New Economics Papers
on Agricultural Economics
Issue of 2010‒07‒31
33 papers chosen by

  1. Credit risk management in financing agriculture By Wenner, Mark D.
  2. Crop Insurance in India By Gurdev Singh
  3. Rethinking Agricultural Production Collectivities: The case for a group approach to energize agriculture and empower poor farmers By Bina Agarwal
  4. Combining extension services with agricultural credit By Mahajan, Vijay; Vasumathi, K.
  5. Bundling development services with agricultural finance By Campaigne, Jonathan; Rausch, Tom
  6. Understanding gender differences in agricultural productivity in Uganda and Nigeria By Peterman, Amber; Quisumbing, Agnes; Behrman, Julia; Nkonya, Ephraim
  7. Indian Agricultural Scenario and Food Security Concerns in the Context of Climate Change: a Review By Dasgupta, Purnamita; Sirohi, Smita
  8. What is the irrigation potential for Africa? By You, Liangzhi; Ringler, Claudia; Nelson, Gerald; Wood-Sichra, Ulrike; Robertson, Richard; Wood, Stanley; Guo, Zhe; Zhu, Tingju; Sun, Yan
  9. Innovations in rural and agriculture finance By Kloeppinger-Todd, Renate; Sharma, Manohar
  10. Economics of export taxation in a context of food crisis By Bouet, Antoine; Laborde Debucquet, David
  11. Sales location and supply response among semisubsistence farmers in Benin By Takeshima, Hiroyuki; Winter-Nelson, Alex
  12. Potential of carbon markets for small farmers By De Pinto, Alessandro; Magalhaes, Marilia; Ringler, Claudia
  13. World Market Impacts of High Biofuel Use in the European Union By Miguel Carriquiry; Fengxia Dong; Xiaodong Du; Amani Elobeid; Jacinto F. Fabiosa; Ed Chavez; Suwen Pan
  14. Demand-Supply Trends and Projections of Food in India By Surabhi Mittal
  15. Innovations in rural and agriculture finance: Overview By Kloeppinger-Todd, Renate; Sharma, Manohar
  16. Contract Design to Sequester Carbon in Agricultural Soils By Mireille Chiroleu-Assouline; Sébastien Roussel
  17. Rural banking in Africa By van Empel, Gerard
  18. Do Comprehensive Africa Agriculture Development Program (CAADP) Processes Make a Difference to Country Commitments to Develop Agriculture? By Kolavalli, Shashidhara; Flaherty, Kathleen; Al-Hassan, Ramatu; Baah, Kwaku Owusu
  19. The role of public–private partnerships in promoting smallholder access to livestock markets in developing countries By Rich, Karl M.; Narrod, Clare A.
  20. Competition and Collusion in Grain Markets: Basmati Auctions in North India By J.V. Meenakshi; A Banerji
  21. Modelling Thirty Five Years of Coffee Prices in Brazil, Guatemala and India and the Law of One Price By Anindya Banerjee; Sushil Mohan; Bill Russell
  22. Price and Brand Competition between Differentiated Retailers: A Structural Econometric Model By Dubois, Pierre; Jodar-Rosell, Sandra
  23. Precision Farming by Cotton Producers in Twelve Southern States: Results from the 2009 Southern Cotton Precision Farming Survey By Mooney, Daniel F.; Roberts, Roland K.; English, Burton C.; Lambert, Dayton M.; Larson, James A.; Velandia, Margarita; Larkin, Sherry L.; Marra, Michele C.; Martin, Steven W.; Mishra, Ashok; Paxton, Kenneth W.; Rejesus, Roderick; Segarra, Eduardo; Wang, Chenggang; Reeves, Jeanne M.
  24. Eight years of Doha trade talks By Bouet, Antoine; Laborde Debucquet, David
  25. Costs and Benefits to Taxpayers, Consumers, and Producers from U.S. Ethanol Policies By Bruce A. Babcock; Kanlaya J. Barr; Miguel Carriquiry
  26. Migratory responses to agricultural risk in Northern Nigeria By Dillon, Andrew; Mueller, Valerie; Salau, Sheu
  27. New approaches for index insurance By Skees, Jerry R.; Collier, Benjamin
  28. World Food Prices and Monetary Policy By Roberto Chang; Luis Catão
  29. Access, adoption, and diffusion By Kumar, Neha; Quisumbing, Agnes R.
  30. A review of collective action in rural Ghana By Salifu, Adam; Francesconi, Gian Nicola; Kolavalli, Shashidhara
  31. Microinsurance innovations in rural finance By Wiedmaier-Pfister, Martina; Klein, Brigitte
  32. Price, inventories, and volatility in the global wheat market By Pietola, Kyösti; Liu, Xing; Robles, Miguel
  33. Geographical Indications at the WTO: An Unfinished Agenda By Kasturi Das

  1. By: Wenner, Mark D.
    Abstract: A griculture is an inherently risky economic activity. A large array of uncontrollable elements can affect output production and prices, resulting in highly variable economic returns to farm households. In developing countries, farmers also lack access to both modern instruments of risk management—such as agricultural insurance, futures contracts, or guarantee funds—and ex post emergency government assistance. Such farmers rely on different “traditional” coping strategies and risk-mitigation techniques, but most of these are inefficient. Formal and semiformal arrangements—such as contract farming, joint-liability lending, and value-chain integration—have arisen in recent decades, but they too are limited and can be very context sensitive. One consequence of inadequate overall financial risk management is that farmers in general face constrained access to formal finance. The smaller the net worth of the farm household, the worse the degree of exclusion. Formal lenders avoid financing agriculture for a host of reasons: high cost of service delivery, information asymmetries, lack of branch networks, perceptions of low profitability in agriculture, lack of collateral, high levels of rural poverty, or low levels of farmer education and financial literacy. But, predominantly, bank managers around the world say they will not finance agriculture because of the high degree of uncontrolled production and price risk that confronts the sector. A farmer can be an able and diligent manager with an excellent reputation for repayment, guaranteed access to a market, and high-quality technical assistance, but an unexpected drought or flood can force him or her to involuntarily default. In emerging countries with fair to high levels of agricultural market and trade integration, large commercial farmers may escape this predicament because they have the ability to purchase insurance, engage in price hedging, obtain financing overseas, or liquidate assets quickly in the event of a default. Consequently, formal lenders tend to overemphasize the use of immoveable collateral as the primary buffer against default risk, which means they provide services to a limited segment of the farm population. Small- and medium-sized farmers, who constitute the vast majority of farm operators, often do not have secured-title land, which is the preferred type of collateral; if they do, its value may be insufficient to cover the loan in question. Even if farmers have sufficient titled land to collateralize loans, they may refuse low-interest formal loans and assume high-interest informal ones that have no collateral requirements instead. They may also use savings to finance agricultural production because they are averse to risking their most prized possession—land. The result is limited supply or access to formal agricultural financing, even though much of the population of Sub-Saharan Africa and South Asia is rural and depends on agriculture and livestock rearing for their main livelihood activities.
