nep-agr New Economics Papers
on Agricultural Economics
Issue of 2010‒07‒03
nineteen papers chosen by
Angelo Zago
University of Verona

  1. Efficiency of Root Crop Production in the Fiji Islands By Henry Haszler; Phillip Hone; Mary Graham; Chris Doucouliagos
  2. The Impact of Public and Private R&D on Farmers' Production Decisions: Econometric Evidence for Midwestern States, 1960-2004 By Huffman, Wallace E.; Fan, Xing; Schuring, Jessica
  3. The long-run decline in the share of agricultural and food products in international trade, 1951-2000: a gravity equation approach of its causes By Vicent Pinilla; Raúl Serrano
  4. Agricultural Land Elasticities in the United States and Brazil By Kanlaya J. Barr; Bruce A. Babcock; Miguel Carriquiry; Andre Nasser; Leila Harfuch
  5. The Impact of Agricultural Technology Adoption of Income Inequality in Rural China By Shijun Ding; Laura Meriluoto; W. Robert Reed; Daoyun Tao; Haitao Wu
  6. Exploration of Certain Aspects of CARB's Approach to Modeling Indirect Land Use from Expanded Biodiesel Production, An By Bruce A. Babcock; Miguel Carriquiry
  7. Halving hunger: Meeting the first millennium development goal By Fan, Shenggen
  8. Impact of the introduction of decoupled payments on functioning of the German land market: Country report of the EU tender Study on the functioning of land markets in those EU member states influenced by measures applied under the Common Agricultura By Möller, Lioudmila; Henter, Sibylle Henriette; Kellermann, Konrad; Röder, Norbert; Sahrbacher, Christoph; Zirnbauer, Martin
  9. FDI in Agricultural Land, Welfare and Unemployment in a Developing Economy By Chaudhuri, Sarbajit; Banerjee, Dibyendu
  10. Pass-Through in United States Beef Cattle Prices By Huan Zhao; Xiaodong Du; David A. Hennessy
  11. The Agricultural Sector in Argentina: Major Trends and Recent Developments By Lence, Sergio H.
  12. The Impact of Index and Swap Funds on Commodity Futures Markets: Preliminary Results By Scott H. Irwin; Dwight R. Sanders
  13. Agricultural distortions in Sub-Saharan Africa : trade and welfare indicators, 1961 to 2004 By Croser, Johanna; Anderson, Kym
  14. Changing contributions of different agricultural policy instruments to global reductions in trade and welfare By Croser, Johanna; Anderson, Kym
  15. Child labour in the presence of agricultural dualism: possible cures By Dwibedi, Jayanta; Chaudhuri, Sarbajit
  16. Environmental Decision Making and Behaviours: How to People Choose how to Travel to Work? By Arnold, S
  17. The Status of Labor-Saving Mechanization in Fruits and Vegetables By Wallace E. Huffman
  18. Setting Incentives for Collaboration Among Agricultural Scientists: Application of Principal-Agent Theory to Team Work By Wallace E. Huffman
  19. Dynamics of Biofuel Stock Prices: A Bayesian Approach By Xiaodong Du; Dermot J. Hayes; Cindy L. Yu

  1. By: Henry Haszler; Phillip Hone; Mary Graham; Chris Doucouliagos
    Abstract: Improvements in the efficiency of agricultural production represent an important source of growth for the Fiji Islands economy. An analysis of the nature and extent of efficiency differences between root crop farmers suggests that there are modest, but economically significant gains that can be made from improving farm level efficiency. On average, around 25% of root crop production is lost due to technical inefficiency. Although our results did not show that larger producers were more efficient than smaller semi-subsistence producers we did find that focus on a smaller range of crops and concentration on farming in terms of work time both tended to improve the efficiency of farmers that produced dalo. The implications of these results for the agricultural R&D system are discussed. The key policy finding is that given the modest gains in production that are feasible from improving technical efficiency, a major growth in root crop production and consumption is likely to be more dependent on the introduction of new technology than the better dissemination of the existing technology.
