New Economics Papers
on Agricultural Economics
Issue of 2010‒09‒18
nineteen papers chosen by

  1. Could Society’s willingness to reduce pesticide use be aligned with Farmers’ economic self-interest? By Jean-Philippe Boussemart; Hervé Leleu; Oluwaseun Ojo
  2. Retrofitting the Brazilian Biodiesel Programme: Implications for Policy Design By Clovis Zapata; Sara Brune; Jackline Achieng Adero
  3. Analysis of Country of Origin Labeling for Food Products in Taiwan using Auction Experiment By Wen S. Chern; Huei-Ching Lin
  4. Modelling Long Memory Volatility in Agricultural Commodity Futures Returns By Roengchai Tansuchat; Chia-Lin Chang; Michael McAleer
  5. A competing risk model for health and food insecurity in the West Bank By Elisa Cavatorta
  6. Can targeted food taxes and subsidies improve the diet? Distributional effects among income groups By Nordström, Jonas; Thunström, Linda
  7. Urban Bias, Rural-Urban Income Gap and Agricultural Growth: the Resource-Diverting Effect of Rural-Urban Income Gap in China By Yanyan Gao
  8. Guideline for constructing nutrient balance in historical agricultural systemes (and its application to three case-studies in southern Spain) By Manuel González de Molina; Roberto García Ruiz; Gloria Guzmán Casado; David Soto Fernández; Juan Infante Amate
  9. World Food Demand By Grace Gao
  10. Improving wastewater use in agriculture : an emerging priority By Scheierling, Susanne M.; Bartone, Carl; Mara, Duncan D.; Drechsel, Pay
  11. "Exaggerated Death of Distance, Revisiting Distance Effects on Regional Price Dispersions" By Kazuko Kano; Takashi Kano; Kazutaka Takechi
  12. Group Lending Scheme operating through Primary Agricultural Credit Society: A Critical Assessment By Amit, Kundu; Suranjana, Mitra
  13. Where Are the Veterinarian Shortage Areas Anyway? By Tong Wang; David A. Hennessy; Annette M. O'Connor
  14. Feeding Southeast Asia: Mekong River Fisheries and Regional Food Security By Brooke Peterson; Carl Middleton
  15. The Determinants Of the Technical Efficiency of Cotton Farmers in Northern Cameroon By Neba, Cletus; Ngassam, Sylvain; Nzomo, Joseph
  16. Sharing the Cost of Global Warming By Leroux, Justin; de Villemeur, Étienne
  17. Food Consumption Patterns and Malnourished Indian Children: Is there a Link? By Pushkar Maitra; Anu Rammohan; Ranjan Ray; Marie-Claire Robitaille
  18. The price stabilization effects of the EU entry price scheme for fruits and vegetables By Cioffi, Antonio; Santeramo, Fabio Gaetano; Vitale, Cosimo
  19. Meteorological forecasts and the pricing of weather derivatives By Matthias Ritter; Oliver Mußhoff; Martin Odening

  1. By: Jean-Philippe Boussemart (LEM-CNRS (UMR 8179), IÉSEG School of Management,); Hervé Leleu (CNRS-LEM (UMR 8179), IÉSEG School of Management,); Oluwaseun Ojo (CNRS-LEM (UMR 8179), IÉSEG School of Management,)
    Keywords: agricultural intensification (AI), agricultural extensification (AE), pesticide reduction, environmental performance, non parametric cost-functions
    Date: 2010–09
  2. By: Clovis Zapata (International Policy Centre for Inclusive Growth); Sara Brune (Wageningen University, the Netherlands); Jackline Achieng Adero (Wageningen University, the Netherlands)
    Abstract: In the context of oil price volatility and the need to reduce carbon emissions, biofuels are an emerging area of interest for many developing nations as alternative energy sources that, in some instances, can also enhance livelihoods in deprived agricultural areas. There are, however, a number of questions on this front: is it economically and environmentally feasible to incorporate small-scale family farmers into biofuel value chains? Can the production of biofuel feedstocks complement rather than compete with food crops? The experience of Brazil, a pioneer in the adoption of a socially inclusive approach to the production of feedstocks for biodiesel, has elicited much interest. This Policy Research Brief seeks to take stock of recent institutional developments and draw lessons as part of an ongoing learning process in an area where there are still no obvious sustainable business models or easy pathways to foster the inclusion of small-scale farmers. The Brief suggests that incorporation into the biodiesel value chain is both feasible and productive for family farmers. But the extent of the engagement required of intermediaries can be significant in the early stages of the programme in underserviced areas, particularly where farmers are dispersed and have not been extensively involved with market processes. Those embarking on these programmes thus have to consider such a production-support role. Further, the Brief suggests that intercropping (castor and beans, for example) can mitigate the food-fuel tradeoffs. However, the choice of optimal feedstocks from the point of view of equity and sustainability remains an open question.
