nep-agr New Economics Papers
on Agricultural Economics
Issue of 2010‒05‒29
sixteen papers chosen by
Angelo Zago
University of Verona

  1. The regional specifity of structural change in agriculture: An assessment of the role of farmersâ strategic behaviour on the land market By Margarian, Anne
  2. Can a Social Safety Net Affect Farmers’ Crop Portfolios? A Study of the Productive Safety Net Programme in Ethiopia By Andersson, Camilla
  3. Changing the Risk at the Margin Smallholder Farming and Public Policy in Developing Countries By Mannberg, Camilla
  4. Demand for Crop Insurance by Organic Corn and Soybean Farmers in Three Major Producing States By Singerman, Ariel; Hart, Chad E.; Lence, Sergio H.
  5. Information, direct access to farmers, andrural market performance in central India By Goyal, Aparajita
  7. An Empirical Analysis of the Determinants of Marketing Contract Structures for Corn and Soybeans By Paulson, Nicholas D.; Katchova, Ani; Lence, Sergio H.
  8. Programming rural development funds â An interactive linear programming approach applied to the EAFRD program in Saxony-Anhalt By Schmid, Julia; Hager, Astrid; Jechlitschka, Kurt; Kirschke, Dieter
  9. Food Security, Gender and Occupational Choice among Urban Low-Income Households By Maria Floro; Ranjula Bali Swain
  10. Does Land Tenure Insecurity Drive Deforestation in the Brazilian Amazon? By Claudio ARAUJO; Catherine ARAUJO BONJEAN; Jean-Louis COMBES; Pascale COMBES MOTEL; Eustaquio J. REIS
  11. Does vertical integration reduce investment reluctance in production chains? An agent-based real options approach By Balmann, Alfons; Musshoff, Oliver; Larsen, Karin
  12. Counterproductive counternarcotic strategies? A study of the effects of opium eradication in the presence of imperfect capital markets and sharecropping arrangements By Andersson, Camilla
  13. Use and Perception of the Internet as a Marketing Tool to Promote Rural Tourism By Paulo Duarte; Ana Rita Pais
  14. Measuring the dependence structure between yield and weather variables By Bokusheva, Raushan
  15. The Environment and Directed Technical Change By Acemoglu, Daron; Aghion, Philippe; Bursztyn, Leonardo; Hemous, David
  16. On beliefs and motives in Richard Wagner's Lohengrin. By Chrissochoidis, I.; Huck, S.

  1. By: Margarian, Anne
    Abstract: Among the family-farms in western Germany, significant regional differences are observable. They exist not only with respect to present farm-structure but also with respect to patterns of structural change. In the present paper, the different farm-development-strategies that cause these regional patterns are explained economically. As a central cause for their stability in a competitive environment, the relatedness of agricultural production to the non-renewable factor land is identified. Moreover, the coordination of the different strategies, which results in regional clusters, is shown to evolve endogenously in a model of strategic interaction on the land-market. It is demonstrated that due to the existence of rents of the status quo and resulting non-linearity in farmersâ reaction-curves, coordination-failures and multiple equilibria are possible. The theoretically derived results confirm the notion that not only farmersâ decisions determine structural development but also the initial structural situation heavily influences upon farmersâ decisions. The interdependence between structure and behaviour is reinforced by the important role of expectation concerning competitorsâ behaviour in strategic interaction, because these expectations are coined by experience.
    Keywords: Market Structure, Firm Behaviour, Equilibria, Rationality, Farming, Complementarity, Competition, Disequilibrium Dynamics, Agriculture, Agribusiness, Agricultural and Food Policy, Farm Management, Institutional and Behavioral Economics,
    Date: 2009–09
  2. By: Andersson, Camilla (Department of Economics, Umeå University)
    Abstract: In this paper, we examine whether a minimum level of ensured consumption from a social safety net has the potential of breaking the vicious circle of risk avoidance and low return in African agriculture. We study how the implementation of a social safety net programme in Ethiopia has affected the value, risk and composition of farmers’ crop portfolios. The effects of programme participation on the value and risk of the crop portfolio are examined in a Just-Pope production function, and the effects of programme participation on composition of the crop portfolio are tested in a set of acreage response models. The empirical analysis is based on unique household panel data that allow us to control for unobserved heterogeneity. No significant effect on the value and risk of the crop portfolio could be found. However, the programme seems to have brought about some changes in the land allocated to different crops. The greatest effect is towards increased cultivation of perennials, which are high-value, high-risk crops in this part of Ethiopia.