    Date: 2010–06–21
  2. By: Huffman, Wallace E.; Fan, Xing; Schuring, Jessica
    Abstract: The objective of this paper is to identify the impact of public and private agriculturalresearch on multi-output multi-input profit maximizing decisions of Midwestern farmers. The mainhypothesis is that investments in public and private R&D shift outward the supply curves for cropand livestock outputs and, in some cases, reduce the demand for inputs. The study uses stateaggregate data for eight Midwestern states over 1960-2004. The own-price elasticities of demand forall inputs are shown to be negative, being larger for agricultural chemicals and energy that for farmcapital services, labor and other materials. Additional public agricultural research increases thesupply of crop and livestock outputs but biases revenue shares toward crop output. Additionalprivate R&D as in adoption of GM corn varieties shifts outward the supply curves for crops andlivestock outputs but biases revenue shares towards crop output. In contrast, an increase in theadoption of GM soybean varieties increases livestock output and deceases crop output. Publicagricultural research reduces the demand for capital services and energy and increases the demandfor agricultural chemicals, other materials, and labor. An increase in the availability of GM soybeanvarieties increases the demand for capital services, agricultural chemicals and other materials andhas weak negative effects on the demand for labor and energy. GM corn variety adoption reducesthe demand for energy but other effects are quite small.
    Keywords: Profit function; midwest agriculture; public research; technology; GMOs; multiple-inputs multiple output; crops
    Date: 2010–04–24
  3. By: Vicent Pinilla (Department of Applied Economics and Economic History, Faculty of Economics and Business Studies, Universidad de Zaragoza); Raúl Serrano (Department of Business Administration, Faculty of Economics and Business Studies, Universidad de Zaragoza)
    Abstract: The objective of this study is to determine the causes of the loss of share of agricultural products and food in international trade. The article compares, using a gravity model, the impact of various factors upon bilateral trade in agricultural products, in manufactures and in total trade, between 1963 and 2000 for a representative sample of 40 countries. The results clearly demonstrate how the low demand elasticity for agricultural products and food, the high degree of protectionism to which they were subjected and their meagre share in intra-industrial trade are the principal causes of their relatively slow growth.
    Keywords: Home market effect, Agri-food trade, GATT, Regional trade agreements, International Trade, Gravity model, Homogenous products
    JEL: F14 N50 N70 F10
    Date: 2010–05
  4. By: Kanlaya J. Barr; Bruce A. Babcock (Center for Agricultural and Rural Development (CARD); Midwest Agribusiness Trade Research and Information Center (MATRIC)); Miguel Carriquiry (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); Andre Nasser; Leila Harfuch
    Abstract: The elasticity of aggregate supply is one key to understanding the degree to which policy-induced increases in demand for biofuel feedstocks or agricultural CO2 offsets will result in higher prices or expanded supply. In this paper we report land supply elasticities for the United States and Brazil estimated directly from the observed changes in cropland and estimated changes in expected returns. The resulting aggregate implied land-use elasticities with respect to price are quite inelastic in the United States and more elastic in Brazil (0.007-0.029 and 0.382-0.895, respectively). However, with pasture land included in Brazil, implied elasticities become much less inelastic (0.007-0.245).
    Keywords: acreage elasticity, Brazil, indirect land-use change, land-use elasticities.
    Date: 2010–02
  5. By: Shijun Ding; Laura Meriluoto (University of Canterbury); W. Robert Reed (University of Canterbury); Daoyun Tao; Haitao Wu
    Abstract: This study analyzes the impact of government efforts to increase agricultural incomes on income inequality in rural China. It collects and analyzes survey data from 473 households in Yunnan, China in 2004. In particular, it investigates the effects of government efforts to promote improved upland rice technologies. Our analysis shows that farmers who adopted these technologies had incomes approximately 32 percent higher than non-adopters. While much of this came from increased incomes from the selling of upland rice, adopters also enjoyed higher incomes from other cash crops. We attribute this to technology spillovers. Despite substantial increases associated with the adoption of improved upland rice technologies, we estimate that the impact on income inequality was relatively slight. This is primarily due to the fact that low income farmers had relatively high rates of technology adoption.
    Keywords: Rural economic development; Chinese economic development; upland rice; rural-urban income inequality; agricultural income policy
    JEL: O13 O18 O53 Q12
    Date: 2010–06–10
  6. By: Bruce A. Babcock (Center for Agricultural and Rural Development (CARD); Midwest Agribusiness Trade Research and Information Center (MATRIC)); Miguel Carriquiry (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI))
    Abstract: This report provides insight into four aspects of modeling indirect land use caused by expanded biofuels production. The report was motivated by the National Biodiesel Board's interest in better understanding how the California Air Resources Board (CARB) estimated an indirect land-use factor for soybean-based biodiesel of 66 gCO2e/MJ, which is more than three times greater than the direct emissions from the fuel. Four aspects of CARB's modeling approach were examined: (1) why CARB estimates that more U.S. forest than pasture will be converted to cropland; (2) whether CARB's predicted land-use changes are consistent with observed U.S. land-use changes in the past decade; (3) how CARB could account for double cropping; and (4) whether CARB's assumption that land brought into production has lower yields than land that was already in production. Results indicate that (1) much of the predicted U.S. forestland conversion is likely due to restrictions on cross-price elasticities imposed by use of the Constant Elasticity of Transformation supply function; (2) a stock of idled cropland could have accommodated the increase in U.S. cropland in 2007 and 2008; (3) the soybean yield elasticity with respect to price can be adjusted to account for double-cropped acres; and (4) there is no empirical support for the assumption that yields in Brazil on new land are lower than yields on old land. The analysis shows how much work needs to be done in this area if the models used to estimate indirect land use are to become widely accepted.
    Keywords: CET supply function, double cropping, idle cropland, indirect land use.
    Date: 2010–02
  7. By: Fan, Shenggen
    Abstract: "In 2000, the world’s leaders set a target of halving the percentage of hungry people between 1990 and 2015. This rather modest target constitutes part of the first Millennium Development Goal, which also calls for halving the proportion of people living in poverty and achieving full employment. However, the effort to meet the hunger target has swerved off track, and the world is getting farther and farther away from realizing this objective. The goal of halving hunger by 2015 can still be achieved, but business as usual will not be enough. What is needed is “business as unusual”—a smarter, more innovative, better focused, and cost-effective approach to reducing hunger. The five elements of this new approach are as follows: Invest in Two Core Pillars: Agriculture and Social Protection The first step in reducing poverty and hunger in developing countries is to invest in agriculture and rural development. Most of the world’s poor and hungry people live in rural areas in Africa and Asia and depend on agriculture for their livelihoods, but many developing countries continue to underinvest in agriculture. Research in Africa and Asia has shown that investments in agricultural research and extension have large impacts on agricultural productivity and poverty, and investments in rural infrastructure can bring even greater benefits. Scaled-up investments in social protection that focus on nutrition and health are also crucial for improving the lives of the poorest of the poor. Although policymakers increasingly see the importance of social protection spending, there are still few productive safety net programs that are well targeted to the poorest and hungry households and increase production capacity. Bring in New Players New actors in global development—the private sector, philanthropic organizations, and emerging economy donors—have important roles to play in reducing hunger in developing countries. But the opportunities presented by these development partners have not been fully harnessed. Given the right incentives, the private sector, for example, can provide effective and sustainable investment and innovation to help in the fight against hunger. In many countries, however, private companies face a lack of incentives and a poor business operating environment, including poor property rights. Emerging economy donors are now playing an increasing role in providing development assistance, but have not yet been fully integrated into the global food security agenda. Adopt a Country-Led, Bottom-Up Approach Effective, efficient, and sustainable policies that are well adapted to the local context can help countries maximize the local impact of the global agenda and tap external development assistance, which increasingly requires approaches that are country led. Successful reforms will be not only country driven, but also local in nature, with poor people acting as a driving force in the development process. At the same time, some issues—like