nep-agr New Economics Papers
on Agricultural Economics
Issue of 2010‒01‒23
seventeen papers chosen by
Angelo Zago
University of Verona

  1. Philippine agricultural and food policies: Implications for poverty and income distribution By Cororaton, Caesar B.; Corong, Erwin
  2. Food, Agriculture, and Antitrust: Looking at the Recent Past By MacDonald, James
  3. Agricultural Export Subsidies and Domestic Support reform under the WTO System:What does it mean for Welfare in West Africa? By J.Alexander Nuetah; Ting Zuo; Xian Xin
  4. The inter-linkages between rapid growth in livestock production, climate change, and the impacts on water resources, land use, and deforestation By Thornton, Philip K.; Herrero, Mario
  6. Impacts of CIMMYT's Formal International Training Activities Linked to Long-Term Trials in the Field of Conservation Agriculture: 1996-2006 By Svitakova, Jirina; Kosina, Peir; La Rovers, Roberto
  7. Economic Importance of Agriculture for Poverty Reduction By Dalila Cervantes-Godoy; Joe Dewbre
  8. From Wine Production to Wine Tourism Experience: the Case of Italy By Asero, Vincenzo; Patti, Sebastiano
  9. Quality Sorting and Trade: Firm-Level Evidence for French Wine By Matthieu Crozet; Keith Head; Thierry Mayer
  10. Economic and livelihood impacts of maize research in hill regions in Mexico and Nepal: Including a method for collecting and analyzing spatial data using Google Earth By La Rovere, Roberto; Mathema, Sudarshan; Aquino Mercado, Pedro; Dixon, John; Gurung, Kamala; Flores Velasquez, Dagoberto; Hodson, Dave
  11. Land Rights Insecurity and Temporary Migration in Rural China By de la Rupelle, Maëlys; Quheng, Deng; Li, Shi; Vendryes, Thomas
  12. Do trade preferential agreements enhance the exports of developing countries? Evidence from the EU GSP By Aiello, Francesco; Demaria, Federica
  14. The Strange Birth of Liberal Denmark: Danish trade protection and the growth of the dairy industry since the mid-nineteenth century By Ingrid Henriksen; Markus Lampe; Paul Sharp
  15. Malta and the Nineteenth Century Grain Trade: British free trade in a microcosm of Empire? By Paul Sharp
  16. Switching to Perennial Energy Crops under Uncertainty and Costly Reversibility By Song, Feng; Zhao, Jinhua; Swinton, Scott
  17. Price is a Better Climate Commitment By Peter Cramton; Steven Stoft

  1. By: Cororaton, Caesar B.; Corong, Erwin
    Abstract: The Philippines has undergone a series of trade reforms since the mid-1980s that have reduced protection on nonagricultural goods. However, protection on key food items is still in effect, and this has led to high domestic food prices. Such high prices have a considerable negative effect on poverty because more than 60 percent of the consumption of poor Filipino households is for food. The special product arguments of the World Trade Organization increase the pressure to maintain the existing high levels of food protection in the country. Special products treatment provides developing countries with the flexibility to implement tariff reduction programs over an extended period for certain self-designated products. These special product discussions are based on food security, livelihood, and rural development arguments. This research report assesses the poverty and income distribution implications of trade reform that is focused on agriculture and major food items (rice, corn, sugar, beef, chicken, pork, processed meat products, fruits and vegetables, and processed fruits) in the Philippines. A dynamic-recursive computable general equilibrium model calibrated to the social accounting matrix for the Philippine economy for the year 2000 and a microsimulation model that uses the 2000 Family Income and Expenditure Survey are used to analyze possible policy shifts. The simulation results indicate that trade reform in agriculture and major food items will have favorable effects on factor prices and bring about a significant reduction in consumer prices. Real household income will increase while poverty and income inequality decline. These findings therefore imply that maintaining existing trade protections on agricultureand major food items—which drive food prices up—will not solve the problem of poverty and income inequality in the Philippines. In the year 2000 the incidence of poverty in the Philippines was 34 percent. In 2003 it declined to 30.4 percent. The incidence of poverty in rural areas is higher than that in urban areas: 48.8 percent and 18.6 percent in 2000, respectively. Over the past two decades, significant structural changes have taken place in the Philippine economy. The share of agriculture in the total gross domestic product has declined. The country has switched from being a net exporter to a net importer of agricultural products and food items. The widening trade gap in agriculture and food has made the Philippines vulnerable to fluctuations in the world market. For example, the international rice crisis in 2008 has adversely affected the domestic market for rice in the Philippines. The deterioration in the net trade position of the country in food has largely been caused by the high growth in domestic food demand relative to production. Domestic food production lags behind demand because of declining productivity. There is increasing demand for food items with higher income elasticities, and there is also increasing pressure from high population growth. To address this growing trade gap in agriculture and food, the government has adopted a strategy to improve rice productivity. This is a step in the right direction: based on our rice productivity simulation results, higher rice productivity will increase domestic production and reduce imports of rice. Most importantly it will reduce consumer prices. Most of the benefits of improved rice productivity would go to the households in the first decile of the population, since rice has the largest share in their consumption basket relative to the rest of the household groups. There is a reduction in poverty incidence and income inequality. However, implementation of the Philippine government’s rice productivity program is costly, inefficient, and ineffective. In 2001 the government introduced a new technology, hybrid rice. Its adoption was aggressively pursued by the government through the Hybrid Rice Commercialization Program (HRCP). Under the HRCP the production of hybrid rice seeds is supported by the government through (1) procurement of seeds at a guaranteed price, (2) distribution of the procured seeds to participating farmers at half the procurement price, and (3) payment of additional money to participating farmers to help defray their fertilizer input costs. The government has devoted significant resources, through a system of subsidies, to supporting the HRCP. However, the results are not encouraging. The adoption rate of hybrid rice is very low. There is a high dropout rate among participating farmers, because hybrid rice seeds are so expensive and farmers have to purchase them every planting season rather than reusing them (which would result in drastically decreased yields). The massive government subsidies have distorted the ability of farmers to make an informed choice between hybrid and inbred rice varieties. Thus instead of supporting the HRCP the government should spend its limited resources on research and development that focuses on improving the yield of inbred rice. Enhancing an inbred-based system that is adapted to farmers’ familiar practice of saving, reusing, and exchanging seeds would be a more responsive approach to improving productivity than promoting such costly technologies as hybrid rice, which has not yet achieved commercially viable levels.
    Keywords: Food prices, Trade reform, Agricultural policies, Computable general equilibrium (CGE) modeling, Social accounting matrix, Microsimulation model, food policies, Income distribution, Poverty reduction,
    Date: 2009
  2. By: MacDonald, James
    Abstract: Presented to USDA Economists Group, Washignton, DC
    Keywords: Antitrust, agriculture, Agribusiness, Agricultural and Food Policy, Q, L,
    Date: 2009–10
  3. By: J.Alexander Nuetah; Ting Zuo; Xian Xin (College of Economics and Management, China Agricultural University Center for Rural Development Policy, China Agricultural University)
    Abstract: This article focuses on analyzing the potential welfare impacts the West African region will experience from reforming agricultural export subsidies and domestic support in developed and developing countries under the Doha Development Agenda. Results indicate that consumers of nearly all of the commodities analyzed will encounter welfare losses, while almost all producers of these commodities will experience welfare gains. However, the gains by producers are insufficient to compensate consumers¡¯ losses, and so all fourteen West African nations analyzed will end up with net welfare losses from these reforms. This finding validates other research results indicating that net food importing countries will become losers of agricultural trade reform, while net food exporters will experience more welfare gains. The implications for the region will be more poverty and heightened food insecurity as three of the countries in the region¡ªNiger, Sierra Leone and Liberia were already listed in the 2008 Global Hunger Index report as nations hardest hit by hunger.
    Keywords: Agriculture, Trade, Export Subsidies, Domestic Support, Welfare
    JEL: F13 F15 F17
    Date: 2010–01
  4. By: Thornton, Philip K.; Herrero, Mario
    Abstract: Livestock systems globally are changing rapidly in response to human population growth, urbanization, and growing incomes. This paper discusses the linkages between burgeoning demand for livestock products, growth in livestock production, and the impacts this may have on natural resources, and how these may both affect and be affected by climate change in the coming decades. Water and land scarcity will increasingly have the potential to constrain food production growth, with adverse impacts on food security and human well-being. Climate change will exacerbate many of these trends, with direct effects on agricultural yields, water availability, and production risk. In the transition to a carbon-constrained economy, livestock systems will have a key role to play in mitigating future emissions. At the same time, appropriate pricing of greenhouse gas emissions will modify livestock production costs and patterns. Health and ethical considerations can also be expected to play an increasing role in modifying consumption patterns of livestock products, particularly in more developed countries. Livestock systems are heterogeneous, and a highly differentiated approach needs to be taken to assessing impacts and options, particularly as they affect the resource-poor and those vulnerable to global change. Development of comprehensive frameworks that can be used for assessing impacts and analyzing trade-offs at both local and regional levels is needed for identifying and targeting production practices and policies that are locally appropriate and can contribute to environmental sustainability, poverty alleviation, and economic development.
    Keywords: Livestock&Animal Husbandry,Wetlands,Wildlife Resources,Agricultural Knowledge&Information Systems,Rural Development Knowledge&Information Systems
    Date: 2010–01–01
  5. By: Fogarty, James J.
    Abstract: As food is an experience good, the market for restaurant meals is a market where the cost of acquiring information regarding quality is relatively high. In such markets consumers often turn to reputation measures to guide purchase decisions. As Australia does not have a longstanding cuisine style of its own, and given Australia has been open to substantial immigration inflows since federation, it represents an especially appropriate market to study regarding the impact of individual restaurant reputation and collective cuisine reputation on meal prices. The following study uses the hedonic price approach to investigate the implicit price of individual reputation indicators, cuisine type reputation indicators, and other objective indicators in the market for restaurant meals. The empirical findings presented suggest that both individual restaurant reputation and cuisine type reputation are important. Other important factors are shown to include the quality of the restaurant wine list, the availability of private dining rooms, and whether or not there is an outdoor dining option.
    Keywords: Expert Opinion, Food, Hedonic Pricing, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety,
    Date: 2009–11
  6. By: Svitakova, Jirina; Kosina, Peir; La Rovers, Roberto
    Keywords: Environmental Economics and Policy,
    Date: 2009
  7. By: Dalila Cervantes-Godoy; Joe Dewbre
    Abstract: The Millennium Declaration set 2015 as the target date for halving the number of people living in extreme poverty. Exceptional progress in some developing countries makes achieving that goal globally a realistic possibility. However, many countries will fall far short, and up to 1 billion people are likely to remain destitute by the target date. Why are some countries doing better than others? This paper seeks to answer this question by looking for shared characteristics of twenty-five developing countries posting extraordinary success in reducing extreme poverty over the past twenty to twenty-five years. These countries were compared using indicators of their macro-economic characteristics and, especially, their agricultural economic characteristics. The countries chosen for analysis constitute a highly diverse mix. The group includes some of the poorest and some of the richest developing countries in the world, representing virtually all geographic regions. The countries also differ greatly in their systems of governance and economic management. Yet, they are surprisingly similar in their achievements, not only in reducing poverty, but across the broad range of macroeconomic and agricultural economic performance measures used to compare them. Findings from time-series, cross-section regression analysis reveal that while economic growth generally was an important contributor to poverty reduction, the sector mix of growth mattered substantially, with growth in agricultural incomes being especially important.
    Keywords: agricultural development, Millennium development goals, poverty reduction
    JEL: I32 O10 O13 O40 O57 Q10 Q18
    Date: 2010–01–14
  8. By: Asero, Vincenzo; Patti, Sebastiano
    Abstract: Typical products, mainly local food and wine, are considered suitable features to characterise the tourist supply of a destination and in many cases they are a major attraction of a territory. These products contain a strong reference to the territory in which they are produced. They simultaneously represent on the market a geographic area, its traditions and its cultural heritage, they identify a local community and its identity as well. Therefore typical products can be defined as âterritorial intensive productsâ (TIPs). Wine tourism represents the most innovative phenomenon of the more general tourism supply created around a TIP and certainly the most evident. The paper considers the importance of quality wine in Italy in helping to create the tourist supply of different territories through the creation of the Wine and Food Routes (WFRs) that represent a particular kind of tourist thematic itineraries. The paper confirms that quality wines are the âdriverâ of WFRs creating a model of socioeconomic district.
    Keywords: Agribusiness, Agricultural and Food Policy,
    Date: 2009–11
  9. By: Matthieu Crozet; Keith Head; Thierry Mayer
    Abstract: Firm-level regressions show that Champagne producers that receive better ratings from wine guides also export to more markets, charge higher prices, and sell more in each market. Our method corrects for a severe selection bias predicted by the model. By using direct measures of quality, we can recover estimates of parameters from a Melitz-based model of heterogeneous firms. We then regress averages of the quality, price, and quantity shipped to a country on measures of its attractiveness and entry costs. Champagne exhibits quality-sorting: more attractive markets tend to have lower average qualities and prices, but higher quantities.
    Keywords: Gravity; heterogeneity; quality; trade
    JEL: F12
    Date: 2009–07
  10. By: La Rovere, Roberto; Mathema, Sudarshan; Aquino Mercado, Pedro; Dixon, John; Gurung, Kamala; Flores Velasquez, Dagoberto; Hodson, Dave
    Keywords: Crop Production/Industries, Research and Development/Tech Change/Emerging Technologies,
    Date: 2009
  11. By: de la Rupelle, Maëlys (Paris School of Economics); Quheng, Deng (Chinese Academy of Social Sciences); Li, Shi (Beijing Normal University); Vendryes, Thomas (Paris School of Economics)
    Abstract: Like most other developing countries, China experiences huge migration outflows from rural areas. Their most striking characteristic is a high geographical and temporal mobility. Rural migrants keep going back and forth between origin villages and destination areas. In this paper, we show that this temporary feature of migration can be linked to land rights insecurity. As village land ownership remains collective and as land use rights can be periodically reallocated, individual out-migration can result in deprivation of those rights. Moreover, the intensity of this insecurity varies according to the village-level management of land and the contractual status of land plots. We use these variations to identify the effect of land rights insecurity on migration behavior. Empirical results based on representative 2002 rural data demonstrate substantial impact.
    Keywords: migration, land rights insecurity, China, semiparametric censored regression models
    JEL: C34 J61 P32 Q15
    Date: 2009–12
  12. By: Aiello, Francesco; Demaria, Federica
    Abstract: The EU grants preferential access to its imports from developing countries under several trade agreements. The widest arrangement, in terms of country and product coverage, is the Generalised System of Preferences (GSP) through which, since 1971, virtually all developing countries have received preferential treatment when exporting to world markets. This paper evaluates the impact of GSP in enhancing developing countries’ exports to EU markets. It is based on the estimation of a gravity model for a sample of 769 products exported from 169 countries to EU over the period 2001-2004. While, from an econometric point of view, the estimation methods take into account unobservable country heterogeneity as well as the potential selection bias which zero-trade values pose, the empirical setting considers an explicit measure of trade preferences, the margin of preferences. The analysis offers new empirical evidence that the impact of GSP on developing countries’ agricultural exports to the EU is positive.