    Keywords: Crop choice; Social safety nets; Food-for-work programmes; PSNP; Ethiopia
    JEL: O22 Q12 Q18
    Date: 2010–05–19
  3. By: Mannberg, Camilla (Department of Economics, Umeå University)
    Abstract: This thesis consists of a summary and four self-contained papers. Paper [I] examines whether the implementation of a social safety net programme in Ethiopia has affected the value, risk and composition of farmers’ crop portfolios. The empirical analysis suggests that the value and risk of the crop portfolio have not been altered due to the programme. However, the programme seems to have brought about some changes in the land allocated to different crops. Paper [II] studies how a social safety net affects farmers’ (dis)investments in productive assets. More specifically, it studies how the Productive Safety Net Programme in Ethiopia has changed livestock and tree holdings. The results indicate no significant effect on livestock holdings, but a significant increase in tree holdings. Paper [III] investigates if there is a problem of adverse selection in formal microlending in rural Bangladesh. The results indicate that farmers who only borrow formally have a shadow price of capital that is substantially higher than the average informal interest rate. This suggests that farmers that only borrow formally are perceived as poor credit risks by informal lenders. Paper [IV] explores the economic incentives surrounding the cultivation of opium poppy in Afghanistan. Specifically, it examines the impact of eradication policies when opium is used as a means of obtaining credit, and when the crops are produced in sharecropping arrangements. The results indicate that both these features are likely to affect the outcome of eradication policies.
    Keywords: Smallholder farming; Public policy; Informal risk strategies; Microcredit; Opium eradication; Development economics; Food policy
    JEL: O22 Q12 Q18 Q18 Q28
    Date: 2010–05–19
  4. By: Singerman, Ariel; Hart, Chad E.; Lence, Sergio H.
    Abstract:  Abstract A survey of organic grain and oilseed producers in Iowa, Minnesota and Wisconsin was conducted to collect information about their demographic characteristics, production and price risk management strategies, yields and losses, and crop insurance decisions. The data are analyzed using a discrete choice model to establish which variables influence organic producers’ decision of whether to purchase crop insurance and also which ones affect the insurance product choice when applicable. The study describes the risk profiles of organic producers, and analyzes whether significant variations exist between organic and conventional methods of production so as to quantitatively determine the differential production risk associated with organic production. This research may contribute to the design of an organic crop insurance policy in which organic producers would be charged according to their idiosyncratic production risks, rather than the arbitrary 5% blanket premium surcharge currently in use.  
    Date: 2010–05–23
  5. By: Goyal, Aparajita
    Abstract: This paper estimates the impact of a change in procurement strategy of a private buyer in the central Indian state of Madhya Pradesh. Beginning in October 2000, internet kiosks and warehouses were established that provide wholesale price information and an alternative marketing channel to soy farmers in the state. Using a new market-level dataset, the estimates suggest a significant increase in soy price after the introduction of kiosks, supporting the predictions of the theoretical model. Moreover, there is a robust increase in area under soy cultivation. The results point towards an improvement in the functioning of rural agricultural markets.
    Keywords: Markets and Market Access,E-Business,Agribusiness,Crops&Crop Management Systems,Access to Markets
    Date: 2010–05–01
  6. By: George Grantham
    Abstract: This paper argues that the conventional Malthusian account of pre-modern economies as constrained by diminishing returns resulting from a fixed land supplied is flawed because it does not recognize the importance of systematic indivisibilities in the production and distribution of farm produce that supported increasing return to additional inputs when the demand price of produce warranted them. Those indivisibilities locked in low-intensity farming practices in places where the demand for produce was diffuse. Most of pre-industrial Europe was in that situation, so average agricultural productivity was low. It was only in regions where urban concentrations of consumers aggregated demand to a level capable of inducing extra investment to exploit latent returns to scale in farming and transportation that the productivity of traditional mixed farming achieved its full potential.
    JEL: N00 N5 N7 Q1 R00 R1
    Date: 2010–05
  7. By: Paulson, Nicholas D.; Katchova, Ani; Lence, Sergio H.
    Abstract: Contracts serve as coordination mechanisms which allocate value, risk, and decision rightsacross buyers and sellers. The use of marketing contracts in agriculture, specifically for crop production,has been increasing over the past decade. This study investigates the determinants ofagricultural marketing contract design employing data from the USDA’s Agricultural ResourceManagement Survey. Models are estimated to analyze the association between producer and contractorcharacteristics, the decision to produce under contract, and the types of contract structuresobserved in practice, while controlling for the potential for endogenous matching betweencontracting parties. Results indicate that while certain producer characteristics are significantlyassociated with the decision to produce corn or soybeans under contract, there is no significantassociation between those characteristics and specific contract attributes.