    Keywords: Retrofitting the Brazilian Biodiesel Programme: Implications for Policy Design
    Date: 2010–08
  3. By: Wen S. Chern; Huei-Ching Lin
    Abstract: The purpose of this study is to evaluate the economic benefits of country of origin labeling (COOL) regulation by estimating the consumerfs willingness to pay (WTP) for Taiwan products vs. other imported products if clearly labeled with their countries of origin. We employ the Vickrey second-price sealed bid auction and conducted auctions in three major cities in Taiwan in 2009. Charcoal-smoked plums from Taiwan and China and oolong teas from Taiwan, China, and Vietnam are auctioned products. One important feature of our experimental design is to investigate the impacts of product tasting on bidding behavior. We estimated Tobit bid models and the OLS premium functions. The regression results show that product tasting affected the participantsf WTP positively or negatively depending on products. Specifically, tasting raised bids for Taiwan and China teas, but lowered bids for Vietnam tea. The econometric results show very high premiums for Taiwan products, ranging from 83% to 109% for tea and 55% to 66% for charcoal-smoked plum. These findings clearly show strong preference of Taiwanese consumers over food and agricultural products produced domestically. It is very important to have rigorous COOL regulation in Taiwan. If all foods and agricultural products are clearly labeled with their countries of origin, Taiwanese consumers and food producers stand to benefit greatly with COOL. The COOL would be one of the best instruments to reduce the negative impacts of agricultural trade liberalization under WTO or ECFA.
    Date: 2010–08
  4. By: Roengchai Tansuchat (Faculty of Economics, Maejo University); Chia-Lin Chang (Department of Applied Economics,); Michael McAleer (Econometric Institute, Erasmus School)
    Abstract: This paper estimates the long memory volatility model for 16 agricultural commodity futures returns from different futures markets, namely corn, oats, soybeans, soybean meal, soybean oil, wheat, live cattle, cattle feeder, pork, cocoa, coffee, cotton, orange juice, Kansas City wheat, rubber, and palm oil. The class of fractional GARCH models, namely the FIGARCH model of Baillie et al. (1996), FIEGACH model of Bollerslev and Mikkelsen (1996), and FIAPARCH model of Tse (1998), are modelled and compared with the GARCH model of Bollerslev (1986), EGARCH model of Nelson (1991), and APARCH model of Ding et al. (1993). The estimated d parameters, indicating long-term dependence, suggest that fractional integration is found in most of agricultural commodity futures returns series. In addition, the FIGARCH (1,d,1) and FIEGARCH(1,d,1) models are found to outperform their GARCH(1,1) and EGARCH(1,1) counterparts.
    Date: 2009–10
  5. By: Elisa Cavatorta (Department of Economics, Mathematics & Statistics, Birkbeck)
    Abstract: This paper explores the interactions between the risk of food insecurity and the decision to health insure in the Palestinian Territories. The risk of adverse health conditions is insurable; the risk of food insecurity is a background risk and no market insurance exists. The vulnerability to food insecurity influences the individual utility from health insuring. We present a competing risk model to reveal this interdependence. We specify the empirical model as a bivariate probit model and evaluate the impact of food insecurity on the household decision to health insure. We find evidence of significant complementarity between the risk of food insecurity and the propensity to health insure. The predicted conditional probabilities reveal that the propensity to health insure is higher in presence of food insecurity among Palestinian households. This study shows that, in presence of a background risk, there are complementarities among risks that policy should be mindful of.
    Date: 2010–09
  6. By: Nordström, Jonas (Department of Economics, Lund University); Thunström, Linda (The Swedish Retail Institute)
    Abstract: This paper analyses distributional effects of revenue-neutral tax reforms aimed at improving dietary quality and encouraging healthier grain consumption. Using data on household grain purchases, we analyse both the impact on dietary quality and the tax incidence among income groups of VAT reforms and excise duty reforms. The VAT reforms include subsidies of healthy products (products labelled with the Swedish National Food Administration’s healthy symbol) funded by increased VAT on ‘less healthy’ products. The excise duty reforms contain a subsidy of fibre content, funded by excise duties on either added sugar or saturated fat. Our results suggest that the VAT reforms have a similar impact on dietary quality across all income groups, with increases in fibre intake, but also unwanted increases in the intake of nutrients frequently overconsumed: fat, salt and sugar. The impact on dietary quality of the VAT reforms is therefore difficult to evaluate. With the exception of the lowest income group, the excise duty reforms seem to have a positive health effect across all other income groups, with increases in the intake of fibre and reductions in the intake of saturated fat, sugar and added sugar. For the lowest income group we find the highest increase in the intake of fibre, but generally an increase in the intake of the other nutrients, too. The excise duty reforms also result in a more energy dense grain diet, with increases in the intake of calories for all income groups. Both the VAT reforms and the excise duty reforms appear to be progressive. The lowest income group pays less food taxes and generally faces a lower overall post-reform price level. The income group that increases its tax payments most is the one with the highest income. This is also the income group that faces the largest increase in the overall post-reform price level.
    Keywords: food; health; taxation; income groups; incidence; consumer economics
    JEL: D12 H22 I12 Q18
    Date: 2010–09–13
  7. By: Yanyan Gao
    Abstract: Urban bias has long been China’s dominant economic policy. The persistent urban bias leads to a severe rural-urban income gap and diverts physical as well as an effect of diverting the rural resource out of agricultural sector, and thus is detrimental to agricultural growth. This paper uses China’s provincial panel data from 1978 to 2007 to investigate the diverting effects of the rural-urban income gap on agricultural growth. The empirical results suggest that the persistent rural-urban income gap caused by urban bias has produced strong current, but smaller lagged resource-diverting effects on agriculture. The further study shows that the diverting effect is decreasing over time and it is larger in the middle provinces than other provinces. The time and region patterns are confirmed to be a “U shape” relationship between the rural-urban income gap and agricultural growth.
    Keywords: Urban Bias, Income Gap, Agricultural Growth, China
    JEL: O13 Q18 R15
    Date: 2010–05
  8. By: Manuel González de Molina; Roberto García Ruiz; Gloria Guzmán Casado; David Soto Fernández; