce compared to applesauce that was labeled organic or low fat and low sugar. Furthermore, the analysis incorporated the effects of consumer characteristics on the demand for applesauce attributes and we find evidence that increased knowledge of agriculture decreases the willingness to pay for organically- and locally-grown applesauce.
    Keywords: Applesauce, Choice experiment, Consumer demand, Fruit and vegetable markets, Locally grown, Multinomial logit model, Organic, Pennsylvania, Willingness to pay, Agribusiness, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Q13,
    Date: 2009–01–29
  11. By: Kizito, Andrew
    Abstract: Using a partial equilibrium model, the benefits of providing improved agricultural market information to farmers and small-scale traders of maize, millet, sorghum and paddy rice in Mali are estimated. The value of information is estimated as the reduction in dead-weight loss when farmers and small-scale traders with rational expectations respond to improved price forecasts from Market Information Systems. The study finds that benefits from improved information, which can also be viewed as a reduction of the cost of being off the equilibrium price and quantity, are great when there is high uncertainty about future prices, high own-price elasticity of supply, low own-price elasticity of demand, and high value of crop output. The study suggests that crop-specific, localized Market Information Systems (MIS) designed based on local area supply and demand responses to prices have higher returns than national uniformly distributed MISs covering a wide range of commodities in the country.
    Keywords: Marketing,
    Date: 2009
  12. By: Tey, (John) Yeong-Sheng; Shamsudin, Mad Nasir; Mohamed, Zainalabidin; Abdullah, Amin Mahir; Radam, Alias
    Abstract: In this study, the focus is on analyzing food demand behaviors in Malaysia. To be more specific, this study intends to estimate demand elasticities for twelve food categories with incorporation of food quality effects in the demand analyses. This study analyses the data from the Household Expenditure Survey 2004/2005 by Linear Approximate Almost Ideal Demand System (LA/AIDS) and unit value function. The estimated expenditure elasticities indicate that there will be growing demand for all the food categories, especially meat, fish, vegetables, oils and fats, and fruits. The own-price elasticities for rice, eggs, beverage, and oils & fats are more elastic than the rest of the food categories. This study also shows that there is quality effect in food demand.
    Keywords: Food; demand behaviors. quality effects; demand analysis
    JEL: Q11
    Date: 2008–10–11
  13. By: Kaminski, Jonathan
    Abstract: Over the last 10 years, Burkina Faso has experienced a reform of its cotton sector, and is now the largest African cotton producer and exporter. The cotton âboomâ consisted of a rapid expansion of cotton areas through the growth of land shares allocated to cotton (and new producers), together with an overall increase in total cultivated land. In this paper, we present an empirical framework to determine the contribution of total farmland changes in the increase of land dedicated to cotton, where both processes are represented by ordered endogenous variables. We then analyze data that we collected in rural Burkina Faso in March 2006 within this framework. From measurable indicators of farmer behavior and variables that measure farmer statements for the reasons of this behavior, we are able to identify both direct and indirect effects of the cotton reform on the extensive growth of cotton seed production. They are namely mechanization and technical assistance, labor intensification, enhanced managerial abilities (learning by doing and better environment for farmers), production incentives arising from the new local organizations of producers, guarantees and confidence stemming from the sector and an easier access to agricultural inputs.
    Keywords: parastatal, Burkina Fasoâs cotton, land extension, privatization,
    Date: 2008–12
  14. By: Nora Lustig
    Abstract: Rising food prices cause considerable policy dilemmas for developing country governments. Letting domestic prices adjust to reflect the full change in international prices generates inflationary pressures and causes severe hardship for poor households lacking access to social safety nets. Alternatively, governments can use food subsidies or export restrictions to stabilize domestic prices, yet this exacerbates global food price increases and undermines a rules-based trading system. The recent episode shows that many countries chose to shift the burden of adjustment back to international markets. The use of corn and oilseed for the production of biofuel will result in a recurrence of such episodes in the foreseeable future.
    Keywords: Food Prices, Inflation, Poverty, Africa, Asia, Latin America and the Caribbean
    Date: 2009–03
  15. By: Just, David R.; Kropp, Jaclyn D.
    Abstract: The use of agricultural decoupled support has increased as World Trade Organization (WTO) member nations implement less trade distortive policies. However, the true production effects of these policies are still unclear. We show how the exclusion restrictions of U.S. direct payments, namely, the fruit and vegetable restriction and the requirement of keeping land in good agricultural use, cause the decoupled payment to become fully coupled over time as relative profits adjust. Theoretically, decoupled payments can be more trade distorting than an equivalent (same level of taxpayer expenditure) fully coupled subsidy.
    Keywords: decoupled payments, infra-marginal support, cross-subsidization, Agricultural and Food Policy, International Relations/Trade, Land Economics/Use, Q15, Q17, Q18,
    Date: 2009
  16. By: Ollinger, Michael
    Abstract: This paper uses plant-level micro-data from the 2002 Census of Manufactures, Food Safety Inspection Service, and the Economic Research Service in a translog cost function to examine the costs of effort devoted to the performance of sanitation and process control tasks and levels of food safety technology use. Results suggest that more effort devoted to performance of sanitation and process control tasks and greater use of food safety technologies modestly reduce long run costs.
    Keywords: food safety, food safety technologies, translog cost function, long run costs, meat and poultry industry, Food Consumption/Nutrition/Food Safety, Industrial Organization, Production Economics,
    Date: 2009–07
  17. By: Stavros Zografakis (Department of Agricultural Economics & Rural Development Agricultural University of Athens); Demetrios Damianos (Department of Agricultural Economics & Rural Development Agricultural University of Athens); Yiorgos Alexopoulos (Department of Agricultural Economics & Rural Development Agricultural University of Athens)
    Abstract: "The substantial rise of world prices of agricultural products due to a host of mutually supporting factors that influenced both their supply and demand between 2005 and the first half of 2008 led to a subsequent increase in the price of food at the retail level. Although this trend has reversed recently, official views and researchers stress that within the next ten years the real term prices of important agricultural products are expected to increase substantially to the detriment of, mainly the lower income, consumers. This paper examines the impact of commodity price rises on consumers' food price inflation. It searches among the differences in the composition of food expenses and presents indicative results of a quite different food consumption pattern among EU member states' consumers and within countries. It highlights the impacts of the observed food price increases not only upon low income households, which were found to be relatively more affected than their higher income counterparts, but upon member states with a lower level of economic development as well, which seemed to have lost their price convergence pace. Hence, it stresses the importance of adequate and prompt policy design to alleviate the consequences of future negative price developments."
    Keywords: Agricultural Products, Prices, Inflation, Food Policy
    JEL: D12 Q11 Q18
    Date: 2009
  18. By: Cooper, Joseph
    Abstract: This paper develops a stochastic model for estimating the probability density function of the Average Crop Revenue Election (ACRE), a revenue-based commodity support payment that is offered under the 2008 Farm Act as an alternative to the traditional suite of price-based commodity payments, that is, marketing loan benefits and counter-cyclical payments. We minimize the potential for miss-specification bias in the model by using nonparametric and semi-nonparametric approaches as specification checks in the model. Our simulation results show that adding ACRE revenue payments to gross revenue reduced the downside risk in revenue for corn, wheat, and soybean farmers in 2009 in the four locations examined, with reductions ranging from 4% to 25%. Integrating Federal crop insurance with ACRE lowered insurance premiums from 10% to 40%, depending on the crop and location. A utility maximization approach is used to assess potential moral hazard effects of ACRE, and suggest little potential impact on acreage in the Heartland.
    Keywords: Domestic support, average crop revenue election, loan deficiency payments, counter-cyclical payments, revenue, price, corn, yield, pairs bootstrap, kernel density, semi-nonparametric, combinatorial optimization, negative exponential utility function, Agricultural and Food Policy, Demand and Price Analysis,
    Date: 2009–04–24
  19. By: LeRoux, Matthew N.; Schmit, Todd M.; Roth, M.; Streeter, Deborah H.
    Abstract: An investigation of the relative costs and benefits of marketing channels used by typical smallscale diversified vegetable crop producers is conducted. Using case study evidence from four small farms in Central New York, this study compares the performance of wholesale and direct marketing channels, including how the factors of risk, owner and paid labor, price, lifestyle preferences, and sales volume interact to impact optimal market channel selection. Given the highly perishable nature of the crops grown, along with the risks and potential sales volume of particular channels, a combination of different marketing channels is needed to maximize overall firm performance. Accordingly, a ranking system is developed to summarize the major firmspecific factors across channels and to prioritize those channels with the greatest opportunity for success based on individual firm preferences.
    Keywords: local food, marketing, wholesale, direct, marketing channels, economic evaluation, Agribusiness, Community/Rural/Urban Development, Crop Production/Industries, Demand and Price Analysis, Production Economics,
    Date: 2009–04–15
  20. By: Tey, (John) Yeong-Sheng
    Abstract: In this consumer driven chain, the changes in meat consumption at consumer level indeed provide implication for upstream production. While econometrics based analysis and forecast are hard to be understood and digested by farmers or investors, a simple forecast from the perspectives of managerial economics as laid down in the objective of this study perhaps provide valuable insights on the future movement of meat consumption and demand. By using simple forecasting technique using mathematical model, farmers and investors can expect that poultry is to be continuing its vital role as the main source for meat in the country. This is to be coupled with increasing consumption in beef and mutton. However, it is likely the decreasing trend in pork is to be continued. Alternative pig farming system is identically the main concern in promising consumers food safety, freedom of disease, and a way of reclaiming the joy of eating by growing pig that is environmentally sustainable and socially responsible. The challenge is certain, extra efforts must be contributed to reduce the cost of supply chain amid of the increasing retail price of pork that drives consumers away to seek for cheaper substitution.
    Keywords: Meat; consumption; managerial economics
    JEL: Q11 Q13
    Date: 2009–04–20
  21. By: Gloy, Brent A.; Staehr, A. Edward
    Abstract: Managing the risk associated with farming is challenging. Fortunately, farmers have a variety of risk management tools at their disposal. This series of case studies examines how crop insurance can be used to manage some of the risks faced by farmers. The examples illustrate how crop insurance purchases would impact the returns generated to a farming enterprise. While the examples cover a variety of commodities and insurance products, they do not consider every possible risk that might arise. Likewise, they do not consider all of the possible financial situations that might be experienced by a farmer. Instead, they focus on highlighting how crop insurance impacts the profitability of the farm. Companion spreadsheets are available for all of the examples so that readers can examine a wider range of scenarios than those discussed in the examples. These spreadsheets and other related materials are available for download at: pIns.html
    Keywords: Managing Risk, Crop insurance, Apple production, grape production, soybeans, forage production, Agribusiness, Crop Production/Industries, Financial Economics,
    Date: 2009–02
  22. By: Tey, (John) Yeong-Sheng; Shamsudin, Mad Nasir; Mohamed, Zainalabidin; Abdullah, Amin Mahir; Radam, Alias
    Abstract: As Malaysians’ per capita income continues to grow, the food budget shares declines, which refers to Engel’s law. However, the statistics of the various Household Expenditure Surveys in Malaysia reported increasing food away from home (FAFH) budget shares which concerns whether the notion of Engel’s law can be extended to FAFH. By using Household Expenditure Survey 2004/05, the Heckman two-step procedure was applied with the Working-leser and other functional forms to conduct the Engel curves analyses. The empirical results exhibit the same observations as laid down in the Engel’s law. All the estimated expenditure elasticities of demand for FAFH were less than unity. Thus, this study verified that the notion of Engel’s law can be extended to FAFH in Malaysia.