    JEL: Q13 Q15
    Date: 2010–05–01
  8. By: Schmid, Julia; Hager, Astrid; Jechlitschka, Kurt; Kirschke, Dieter
    Abstract: Policies for rural areas have become an important but complex policy field in the European Union`s Common Agricultural Policy. The purpose of this paper is to report on a methodological approach pursued to model the allocation of EAFRD (European Agricultural Fund for Rural Development) funds in Saxony-Anhalt. We show how an interactive programming approach can be developed and used to support our partner Ministry of Agriculture and the Environment. So far, various key elements of the modeling approach have been specified: the definition of all relevant policy measures and funding options, the assessment of impacts on the regional objectives pursued, the definition of relevant lower and upper bounds, and the formulation of co-financing requirements and possibilities. Some first results reveal potentials for policy adjustment. After some more refinements and specifications, the model is to be used interactively with Ministry representatives for scenario calculations to support policy-making and strategy development for rural development in Saxony-Anhalt.
    Keywords: rural development, interactive programming, EAFRD, multi-level co-financing, Saxony-Anhalt, Agricultural and Food Policy, Agricultural Finance, Community/Rural/Urban Development, Environmental Economics and Policy, Institutional and Behavioral Economics, Public Economics,
    Date: 2010–01
  9. By: Maria Floro; Ranjula Bali Swain
    Abstract: Rising urban poverty and food insecurity are serious concerns in developing countries today. Urban livelihoods and coping strategies remain poorly understood however. This paper examines the response of female and male household members in marginalized urban (predominantly squatter) areas to the risk of food shortage in terms of occupational choice. More specifically, we use probit analyses to investigate whether household vulnerability or the need to provide self-insurance for food security, alongside gender roles, influence a worker’s choice of enterprise activity. We focus our investigation on self-employed women and men using a data set drawn from the 1496 individual sample in 14 urban squatter communities in Bolivia, Ecuador, Philippines and Thailand. Our findings show that selfemployed women in households facing higher risk of food insecurity are likely to engage in food-related enterprise activities and this is especially true in Philippines and Thailand. This suggests the role of occupational choice in in helping urban squatter households in mitigating the risk of food shortage through the selection of an income-generating activity that allows the direct use of unsold inventories for food consumption.
    Keywords: food security, self-employment, occupational choice, urban informal sector
    Date: 2010–05
  10. By: Claudio ARAUJO (Centre d'Etudes et de Recherches sur le Développement International); Catherine ARAUJO BONJEAN (Centre d'Etudes et de Recherches sur le Développement International); Jean-Louis COMBES (Centre d'Etudes et de Recherches sur le Développement International); Pascale COMBES MOTEL (Centre d'Etudes et de Recherches sur le Développement International); Eustaquio J. REIS
    Abstract: The purpose of this paper is to highlight the detrimental impact of land tenure insecurity on deforestation in the Brazilian Amazon. It is related to recent controversies about the detrimental impact of land laws on deforestation, which seem to legitimize land encroachments. The latter is mainly the result of land tenure insecurity which is a key characteristic of this region and results from a long history of interactions between rural social unrest and land reforms or land laws. A simple model is developed where strategic interactions between farmers lead to excessive deforestation. One of the empirical implications of the model is a positive relationship between land tenure insecurity and the extent of deforestation. The latter is tested on data from a panel of Brazilian Amazon municipalities. The negative effect of land tenure insecurity proxied by the number of squatters on deforestation is not rejected when estimations are controlled for the possible endogeneity of squatters. One of the main policy implications is that ex post legalizations of settlements must be accompanied by the enforcement of environmental obligations.
    Keywords: deforestation, land tenure insecurity, squatters, Panel Data Analysis, Brazil
    JEL: Q23 Q15
    Date: 2010
  11. By: Balmann, Alfons; Musshoff, Oliver; Larsen, Karin
    Abstract: This paper uses an agent-based real options approach to analyze whether stronger vertical integration reduces investment reluctance in pork production. A competitive model in which firms identify optimal investment strategies by using genetic algorithms is developed. Two production systems are compared: a perfectly integrated system and a system in which firms produce either the intermediate product (piglets) or the final product (pork). Simulations show that the spot market solution and the perfectly integrated system lead to a very similar production dynamics even with limited information on production capacities. The results suggest that, from a pure real options perspective, spot markets are not significantly inferior to perfectly integrated supply chains.
    Keywords: real options, supply chain, agent-based models, genetic algorithms, Agribusiness, Agricultural and Food Policy, Agricultural Finance, Institutional and Behavioral Economics, Productivity Analysis,
    Date: 2009–09
  12. By: Andersson, Camilla (Department of Economics, Umeå University)
    Abstract: In this paper, we model the economic incentives surrounding opium crop production at farm level in Afghanistan. Specifically, we examine the impact of eradication policies when opium is used as a means of obtaining credit, and when the crops are produced in sharecropping arrangements. The theoretical analysis suggests that when perfect credit markets are available, an increased risk of having the opium poppy eradicated will lead to less land being allocated to opium poppy. Thus, with perfect credit markets, the eradication policy is likely to have the intended effect of lowering opium crop production. However, when opium is sold on futures markets as a means of obtaining credit, the effects of opium eradication are no longer clear-cut: in some cases the outcome may actually increase the land allocated to opium poppy. Finally, the results indicate that when opium is produced in sharecropping arrangements, increased risk of opium eradication will unambiguously make the tenants worse off, while landlords may actually benefit.