    Keywords: agricultural finance, agriculture finance, Risk management, Rural finance,
    Date: 2010
  2. By: Gurdev Singh
    Abstract: This working paper discusses the dependence of Indian agriculture on uncertain rains. In addition the farmers experience other production risks as well as marketing risks related to different crop enterprises and for different agro-climatic regions and areas. It then argues on the need for crop insurance as an alternative to manage production risk. It then takes up the historical overview of crop insurance products and their performance. It is followed by the discussion on the currently available crop insurance products for specific crops and regions. It discusses at length the two important products, namely, National Agricultural Insurance Scheme and Weather Based Insurance Scheme. It also reflects on some deficiencies in these products.
    Date: 2010–06–29
  3. By: Bina Agarwal (Institute of Economic Growth)
    Abstract: In the face of persistent rural poverty, an incomplete agrarian transition, the predominance of small and marginal farms and an emerging feminization of agriculture, this paper argues for a new institutional approach to poverty reduction, agricultural revival and social empowerment. It makes a strong case for a group approach to agricultural investment and production through promoting collectivities of the poor which, it argues, would be much more effective on all these counts than the traditional individual-oriented approaches. The collectivities proposed here, however, are small-sized, voluntary, socio-economically homogeneous, and participatory in decision-making, and in keeping with the principles emphasized in a human-rights approach to development. This is in sharp contrast to the largely failed historical efforts at early socialist collectivization, and some similar thrusts in non-socialist developing countries in the 1960s and 1970s, which were massive in scale, top-down, and typically coercive and non-participatory. The paper outlines the potential benefits of bottom-up agricultural production collectivities and describes a range of successful cases from the transition economies and South Asia. It also reflects on the contexts in which such collectivities may be expected to succeed, and how these efforts could be replicated for wider geographic coverage and impact.
    Keywords: Agricultural production collectivities, food security, women farmers, self-help groups, transition economies, group farming
    JEL: I38 J16 P32 Q15
    Date: 2010
  4. By: Mahajan, Vijay; Vasumathi, K.
    Abstract: India has nearly 90 million farm households. More than 80 percent of these farmers operate on a small or marginal scale, farming less than two hectares of land. They also usually have one or two buffaloes or cows, reared for milk and dung. Most of these small and marginal farmers fall below the poverty line. To reduce overall poverty in India, it is important to enhance the incomes of small and marginal farmers. One way to do that is to provide credit so they can get access to yield-enhancing inputs like seed, fertilizer, and cattle feed, as well as acquire irrigation pumps and crossbred cattle. But these kinds of investments alone will not raise farmers’ incomes. Agricultural and livestock development services are also crucial to give farmers knowledge of improved practices and strengthen their links to markets. BASIX is an Indian livelihood promotion institution working with more than a million poor households. Its mission is to promote sustainable livelihoods for a large number of rural poor people and women. When it started in 1996, BASIX’s primary focus was delivering microcredit to its customers. In 2001, however, BASIX asked the Indian Market Research Bureau to carry out an impact assessment, and the results were rather disappointing. Only 52 percent of the customers, who had received at least three rounds of microcredit from BASIX, showed a significant increase in their income (compared with a control group); 25 percent reported no change in income level; and 23 percent reported a decline in their income level. BASIX then carried out a detailed study of those who had experienced no increase or a decline in income and found that the reasons for these results could be grouped into three factors: 1. unmanaged risk; 2. low productivity; and 3. unfavorable terms in input and output market transactions.
    Keywords: agricultural extension, BASIX, Rural poverty, Sustainable livelihoods,
    Date: 2010
  5. By: Campaigne, Jonathan; Rausch, Tom
    Abstract: Agriculture is the largest economic sector in most African countries and remains the best opportunity for economic growth and poverty alleviation on the continent. Yet, sadly, the sector has been in decline over the past 40 years, and poor farmers have largely remained poor. This failure is due to many factors, including collapsed agricultural development banks, corruption, inadequate infrastructure, and poor soils and seeds. It has also occurred because smallholder farmers lack access to critical information, market facilitation, and financial intermediation services. This brief reviews the DrumNet Project and its approach to improving farmers’ access to finance in Kenya. The project has found that financing small-scale farmers is challenging given the cost and risk associated with serving rural, relatively isolated clients. Lending becomes increasingly feasible, however, in a supply-chain approach in which farmers are connected to a formal network of buyers, retailers, and financiers.
    Keywords: agriculture finance, DrumNet, economic growth, Poverty reduction, Small-scale farmers, Supply chain management,
    Date: 2010
  6. By: Peterman, Amber; Quisumbing, Agnes; Behrman, Julia; Nkonya, Ephraim
    Abstract: We investigate gender differences in agricultural productivity using data collected in 2005 from Nigeria and in 2003 from Uganda. Results indicate that lower productivity is persistent from female-owned plots and female-headed households, accounting for a range of socioeconomic variables, agricultural inputs, and crop choices using multivariate Tobit models. These results are robust to the inclusion of household-level unobservables. However, productivity differences depend on the type of gender indicator used, crop-specific samples, agroecological region, and inclusion of biophysical characteristics. More nuanced gender data collection and analysis in agricultural research spanning diverse regions are encouraged to identify interventions that will increase productivity and program effectiveness for male and female farmers.