    Keywords: Trade Preferences; Developing Countries; Agricultural Trade
    JEL: F13 C33
    Date: 2009–12–15
  13. By: Zuniga Gonzalez, Carlos Alberto
    Keywords: Malmquist Index, Technological Change, Technical Efficiency Change, Returns scale efficiency change, total factors productivity, LSMS-ISA MECOVI, Productivity Analysis, D61, Q12, Q23, R38,
    Date: 2009–11–05
  14. By: Ingrid Henriksen (Department of Economics, University of Copenhagen); Markus Lampe (Department of Economics, University of Copenhagen); Paul Sharp (Department of Economics, University of Copenhagen)
    Abstract: The usual story of the “first era of globalization” at the end of the nineteenth century sees Denmark as something as an outlier: a country which, like Britain, resisted the globalization backlash in the wake of the inflow of cheap grain from the New World, but where agriculture, rather than going into decline, in fact flourished. Key to the success of Danish agriculture was an early diversification towards dairy production. We dispute this simple story which sees Denmark as something of a liberal paragon. Denmark’s success owed much to a prudent use of trade policy which favoured dairy production. Moreover, this favouritism continued even after a more general movement to free trade in the 1860s. Using micro-level data from individual dairies, we quantify the implied subsidy to dairy production from the tariffs, and demonstrate that this in many cases ensured the profitability of individual dairies.
    Keywords: dairies; Denmark; protection; tariffs; cheese
    JEL: N5 N7
    Date: 2010–01
  15. By: Paul Sharp (Department of Economics, University of Copenhagen)
    Abstract: It is often assumed that Britain’s colonies followed the British doctrine of free trade in the second half of the nineteenth century. Malta, which became a British colony in 1814, did indeed become an early free trader. However, she failed to liberalize the grain trade, even when the mother country famously repealed the Corn Laws. This paper documents that although institutions changed over the years, the ad valorem equivalents of the duties on wheat did not. The reason for this seems to be that administrators were convinced that is was not possible to fund government spending in any other way. The duties on grain in Malta were therefore not protectionist, but rather for revenue purposes, in contrast to the UK Corn Laws. Taxing an inelastic demand for foreign wheat by Maltese, who were unable to grow enough food to support themselves, was certainly an effective way of raising revenue, but probably not the fairest one, as contemporaries were well aware.
    Keywords: Malta; wheat; trade policy; British Empire
    JEL: N4 N5 N7
    Date: 2010–01
  16. By: Song, Feng; Zhao, Jinhua; Swinton, Scott
    Abstract: We study a farmerâs decision to convert traditional crop land into growing dedicated energy crops, taking in account sunk conversion costs, uncertainties in traditional and energy crop returns, and learning. The optimal decision rules differ significantly from the expected net present value rule, which ignores learning, and from real option models that allow only one way conversions into energy crops. These models also predict drastically different patterns of land conversions into and out of energy crops over time. Using corn-soybean rotations and switchgrass as examples, we show that the model predictions are sensitive to assumptions about stochastic processes of the returns. Government policies might have unintended consequences: subsidizing conversion costs into switchgrass reduces proportions of land in switchgrass in the long run.
    Keywords: real options, irreversibility, sunk costs, land conversion, biofuel, cellulosic biomass, dynamic modeling, stochastic process, biofuel policy, Land Economics/Use, Resource /Energy Economics and Policy, Risk and Uncertainty, Q42, Q24,
    Date: 2009–12
  17. By: Peter Cramton (Economics Department, University of Maryland); Steven Stoft
    Abstract: Developing countries justifiably reject meaningful emission targets. This prevents the Kyoto Protocol from establishing a global price for greenhouse gas emissions, and leaves almost all new emissions unpriced. This paper proposes a new pair of commitments—a commitment to a binding carbon-price target and to a Green Fund financed by a form of carbon pricing. The result is global carbon pricing that neither requires developing countries to accept emission caps nor requires industrial countries to accept carbon taxes. The cost of complying with these commitments is subject to far less risk than the cost of an emissions cap, and the combined cost of a $30/ton price target and the Green Fund is only 23 cents per person per day for the United States and is negative for India. The combined advantages should significantly increase the chance that developing countries will commit to a substantial carbon price, and this should increase the chance of cap and trade passing the U.S. Senate.
    Keywords: Climate change, carbon pricing, cap and trade, carbon auctions
    JEL: Q54
    Date: 2010

This nep-agr issue is ©2010 by Angelo Zago. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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.