    Keywords: Opium; Eradication; Futures markets; Sharecropping
    JEL: Q12
    Date: 2010–05–19
  13. By: Paulo Duarte (Departamento de Gestão e Economia, Universidade da Beira Interior); Ana Rita Pais (Universidade da Beira Interior)
    Abstract: Businesses and communities in rural areas face increased challenges to compete in the globalized tourism market. Rural areas and small communities often have rich endogenous natural resources, which may appeal to a stressed urban public, however, simply possessing these attributes is not sufficient, the must be communicated and promoted to the right people. The purpose of this study is to explore the use of Internet and online marketing tools to improve the competitiveness of small-scale rural tourism companies. The paper presents an overview of the perception, knowledge and use of Internet as a marketing toll by small-scaled rural tourism companies located in Portugal centre region and discusses the challenges and motivations involved in promoting rural tourism in a globalized market. A sample of small-scaled rural tourism companies was inquired about their attitudes toward the use of Internet marketing tools. The results show that Rural Tourism companies have limited knowledge of web marketing tools potential to support the rural tourism and highlight the need to increase the use of Internet as a marketing tool to globally communicate, promote and positioning rural tourism in order to leverage resources and create sustainability.
    Keywords: Rural tourism, SMEs, Internet, Marketing, e-Commerce
    Date: 2010
  14. By: Bokusheva, Raushan
    Abstract: The design and pricing of weather-based crop insurance and weather derivatives is strongly based on an implicit assumption that the dependence structure between yields and weather variables remains unchanged over time. In this paper, we prove this assumption based on empirical time series of weather variables and farm wheat yields from Kazakhstan over the period from 1961 to 2003. By employing two different methods to measure dependence in multivariate distributions – the regression analysis and copula approach – we reveal statistically significant temporal changes in the joint distribution of relevant variables. These empirical results indicate that greater effort is required to capture potential temporal changes in the dependence between yield and weather variables, and subsequently to consider them in the design and rating of weather-based insurance instruments.
    Keywords: weather-based index insurance; dependence structure; copula estimation; Bayesian hierarchical model; Kazakhstan.
    JEL: C32 G22 C11
    Date: 2010–04
  15. By: Acemoglu, Daron (Harvard); Aghion, Philippe (Institute for International Economic Studies, Stockholm University); Bursztyn, Leonardo (Harvard); Hemous, David (Harvard)
    Abstract: This paper introduces endogenous and directed technical change in a growth model with environmental constraints. A unique final good is produced by combining inputs from two sectors. One of these sectors uses “dirty” machines and thus creates environmental degradation. Research can be directed to improving the technology of machines in either sector. We characterize dynamic tax policies that achieve sustainable growth or maximize intertemporal welfare. We show that: (i) in the case where the inputs are sufficiently substitutable, sustainable long-run growth can be achieved with temporary taxation of dirty innovation and production; (ii) optimal policy involves both “carbon taxes” and research subsidies, so that excessive use of carbon taxes is avoided; (iii) delay in intervention is costly: the sooner and the stronger is the policy response, the shorter is the slow growth transition phase; (iv) the use of an exhaustible resource in dirty input production helps the switch to clean innovation under laissez-faire when the two inputs are substitutes. Under reasonable parameter values and with sufficient substitutability between inputs, it is optimal to redirect technical change towards clean technologies immediately and optimal environmental regulation need not reduce long-run growth.
    Keywords: environment; exhaustible resources; directed technological change; innovation
    JEL: C65 O30 O31 O33
    Date: 2010–04–25
  16. By: Chrissochoidis, I.; Huck, S.
    Abstract: Once Wagner’s most popular opera, Lohengrin has suffered scholarly neglect in the postwar period. This essay reengages with the work from the novel perspective of game theory analysis. Centering on Elsa’s breach of the Frageverbot, it offers a rigorous epistemological study of the opera’s main characters. Against traditional interpretations of the heroine’s fatal decision, we propose a complex and psychologically more satisfactory account. Elsa asks the forbidden question because she needs to confirm Lohengrin’s belief in her innocence, a belief that Ortrud successfully eroded in Act II. This novel interpretation reveals Elsa as a rational individual, upgrades the dramatic significance of the Act I combat scene, and signals a hermeneutic return to the heart of opera criticism, the drama itself.
    Date: 2010–04

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