    Keywords: Agricultural productivity, Gender,
    Date: 2010
  7. By: Dasgupta, Purnamita; Sirohi, Smita
    Abstract: This paper presents a brief review of the trends in foodgrain production in India, the determinants of its growth and domestic foodgrain supply projections to draw inferences about the future foodgrain production trends. The foodgrain supply forecasts are examined in relation to the likely demand of foodgrains to answer whether India would have a situation of food surplus or deficit. The paper summarizes the supply and demand side aspects of food security in the context of climate change- covering on one hand, the climate change impact on availability and stability of food supplies and on the other, its likely influence on the access and utilization dimensions of food demand.
    Keywords: food security; climate change
    JEL: Q11 O13 Q54
    Date: 2010
  8. By: You, Liangzhi; Ringler, Claudia; Nelson, Gerald; Wood-Sichra, Ulrike; Robertson, Richard; Wood, Stanley; Guo, Zhe; Zhu, Tingju; Sun, Yan
    Abstract: Although irrigation in Africa has the potential to boost agricultural productivities by at least 50 percent, food production on the continent is almost entirely rainfed. The area equipped for irrigation, currently slightly more than 13 million hectares, makes up just 6 percent of the total cultivated area. Eighty-five percent of Africa’s poor live in rural areas and mostly depend on agriculture for their livelihoods. As a result, agricultural development is key to ending poverty on the continent. Many development organizations have recently proposed to significantly increase investments in irrigation in the region. However, the potential for irrigation investments in Africa is highly dependent upon geographic, hydrologic, agronomic, and economic factors that need to be taken into account when assessing the long-term viability and sustainability of planned projects. This paper analyzes large, dam-based and small-scale irrigation investment needs in Africa based on agronomic, hydrologic, and economic factors. This type of analysis can guide country- and local-level assessment of irrigation potential, which will be important to agricultural and economic development in Africa.
    Keywords: internal rate of return, Investment, irrigation potential, large-scale irrigation, small-scale irrigation,
    Date: 2010
  9. By: Kloeppinger-Todd, Renate; Sharma, Manohar
    Abstract: Most rural households lack access to reliable and affordable finance for agriculture and other livelihood activities. Many small farmers live in remote areas where retail banking is limited and production risks are high. The recent financial crisis has made the provision of credit even tighter and the need to explore innovative approaches to rural and agricultural finance even more urgent. This set of 14 briefs clearly points out the importance of business realities faced by small farmers, including low education levels, the dominance of subsistence farming, and the lack of access to modern financial instruments. These conditions mean that new and innovative institutions are required to reach small farmers. Emerging communication technologies provide new opportunities for rural banking by reducing business costs and alleviating information asymmetries. New financing instruments, such as weather index-based insurance and microinsurance, also have great potential for managing the risks faced by small farmers. In addition, bundling financial services with nonfinancial services like marketing and extension services offers new opportunities for small farmers to increase their productivity and incomes. Finally, an enabling policy environment and legal framework, enforcement of rules and regulations, and a supportive rural infrastructure all contribute immensely to making sustainable access to finance a reality. Table of Contents: •Innovations in rural and agriculture finance: Overview by Renate Kloeppinger-Todd and Manohar Sharma •Financial literacy by Monique Cohen •Community-based financial organizations: Access to Finance for the Poorest by Anne Ritchie •Rural banking in Africa: The Rabobank approach by Gerard van Empel •Rural banking: The case of rural and community banks in Ghana by Ajai Nair and Azeb Fissha •Rural leasing: An alternative to loans in financing income-producing assets by Ajai Nair •Determinants of microcredit repayment in federations of Indian self-help groups by Yanyan Liu and Klaus Deininger •M-PESA: Finding new ways to serve the unbanked in Kenya by Susie Lonie •Biometric technology in rural credit markets: The case of Malawi by Xavier Giné •Credit risk management in financing agriculture by Mark D. Wenner •New approaches for index insurance: ENSO insurance in Peru by Jerry R. Skees and Benjamin Collier •Microinsurance innovations in rural finance by Martina Wiedmaier-Pfister and Brigitte Klein •Combining extension services with agricultural credit: The experience of BASIX India by Vijay Mahajan and K. Vasumathi •Bundling development services with agricultural finance: The experience of DrumNet by Jonathan Campaigne and Tom Rausch
    Keywords: Agricultural innovations -- Developing countries, agriculture finance, Financial crisis, microinsurance, Poverty reduction, rural banking, Rural finance, Rural households, Small farmers,
    Date: 2010
  10. By: Bouet, Antoine; Laborde Debucquet, David
    Abstract: This paper aims to assess the rationales for the use of export taxes, in particular in the context of a food crisis. First, we summarize the effects of export taxes using both partial and general equilibrium theoretical models. When large countries have an objective of constant food domestic prices, in the event of an increase in world agricultural prices the optimal response is to decrease import tariffs in net food-importing countries and to increase export tariffs in net food-exporting countries. The latter decision is welfare improving while the former is welfare reducing: it is the price to pay to get domestic food prices constant. Small countries are harmed by both decisions. Second, we illustrate the costs of a lack of cooperation in and regulation of (binding process) such policies in a time of crisis using a global computable general equilibrium (CGE) model illustration, mimicking the mechanisms that have appeared during the recent food price surge. We conclude with a call for international regulation, in particular because small net food-importing countries may be substantially harmed by these beggar-thy-neighbor policies that amplify the already negative impact of the food crisis.
    Keywords: Computable general equilibrium (CGE), export taxes, Food crisis, optimum tariff,
    Date: 2010
  11. By: Takeshima, Hiroyuki; Winter-Nelson, Alex
    Abstract: In much of rural Africa, high transaction costs limit farmers’ market participation and thus their potential for income growth. Transaction costs can affect not only whether a farmer sells product but also whether sales occur at the farm gate on at a market. If production behavior is related to a chosen sales location, then analysis of interventions can be improved by explicit consideration of the decision of where to sell. This paper develops a double-selection model that explains consumption and production decisions by semi-subsistence farmers who first decide whether to be a seller and then whether to sell at the farm gate or at an off-farm location before deciding on production and consumption. The study tests the validity of this dual-criteria model against a single criterion model in which a grower first decides to be a seller and then decides production, consumption and sales location simultaneously. Dual-criteria and single-criterion models are compared while correcting inconsistency in estimations due to violation of homoskedasticity and normality assumptions in selection equations. The results suggest that the dual-criteria model provides more information than the single-criterion model using a sample of cassava producer in Benin.
    Keywords: agricultural supply response, Development strategies, dual-criteria, sales location, Transaction costs,
    Date: 2010
  12. By: De Pinto, Alessandro; Magalhaes, Marilia; Ringler, Claudia
    Abstract: While agriculture accounts for an estimated 10 to 14 percent of total greenhouse gas emissions, its role as a mitigating force is receiving increasing attention. This discussion paper provides a quick overview of the literature on the climate change mitigation potential of agriculture, the regulatory and voluntary frameworks under which such a contribution could be rewarded, and the economic literature that focuses on agriculture’s participation in climate change mitigation efforts. While there is general agreement on the potential for mitigation, several barriers have prevented farmers from entering the so-called carbon markets. The paper reviews the main challenges faced by smallholder farmers in accessing such markets.
    Keywords: carbon markets, Carbon sequestration, Smallholder farmers,
    Date: 2010
  13. By: Miguel Carriquiry (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); Fengxia Dong (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); Xiaodong Du (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); Amani Elobeid (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); Jacinto F. Fabiosa (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI)); Ed Chavez; Suwen Pan
    Abstract: This study examines the world market impact of an expansion in the biofuel sector in the European Union with particular focus on indirect land-use impacts. In the first scenario, an increase of 1 million tonnes oil equivalent (Mtoe) of wheat ethanol use in the European Union expands world land area used in agricultural commodity production by 366,000 hectares, representing an increase of 0.039% in total area. In the second scenario, an increase of 1 Mtoe of rapeseed oil biodiesel use in the European Union expands world land area by 352,000 hectares, representing an increase of 0.038% in total area. With additional land use somewhat close between the two scenarios, the main difference is the spatial distribution of the sources of additional supply. Because the wheat sector, especially in the European Union, is large (26.4 million hectares), when wheat use for ethanol production expands, most of the adjustment is met within the European Union, with only a 9% reduction in net exports required. In contrast, since the rapeseed sector is smaller (only 7.8 mha in the EU), 57% of additional rapeseed oil used for expanded biodiesel production is supplied from higher imports, allowing substantial adjustment by countries outside of the European Union.
    Keywords: biofuels, land use, partial equilibrium model, rapeseed oil biodiesel scenario, wheat ethanol scenario.
    Date: 2010–07
  14. By: Surabhi Mittal
    Abstract: The present paper presents the supply and demand trends of rice, wheat, total cereals, pulses, edible oil/oilseeds and sugar/sugarcane. It provides the demand and supply projections for food items during 2011, 2021 and 2026. These projections have been based on change in productivity levels, changes in price, growth of population and income growth. A comparison with projections provided by other scholars has also been made in the paper. Subsequently, the future supply-demand gap has been discussed in the light of policy requirements. It is concluded that an increase in total demand is mainly due to growth in population and per capita income. A diversification in consumption basket significantly away from cereals has been observed. On the supply side, production is constrained by low yield growths. This is more specific in context of total cereals and sugarcane. [Working Paper No. 209]
    Keywords: Demand Projection, Supply Projection, India, Food grains
    Date: 2010
  15. By: Kloeppinger-Todd, Renate; Sharma, Manohar
    Abstract: Everywhere in the world, small agricultural producers are entrepreneurs, traders, investors, and consumers, all rolled into one. In all these roles, small agricultural households constantly seek to use available financial instruments to improve their productivity and secure the best possible consumption and investment choices for their families. But the package of financial services available to small farmers in developing countries is severely limited, especially for those living in remote areas with no access to basic market infrastructure. When poor people have limited saving or borrowing options, their investment plans are stifled and it becomes harder for them to break out of poverty. If households have no access to insurance and are unable to accumulate small savings that enable them to pay for household and business expenses, especially during lean seasons, they are forced to limit their exposure to risk, even if high returns are expected, once again making the pathway out of poverty more arduous than necessary. Inadequate access to financial services is thus part of what is often called the “poverty trap.”
    Keywords: agricultural producers, agriculture finance, Developing countries, households, Investment needs, Microfinance, Poverty traps, Rural finance, Small farmers,
    Date: 2010
  16. By: Mireille Chiroleu-Assouline (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Panthéon-Sorbonne - Paris I, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris); Sébastien Roussel (LAMETA - Laboratoire Montpellierain d'économie théorique et appliquée - CNRS : UMR5474 - INRA : UR1135 - CIHEAM - Université Montpellier I - Montpellier SupAgro)
    Abstract: According to several studies, agricultural carbon sequestration could be a relatively low cost opportunity to mitigate greenhouse gas (GHG) concentration and a promising means that could be institutionalised. However the potential for additional carbon quantities in agricultural soils is critical and comes from the agricultural firms behaviour with regards to land heterogeneity. In this paper, our aim is to set incentive mechanisms to enhance carbon sequestration by agricultural firms. A policymaker has to arrange incentives as agricultural firms have private information and do not spontaneously switch to the required practices. Moreover, a novelty in our paper is to show that the potential for additional carbon sequestration is similar to an exhaustible resource. As a result, we construct an intertemporal principal-agent model with adverse selection. Our contribution is to specify contracts in order to induce truthful revelation by the firms regarding their intrinsic characteristics towards carbon sequestration, while analytically characterizing the optimal path to sequester carbon as an exhaustible resource.
    Keywords: Adverse selection ; agriculture ; carbon sequestration ; incentives ; land-use
    Date: 2010–03
  17. By: van Empel, Gerard
    Abstract: Many people in the vast rural areas of Africa lack access to financial services, and most commercial banks are not interested in moving into these areas due to their low income levels, lack of scale economies, and poor infrastructure. Also, few banks actually understand the most common economic activity in rural areas: agriculture. Consequently, the absence of financial institutions in rural Africa has often enticed governments to step in, particularly with state-dominated banks focused on agriculture. Many of these initiatives have failed, however, because they were too bureaucratic, too policy oriented, too concentrated on risk to only one segment of the population, or too weak in customer focus. In addition, clients considered these government-sponsored institutions to be instruments that provided grants; hence, the banks suffered from poor loan-recovery rates. While microfinance institutions have made some inroads into rural Africa with the financial backing of international nongovernmental organizations and other sponsors, their sustainability is questionable. They tend to lack banking licenses and therefore have a very limited product range, and they cannot afford modern technology-based distribution systems.
    Keywords: Agricultural development -- Africa, agriculture finance, Farmers, Rabobank, rural banking, supply chain,
    Date: 2010
  18. By: Kolavalli, Shashidhara; Flaherty, Kathleen; Al-Hassan, Ramatu; Baah, Kwaku Owusu
    Abstract: The CAADP is a commitment of African countries to pursue economic growth through agriculture-led development to reduce poverty and hunger on the continent. It stems from the failure of previous interventions on the continent largely attributed to their weak ownership. CAADP is expected to serve as a framework that adds value to national and regional strategies for the development of agriculture. Some of its key principles that are expected to add value are the building of partnerships, dialogue, peer review, and mutual accountability at all levels as well as exploitation of regional complementarities. CAADP countries are expected to achieve 6 percent growth in the agricultural sector and allocate at least 10 percent of the national budget to agriculture. The objective of this paper is primarily to understand how continental initiatives such as CAADP can and do influence country commitment to seek agriculture-led development. This paper employs Ghana as a case study to examine whether CAADP processes leading up to and including the country roundtable process enhance the visibility of the role of agriculture as a means of reducing poverty. The study explores whether countries take the leadership in adopting the CAADP framework. First, the paper provides perspective on the agricultural sector in Ghana and the role of agriculture in development strategies. Further, it reviews how the processes for implementation of CAADP have evolved and how they have influenced implementation in Ghana. It evaluates what impact CAADP may have on the content of agricultural policies in Ghana. Finally, the paper makes some suggestions for improving CAADP implementation.
    Keywords: Agriculture, CAADP, Development strategies, NEPAD, Participation, values,
    Date: 2010
  19. By: Rich, Karl M.; Narrod, Clare A.
    Abstract: Rising demands for quality and safety measures in high-value agriculture and livestock markets have necessitated the creation of increasingly complex supply chains to manage the flow of goods and information among channel actors. Public–private partnerships (PPPs) can play a key role in strengthening links within the supply chain, particularly where market failures impede access by the poor. This paper examines the potential of PPPs in promoting smallholder access to such supply chains. A conceptual model is presented that highlights the need to generate chain-level benefits for all channel participants in order for PPPs to be sustainable and to adequately address market failures. A case of both a successful and a failed PPP in livestock markets illustrates the utility of this model.
    Keywords: Developing countries, High-value agriculture, public–private partnerships, supply chain,
    Date: 2010
  20. By: J.V. Meenakshi; A Banerji
    Abstract: Many small wholesale grain markets in India are characterized by large numbers of sellers and a relatively small number of buyers, thereby lending the price formation process open to manipulation through collusion. Government intervention limits the extent of such manipulation through the institution of regulated markets, where the rules of exchange are clearly spelled out and the price formation process is transparent. Unfortunately, recent studies that document how agricultural markets operate—especially in Northern India—and the extent to which they hinder or serve farmers, are rare. In this paper we attempt to fill this gap by studying the functioning of a regulated basmati paddy market in the state of Haryana in North India. [Working Paper No. 91]
    Keywords: Wholesale, grain markets, manipulation, price formation, transparent, agricultural markets, basmati, paddy markets
    Date: 2010
  21. By: Anindya Banerjee; Sushil Mohan; Bill Russell
    Abstract: The standard approach to modelling coffee prices ignores the impact that changes in government policies and market structures has on coffee prices. These changes have led to large structural breaks in coffee prices implying the standard estimates are biased. This paper models coffee princes in Brazil, Guatemala and India allowing for the structural breaks. The estimated model provides a consistent description of coffee prices and shows that liberalisation has benefited producers substantially in terms of a higher share of the world price of coffee. We also show that producers have benefited from higher real coffee prices following liberalisation.
    Keywords: coffee prices, cointegration, coffee markets, liberalisation, coffee producers, transfer costs, law of one price
    JEL: Q11 Q17 Q18 C32 C52 F13 F14
    Date: 2010–07
  22. By: Dubois, Pierre; Jodar-Rosell, Sandra
    Abstract: We develop a model of competition between retailer chains with a structural estimation of the demand and supply in the supermarket industry in France. In the model, supermarkets compete in price and brand offer over all food products to attract consumers, in particular through the share of private labels versus national brands across all their products. Private labels can serve as a differentiation tool for the retailers in order to soften price competition. They may affect the marginal costs of all products for the retailer because of eventual quality differences and also by helping retailers to obtain better conditions from their manufacturers. Differentiation is taken into account by estimating a discrete-continuous choice model of demand where outlet choice and total expenditures are determined endogenously. On the supply side, we consider a simultaneous competition game in brand offer and price between retailers to identify marginal costs. After estimation by simulated maximum likelihood, the structural estimates allow to simulate the effect on the equilibrium behavior of retailer chains of a demand shock through an increase in transportation costs for consumers and a merger between two retailer chains.