climate change, trade, and control of disease—must be addressed at the global level. The task for individual countries is then to digest and integrate these global issues in developing their own strategies at the country level. Design Policies Using Evidence and Experiments Pilot projects and policy experiments have the potential to improve policymaking by giving decisionmakers information about what works before policies are implemented across the board. Experimentation can improve the success rate of reforms as successful pilot projects are scaled up and unsuccessful policy options are eliminated. To succeed with this approach, policymakers need to allow impartial monitoring of experiments and rapidly transform the lessons learned into large-scale reforms. These changes can create an environment in which policies are continually tried, tested, adjusted, and tried again before being scaled up. Walk the Walk Decisionmakers at the global, regional, and national levels have made commitments to policies and investments for enhancing food security, but they have often failed to meet those commitments. For example, in 2003, African heads of state pledged that their governments would allocate 10 percent of national public budgets to the agricultural sector by 2008, but data for 2007 show that only a handful of countries had met the 10 percent target. These financial commitments must be supported with strong institutions and governance at the global, regional, and national levels and monitored in a timely and transparent fashion. Scaling Up “Business as Unusual” Some aspects of this “business as unusual” approach have already been successful in a few countries, but they need to be scaled up and extended to new countries to have a real impact on the reduction of global hunger. On a larger scale, the global food governance system itself needs to be reformed to work better. Reforms should include (1) improving existing institutions and creating an umbrella structure for food and agriculture; (2) forming government-to-government systems for decisionmaking on agriculture, food, and nutrition; and (3) explicitly engaging the new players in the global food system—the private sector and civil society—together with national governments in new or reorganized international organizations and agreements. A combination of all three options, with a leading role for emerging economies, is required. Finally, though global and national actors have distinct roles to play, it is important that they work together, combining their efforts to fight poverty and hunger. A stronger system of mutual accountability between the two groups would help keep progress on track." from Text
    Keywords: Agricultural development -- Developing countries, Developing countries -- Economic policy, Hunger -- Developing countries, Millennium Development Goals (MDG), Policies, Poverty -- Developing countries, Rural development -- Developing countries, Social protection,
    Date: 2010
  8. By: Möller, Lioudmila; Henter, Sibylle Henriette; Kellermann, Konrad; Röder, Norbert; Sahrbacher, Christoph; Zirnbauer, Martin
    Abstract: Against the background of the reform of the Common Agricultural Policy (CAP) in 2003 the following analysis, brings into focus the responses of the agricultural sector to decoupled subsidies. In particular it addresses the impact of the Single Payment Scheme (SPS) on land sales and rent prices and therefore on farm structure. It also aims to assess the extent to which the reform advances sound and sustainable agriculture and provides incentives for marketorientated farming practices. The study is based on the analysis of statistical data and expert surveys conducted in three selected regions. -- Die vorliegende Studie untersucht den Einfluss der 2003 im Zuge der Reform der Gemeinsamen Agrarpolitik (GAP) durchgeführten Entkopplung der Direktzahlungen auf den Agrarsektor in Deutschland. Besonderer Fokus der Analyse liegt auf der Auswirkung der einmaligen Zahlungen auf die Kauf- und Pachtpreise für das landwirtschaftlich genutzte Land. Des Weiteren wird die Förderung einer nachhaltigen und marktorientierten Landwirtschaft durch die GAP-Reform bewertet. Die Untersuchung basiert auf Auswertung statistischer Daten und auf Expertenbefragungen, welche in drei ausgewählten Bundesländern durchgeführt wurden.
    Keywords: Land markets,midterm review,CAP,structural change,Bodenmärkte,Halbzeitbewertung,GAP,Strukturwandel
    JEL: Q15 Q18
    Date: 2010
  9. By: Chaudhuri, Sarbajit; Banerjee, Dibyendu
    Abstract: The paper purports to examine the consequences of foreign direct investment (FDI) in agricultural land in a developing economy using a three-sector general equilibrium model with simultaneous existence off unemployment of both skilled and unskilled labour. The analysis finds that FDI in agriculture does not only improve national welfare unequivocally but also mitigates unemployment problem of both types of labour. The paper theoretically justifies the desirability of flow of FDI in agriculture in the developing economies.