    Keywords: Engel’s law; food away from home; expenditure elasticity
    JEL: Q11
    Date: 2009–03–10
  23. By: Cimpoies, Dragos; Lerman, Zvi
    Keywords: Farm Management, Land Economics/Use,
    Date: 2008
  24. By: Richards, Steve
    Keywords: Crop insurance, Agribusiness, Crop Production/Industries,
    Date: 2009–02
  25. By: Maynard, Leigh J.; Wang, Xin
    Abstract: Household-level Canadian scanner data from 2002 â 2005 were used to identify consumer reactions to the early BSE discoveries that severely impacted Canadaâs beef industry. In all provinces, consumers reacted to the initial BSE event by purchasing more beef, apparently to support struggling ranchers. Subsequent BSE events, however, met with reduced beef purchases. The results were consistent across three measures of monthly beef purchases: participation, units purchased, and beef expenditure share. Failing to account for the context of individual BSE events would have produced little evidence of consumer reaction, a common finding among prior North American BSE studies.
    Keywords: BSE, mad cow disease, food safety, consumer behavior, Canada, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety, D12, Q11,
    Date: 2009
  26. By: Peter Cramton (Economics Department, University of Maryland)
    Abstract: I study the design of auctions of natural resources, such as oil or mineral rights. A good auction design promotes both an efficient assignment of rights and competitive revenues for the seller. The structure of bidder preferences and the degree of competition are key factors in determining the best design. With weak competition and simple value structures, a simultaneous first-price sealed-bid auction may suffice. With more complex value structures, a dynamic auction with package bids likely is needed to promote efficiency and revenue objectives. Bidding on production shares, rather than bonuses, typically increases government take by reducing oil or mining company risk.
    Keywords: Auctions, natural resource auctions, oil auctions
    JEL: D44
    Date: 2009
  27. By: Lerman, Zvi; Sedik, David
    Date: 2008–11
  28. By: Bailey, Kenneth
    Abstract: The objective of this report is to publish a monthly forecasting tool of the U.S. dairy industry. This model forecasts the milk supply as well as the supply and demand for American cheese, Other cheese, butter, nonfat dry milk, and dry whey. Trade is presently exogenous to the model, but can be endogenized at a later date. The principal use of the model will be for forecasting purposes, thus we settled on a monthly frequency for the data. We delve into the complexities of the U.S. dairy industry using rich data sources. Our objective is clearly focused on developing an initial forecasting tool.
    Keywords: Econometric model, U.S. Dairy Industry, Forecasting Model, Agribusiness, Marketing,
    Date: 2009–03
  29. By: Xu, Wei; Filler, Guenther; Odening, Martin; Okhrin, Ostap
    Abstract: Systemic weather risk is a major obstacle for the formation of private (nonsubsidized) crop insurance. This paper explores the possibility of spatial diversication of insurance by estimating the joint occurrence of unfavorable weather conditions in dierent locations. For that purpose copula methods are employed that allow an adequate description of stochastic dependencies between multivariate random variables. The estimation procedure is applied to weather data in Germany. Our results indicate that indemnity payments based on temperature as well as on cumulative rainfall show strong stochastic dependence even at a national scale. Thus the possibility to reduce risk exposure by increasing the trading area of the insurance is limited. Irrespective of their economic implications our results pinpoint the necessity of a proper statistical modeling of the dependence structure of multivariate random variables. The usual approach of measuring stochastic dependence with linear correlation coeffcients turned out to be questionable in the context of weather insurance as it may overestimate diversfication effects considerably.
    Keywords: weather risk, crop insurance, copula, Risk and Uncertainty, C14, Q19,
    Date: 2009
  30. By: Lerman, Zvi
    Date: 2008–11

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.