    JEL: L13 L22 L81
    Date: 2010–04
  23. By: Mooney, Daniel F.; Roberts, Roland K.; English, Burton C.; Lambert, Dayton M.; Larson, James A.; Velandia, Margarita; Larkin, Sherry L.; Marra, Michele C.; Martin, Steven W.; Mishra, Ashok; Paxton, Kenneth W.; Rejesus, Roderick; Segarra, Eduardo; Wang, Chenggang; Reeves, Jeanne M.
    Abstract: Precision Farming by Cotton Producers in Twelve Southern States: Results from the 2009 Southern Cotton Precision Farming Survey
    Keywords: cotton, precision farming, survey, Agribusiness, Farm Management, Production Economics, Research and Development/Tech Change/Emerging Technologies,
    Date: 2010–05
  24. By: Bouet, Antoine; Laborde Debucquet, David
    Abstract: In 2001, the World Trade Organization launched a highly ambitious program of multilateral liberalization. Eight years later, concluding the negotiations is uncertain, though an opportunity still exists. Since 2001, many proposals on market access have been brought to the negotiating table by the E.U., the United States, and the G-20. Because it is politically and economically acceptable to many parties, the final December 2008 package could be the basis of an agreement. An evaluation of these various proposals shows how trade negotiations have been following countries’ strategic interests. In eight years, the ambition of the formula to reduce agricultural market access tariffs has increased, but flexibilities added to accommodate domestic political constraints have offset delivered market access. The December 2008 package would reduce these average tariffs by 25 percent, a reduction very close to the one implied by the Harbinson and Girard proposals of 2003. This has to be compared with the 73 percent reduction in world agricultural protection by the very ambitious 2005 U.S. proposal. The 2005 G-20 and E.U. proposals were intermediate outcomes. The December 2008 package implies a reduction of agricultural protection by 6 percentage points in high-income countries and 0.5 percentage points in middle-income countries. If the U.S. proposal had been applied, these figures would have been 12.4 and 4.7, respectively. Different scenarios imply losses for developing countries, reflecting eroding preferences and rising terms of trade for imported commodities, including food products. We study how this trade reform can be more development-friendly.
    Keywords: Computable general equilibrium (CGE) modeling, Developing countries, Trade negotiations, WTO Doha round,
    Date: 2010
  25. By: Bruce A. Babcock (Center for Agricultural and Rural Development (CARD); Midwest Agribusiness Trade Research and Information Center (MATRIC)); Kanlaya J. Barr; Miguel Carriquiry (Center for Agricultural and Rural Development (CARD); Food and Agricultural Policy Research Institute (FAPRI))
    Abstract: The U.S. ethanol industry is lobbying hard for an extension of existing ethanol import tariffs and blenders tax credits before they expire at the end of 2010. The purpose of this study is to examine the likely consequences on the U.S. ethanol industry, corn producers, taxpayers, fuel blenders, and fuel consumers if current policy is not extended. Impacts of different ethanol policies in both 2011 and 2014 were estimated. Estimates were obtained by developing a new stochastic model that calculates market-clearing prices for U.S. ethanol, Brazilian ethanol, and U.S. corn. The model is stochastic because market-clearing prices are calculated for 5,000 random draws of corn yields and wholesale gasoline prices. Key assumptions in this study are that the strong growth in flex-fuel vehicles in Brazil continues; intermediate ethanol blends with few restrictions are implemented in U.S. markets in 2014; U.S. ethanol production capacity reaches 15 billion gallons in 2014; and Brazilian ethanol production increases by at least 45% by 2014. Projected strong demand for ethanol in Brazil combined with a largely saturated U.S. ethanol market means that elimination of ethanol import tariffs would have almost no impact on U.S. corn and ethanol markets in 2011. Elimination of the tax credit would impact markets modestly, with ethanol production declining by an average of about 700 million gallons. This reduction in ethanol production would cause corn prices to drop by an average of 23 cents per bushel. Ethanol prices would drop by 12 cents per gallon. Elimination of the tax credit would shift the burden of meeting mandates from taxpayers to blenders and consumers. Taxpayers would save more than $6 billion through elimination of the tax credit, or almost $7.00 per gallon of ethanol produced in excess of mandated amounts. The impacts of a change in U.S. ethanol policy in 2014 are larger than 2011 impacts because Brazil has a chance to respond by ramping up its ability to export in response to trade liberalization. But because of strong domestic demand growth in Brazil and limits on how fast Brazilian ethanol production can increase, the impacts of a change in policy are still modest. As long as the mandate is maintained, U.S. ethanol production drops by no more than 500 million gallons, corn prices drop by no more than 16 cents per bushel, and ethanol prices drop by no more than 35 cents per gallon. If the impact of intermediate blends is not as strong as assumed in this study, then there will be less incentive for Brazil to export ethanol and the impacts of tariff elimination would be even more modest.
    Keywords: blenders tax credit, Brazilian ethanol, ethanol import tariffs, U.S. ethanol policy.
    Date: 2010–07
  26. By: Dillon, Andrew; Mueller, Valerie; Salau, Sheu
    Abstract: We investigate the extent in which northern Nigerian households engage in internal migration to insure against ex ante and ex post agricultural risk due to weather-related variability and shocks. We use data on the migration patterns of individuals over a 20-year period and temperature degree-days to identify agricultural risk. Controlling for ex ante and ex post risk, we find that households with higher ex ante risk are more likely to send migrants. Households facing hot shocks before the migrant’s move tend to keep their male migrants in closer proximity. These findings suggest that households use migration as a risk management strategy in response to both ex ante and ex post risk, but that migration responses are gender-specific. These findings have implications not only for understanding the insurance motives of households, but also potential policy responses tied to climatic warming.