    Keywords: FDI in agricultural land; national welfare; unemployment; fair wage hypothesis; skilled labour; unskilled labour; general equilibrium
    JEL: F13 J41 F10 O15
    Date: 2010–05–30
  10. By: Huan Zhao; Xiaodong Du (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); David A. Hennessy (Center for Agricultural and Rural Development (CARD))
    Abstract: Feeder cattle are fattened to become fed live cattle six months later. The U.S. feeder cattle industry is intensively competitive, so that market efficiency suggests feeder cattle prices should fully reflect feed prices and information on future fed cattle prices. Employing a long time series (1979-2004) of feeder cattle futures, live cattle futures, and local corn prices, we test whether complete pass-through occurs. The results indicate that an increase of a dollar per hundred pounds in the live cattle price leads to an increase of approximately $1.48 per hundred pounds in the feeder cattle price in one month, about 93% of complete pass-through. The corresponding negative effect of a corn price increase is about 87% of complete pass-through. By contrast with agricultural land markets, the results support the hypothesis of Ricardian rent extraction by the scarce asset owner in feeder cattle markets. The results also provide evidence in favor of informational efficiency in futures markets.
    Keywords: feeder cattle, futures market efficiency, live cattle, structural change.
    JEL: D4 Q13
    Date: 2009–07
  11. By: Lence, Sergio H.
    Date: 2010–05–21
  12. By: Scott H. Irwin; Dwight R. Sanders
    Abstract: This preliminary study examines the impact of index and swap fund participation in agricultural and energy commodity futures markets. Based on new data and empirical analysis the study finds that index funds did not cause a bubble in agricultural futures prices. Using Granger causality methods the study finds no statistically significant relationship between changes in index and swap fund positions and increased market volatility. The evidence is strongest for agricultural futures markets because the data on index trader positions are measured with reasonable accuracy. The evidence is not as strong in the two energy markets examined here because of considerable uncertainty about the degree to which the available data actually reflect index trader positions in these markets.
    Keywords: speculation, agricultural futures markets, speculative bubbles, futures price volatility, index funds and swaps
    Date: 2010–06
  13. By: Croser, Johanna; Anderson, Kym
    Abstract: For decades, agricultural price and trade policies in Sub-Saharan Africa have hampered farmers’ contributions to economic growth and poverty reduction. Although there has been much policy reform over the past two decades, the injections of agricultural development funding, together with ongoing regional and global trade negotiations, have brought distortionary policies under the spotlight once again. A key question asked of those policies is: How much are they still reducing national economic welfare and trade? Economy-wide models are able to address that question, but they are not available for many poor countries. Even where they are, typically they apply to just one particular previous year and so are unable to provide trends in effects over time. This paper provides a partial-equilibrium alternative to economy-wide modeling, by drawing on a modification of so-called trade restrictiveness indexes to provide theoretically precise indicators of the trade and welfare effects of agricultural policy distortions to producer and consumer prices over the past half-century. The authors generate time series of country level indexes, as well as Africa-wide aggregates. They also provide annual commodity market indexes for the region, and a sense of the relative importance of the key policy instruments used.
    Keywords: Economic Theory&Research,Markets and Market Access,Emerging Markets,Trade Policy,Free Trade
    Date: 2010–06–01
  14. By: Croser, Johanna; Anderson, Kym
    Abstract: Trade negotiators and policy advisors are keen to know the relative contribution of different farm policy instruments to international trade and economic welfare. Nominal rates of assistance or producer support estimates are incomplete indicators, especially when (especially in developing countries) some commodities are taxed and others are subsidized, in which case positive contributions can offset negative contributions. This paper develops and estimates a new set of more-satisfactory indicators to examine the relative contribution of different farm policy instruments to reductions in agricultural trade and welfare, drawing on recent literature on trade restrictiveness indexes and a recently compiled database on distortions to agricultural prices for 75 developing and high-income countries over the period 1960 to 2004. Results confirm earlier findings that border taxes are the dominant instrument affecting global trade and welfare, but they also suggest declines in export taxes contributed nearly as much as cuts in import protection to global welfare gains from agricultural policy reforms since the 1980s.