    Keywords: Migration, Risk, temperature degree days,
    Date: 2010
  27. By: Skees, Jerry R.; Collier, Benjamin
    Abstract: The El Niño Southern Oscillation (ENSO) is a climate event associated with warming sea surface temperatures in the Pacific Ocean. In years of extreme El Niño events, areas in northern Peru experience catastrophic flooding. As of 2010, it is possible for stakeholders in northern Peru to purchase a new form of insurance that pays out just as flooding begins and stakeholders begin incurring extra costs and consequential losses. Given the high basis risk associated with selling index insurance to households, this insurance is designed for firms and institutions that serve households that are highly exposed to El Niño. ENSO insurance is sold by a Peruvian insurance company, and a major global reinsurer carries most of the risk. This new insurance product is the first insurance to use sea surface temperature as the proxy for catastrophic losses and also the first regulated “forecast index insurance” product in the world. This innovation could enhance progress in developing index-based insurance products for extreme weather events. Recent years have seen a growing number of pilot tests of index insurance for weather risk, motivated by an increased understanding of how natural disasters affect developing countries. Beyond immediate suffering (including deaths, destroyed assets, and lost income), disasters have troublesome indirect effects: economic growth can be disrupted, the poor are thrust into permanent poverty traps, and the mere presence of these risks constrains access to financial services and causes many decisionmakers to pursue low-return, low-risk strategies that impede economic progress. Much of the development of index insurance focuses on agriculture, because activities associated with agriculture remain the primary livelihood strategies for the rural poor in developing countries. Thus far, most index insurance pilots have involved products targeted at households—that is, micro-level products. Index insurance uses an objective measure (an index) of a natural event known to cause losses (such as excess rain, high river levels, or extreme sea surface temperatures). Using an index as the proxy for loss dispenses with expensive loss assessments. Furthermore, use of an index diminishes moral hazard and adverse selection, problems that plague traditional forms of insurance. Given these advantages, index insurance may be well suited to developing countries where data are sparse and delivery of financial services to smallholder households increases the per-unit cost of traditional insurance. Despite the promise of index insurance, uptake by smallholder households is slow. Presently, index insurance may be better suited for risk aggregators—that is, groups or institutions that aggregate the risk of households either through the services they provide or through informal risk-sharing arrangements (for example, agricultural lenders, firms in the value chain, and farmer associations). Focusing first on risk aggregators should also help build linkages and sustainable products that will directly serve smallholder households.
    Keywords: ENSO insurance, Farmers, Flooding, forecast index, index insurance,
    Date: 2010
  28. By: Roberto Chang; Luis Catão
    Abstract: The large swings in world food prices in recent years renew interest in the question of how monetary policy in small open economies should react to such imported price shocks. We examine this issue in a canonical open economy setting with sticky prices and where food plays a distinctive role in utility. We show how world food price shocks affect natural output and other aggregates, and derive a second order approximation to welfare. Numerical calibrations show broad CPI targeting to be welfare-superior to alternative policy rules once the variance of food price shocks is sufficiently large as in real world data.
    Date: 2010–07–13
  29. By: Kumar, Neha; Quisumbing, Agnes R.
    Abstract: This paper assesses long-term impacts of vegetable and polyculture fish production technologies on a variety of measures of household and individual well-being in Bangladesh. In 1996–1997, households were surveyed in three sites where nongovernmental organizations and extension programs were disseminating agricultural technologies—about two to six years after the technologies were first introduced. The same households were reinterviewed in 2006–2007. Using nearest-neighbor matching to construct a statistical comparison group, we find that long-term impacts differ across agricultural technology interventions and across outcomes. Long-term impacts on household-level consumption expenditures and asset accumulation are, in general, insignificant in the improved vegetables sites, but are positive and significant in the individually operated fishponds sites. Interestingly, impacts on individual nutrient intake, nutrient adequacy, and nutritional status do not necessarily follow the pattern of household-level impacts. The improved vegetable program, despite insignificant or even negative impacts at the household level, seems to have resulted in increases in vitamin A consumption (and iron consumption for men), an increase in average weight-for-age Z-scores among children, and a reduction in the proportion of girls stunted and the proportion of boys underweight. Women in the improved vegetable program also experienced increases in body mass index. Impacts in the group-operated fishponds sites on nutrient intake are mostly negative, although we do find improvements in weight-for-age Z-scores and a decline in stunting and wasting among boys. Although one would expect significant improvements in nutritional status in the individually operated fishponds sites, impacts on nutritional status are mixed. Nutrient availability and the fraction of members consuming the recommended daily allowances have improved significantly for most nutrients considered, among men and women. Although indicators of long-term nutritional status worsen, short-term nutritional status indicators improve. The fraction of women with low hemoglobin levels also decreases significantly. We argue that the differences in long-term and short-term impacts arise from several causes: differences in dissemination and targeting mechanisms that may affect what types of households adopt and benefit from the technologies; initial existing differences between control and treatment groups (controlled for using matching methods); the degree to which a technology is divisible and easily disseminated outside the treatment group; and finally, intrahousehold allocation processes that determine how gains from the new technology are allocated among household members.
    Keywords: agricultural technology adoption, long-term impacts, Nutrition,
    Date: 2010
  30. By: Salifu, Adam; Francesconi, Gian Nicola; Kolavalli, Shashidhara
    Abstract: With the beginning of the new millennium and the increasing concerns with regard to wild privatization reforms, African governments, international donors and development scholars have been showing renewed interest in collective action. As a result, farmer-based organization (FBOs) and agricultural cooperatives (agri–coops) are back on the policy agenda for Africa as a preferential means to achieve a more equitable, inclusive and community-driven development of rural areas. The objective of this paper is to provide a snapshot of the patterns and determinants in the development of FBOs and agri–coops in Ghana. With the intention to fill knowledge gaps, harmonize perceptions, update and broaden public understanding of FBOs and agri–coops in Ghana, this review compiles and compares as much secondary evidence as possible and fills in missing evidence through focus group discussions and key informant interviews. The paper concludes with some implications for policy-making and for further and more empirical research.
    Keywords: agricultural cooperatives, Collective action, farmer-based organizations, reviews,
    Date: 2010
  31. By: Wiedmaier-Pfister, Martina; Klein, Brigitte
    Abstract: Poor people in developing countries are vulnerable to a broad range of shocks that affect their livelihoods, including illness, accidents, and death as well as loss of assets such as animals, crops, and machinery. The poor are still predominantly rural, and their vulnerability is even higher than that of their urban peers. Health facilities are less available and less well equipped in rural areas; water, sanitation, roads, and telecommunication are less developed; and people are less educated and not as aware of risk-mitigation mechanisms. Given the rural character of poverty in many countries, poverty reduction remains strongly connected to agricultural development, and sustainable agricultural development depends on well-organized risk mitigation. One important tool for mitigating risk is microinsurance. The International Association of Insurance Supervisors (IAIS) defines microinsurance as “insurance that is accessed by the low-income population, provided by a variety of different providers but run in accordance with generally accepted insurance practices (including the IAIS Insurance Core Principles).” It differs from traditional insurance in that it is adapted to the circumstances of the poor: premiums are low, products have simple designs, it is offered through well-trusted and innovative channels, premium payments are flexible, and claims are settled promptly. Microinsurance has the potential to enable the rural poor to mitigate the effects of shocks that threaten their lives, productivity, and assets. It can help prevent emergencies from depleting poor people’s savings and other assets. Furthermore, it allows households to invest in high-risk, high-return activities by securing the lending risk for agricultural and other investments. Financial sector reforms in many countries have begun to include insurance as an important pro-poor financial service along with other microfinance services such as savings, lending, and cashless payments. According to a study by the International Labour Organization, microinsurance in Africa almost doubled from 2006 to 2009. The survey shows that half of the schemes were growing faster than 30 percent a year between 2007 and 2008. Data on growth in rural areas, however, are not available.
    Keywords: agricultural development, microinsurance, rural areas, rural development policies, Rural finance, Rural poor,
    Date: 2010
  32. By: Pietola, Kyösti; Liu, Xing; Robles, Miguel
    Abstract: The study estimates a conditional mean model for international wheat prices and inventories. Endogenous price volatility and exogenous shocks in the price and inventory series are controlled for in estimation. Redressing the empirical linkage between volatility, prices, and inventories is important because volatility increases returns to inventories, which in turn may imply prices. The problem is also important from the regulator perspective, because publicly funded inventory programs have been traditional measures in stabilizing prices and improving food security by providing a buffer against adverse yield shocks and stock-outs. The structural model underlying the estimating equations is based on a dynamic inventory optimization problem. The data suggest that the price of both wheat and wheat inventories is nonstationary and that they are significantly linked to each other in the short run but do not exhibit a stationary long-run equilibrium relationship. Price volatility is an important determinant in the short-run conditional mean processes for both the price and inventories. The pairwise causal relationships have only one direction each. Inventories imply price volatility, price volatility implies price, and price implies inventories, but not vice versa. The parameter estimates suggest that when inventories decrease, price volatility increases. Thus, low inventories have likely been among the necessary conditions, but have not been a sufficient condition by themselves, for the price surge observed in 2008. The price and inventory movements have a significant negative relationship in the very short run, but it is leveled off over time. A decreasing price implies either inventory build-ups or postponement of inventory withdrawals. Overall, the current and past inventory and price movements are not very valuable in predicting the future price movements, and it is likely that the inventory information announced each month is already in the prices.
    Keywords: international price, inventories, volatility, Wheat,
    Date: 2010
  33. By: Kasturi Das (Research and Information System for Developing Countries)
    Abstract: Over the recent past, Geographical Indication (GI) has emerged as one of the most contentious categories of intellectual property (IP). Two among the three TRIPS issues presently under discussion at the WTO pertain to GIs, the third being the relationship between the TRIPS and the CBD. Interestingly, in sharp contrast to the archetypical North-South divide on IP issues in the realm of the WTO and beyond, in the sphere of GIs one comes across developing countries joining hands with developed countries either as demandeurs or opponents in the ongoing WTO talks, depending on their respective stakes on GIs. The aim of this paper is to provide a concise account of the ongoing WTO discussions on GIs. However, the dynamics of the current negotiations cannot be put into perspective unless judged in the light of the key reasons underlying the discordance between the two sides of this highly contentious area, namely the ‘Old World’ and the ‘New World’. With this aim in view, the paper explores some of the key historical, legal and economic reasons underlying the GI row. Given that the issues presently under discussion have their origin in the Uruguay Round negotiations and the compromise deal on GIs that they culminated into, the paper undertakes a rigorous assessment of the drafting history of the Uruguay Round. It then goes on to track the ongoing negotiations and analyzes various negotiating proposals under consideration on the three GI issues: multilateral register for wines and spirits; extension of the higher level of protection presently available for wines and spirits to all product categories; and the ‘claw-back’ proposal of the European Communities (under the agriculture agenda). The paper argues that the recent emergence of a strategic alliance of more than 100 Member countries in support of a parallelism on the three IP issues may be helpful in pushing the GI agenda forward, including the case of ‘extension’ that has been strongly supported by many developing countries including China, India, Pakistan, and Sri Lanka, among others. However, adequate legal protection at the international level through the ‘extension’ route can at best be regarded as necessary but in no way sufficient for reaping the commercial benefits out of the Southern GIs in the global market. Hence, the developing country proponents of GIs need to weigh the costs and benefits among various issues of interest to them before taking any particular stance at the WTO in the future. Given that the aforesaid strategic alliance was reached at the cost of a significant compromise on the part some of these developing countries on the TRIPS/CBD front, it remains an open question whether such a compromise was worth making for these countries, many of whom could actually have benefited more by getting a better deal on TRIPS/CBD than on GIs!
    Keywords: geographical indication, intellectual property, WTO,
    JEL: F00 F13 F19
    Date: 2010

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.