    Keywords: Economic Theory&Research,Emerging Markets,Taxation&Subsidies,Trade Policy,Markets and Market Access
    Date: 2010–06–01
  15. By: Dwibedi, Jayanta; Chaudhuri, Sarbajit
    Abstract: The paper using a three-sector general equilibrium model with agricultural dualism and child labour shows that any fiscal measures designed to benefit backward agriculture cannot cure the problem of child labour in a developing economy although they raise the non-child labour income of the poor households. A policy of capital led growth through inflows of foreign capital, on the contrary, will be able to alleviate the problem by encouraging advanced agriculture and lowering the demand for child labour. The analysis questions the desirability of assisting backward agriculture and advocates in favour of a liberalized investment policy for controlling the menace of child labour in the society.
    Keywords: Child labour; general equilibrium; agricultural dualism; subsidy policy; capital led growth.
    JEL: J13 J10 O17 D10 O12
    Date: 2010–05–15
  16. By: Arnold, S
    Abstract: The daily commute is an important element of transport and travel behaviour in the UK, and as such is relevant to discussions about the environment and sustainability, as well as social well-being. Economic research on the matter focuses on cost and structural factors, with preferences being given, whilst the psychological literature looks at how preferences are formed from attitudes and values, but tends to underplay the role of structural variables. This paper develops a simple structure of how attitudes, values and behaviours are linked, and tests them with multinomial and ordered regressions using data from Defra’s 2007 Survey of Attitudes and Behaviours in Relation to the Environment. The results found that attitudes towards cars and driving were a significant factor in transport choices, but environmental beliefs were only mildly significant, and only for some travel choices. Structural variables, here proxied by distance to work, were influential in most travel choices, as was age. Stated environmental behaviours however, were almost entirely insignificant. The results were robust, and suggest that policies aimed at structural or attitudinal change would be more effective than policies aimed at changing people’s environmental values.
    Date: 2010–06
  17. By: Wallace E. Huffman
    Abstract:  The objective of this paper is to examine the status of labor-saving mechanization in U.S. fruit and vegetable harvesting. Fruit and vegetable harvest mechanization has several potential advantages: reduced harvest costs, eliminate problems associated with finding good quality harvest labor, permit longer harvesting days, and reduce exposure of harvest to human bacteria.         Commercial mechanical harvesters for processed tomatoes, cucumbers, peppers, carrots, tart cherries, apples, grapes, peaches, plums and grapes are in the hands of growers. To my surprise, considerable progress has been made on fresh market sweet cherry, apple and berry harvesters, and in the next few years commercial sales of these machines are expected. A negative shock to labor harvest-labor availability or jump in the harvester wage or piece rate could rapidly accelerate adoption of the best mechanical harvesting technologies by growers and processors.  
    Keywords: mechanized harvesting; fruits; vegetables; processing; fresh market; labor availability; United States
    JEL: Q Q1 Q10 Q16
    Date: 2010–06–22
  18. By: Wallace E. Huffman
    Abstract:  The USDA is attempting to shift more research funds into competitive grants involving collaboration across disciplines on large projects. This type of research structure raises a host of information and incentive issues. The objective of this paper is to shed new light on principal-agent problems that are likely to arise in this new funding structure.
    Keywords: incentives; Principal-agent model; team research; competitive grants; multi-disciplinary research
    Date: 2010–06–22
  19. By: Xiaodong Du (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); Dermot J. Hayes (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); Cindy L. Yu
    Abstract: We use Bayesian Markov Chain Monte Carlo methods to investigate the linkage between the volatility of ethanol security prices and the uncertainty surrounding the profitability of ethanol production and the price variations of non-ethanol energy securities. The joint evolution of return and volatility is modeled as a stochastic process that incorporates jumps in both return and volatility. While a strong and significant correlation is found between the volatility of ethanol securities and profit uncertainty from June 2005 to July 2008, the dynamic pattern of ethanol stock volatility is strikingly similar to that of the S&P 500 energy sector index in the more recent period. Our evidence lends support to the findings in the literature on rational learning from uncertainty in determining the equity price and volatility during the adoption and development of a technological innovation.
    Keywords: jumps, rational learning, stochastic volatility, technological innovation.
    JEL: C11 G12 Q42
    Date: 2009–09

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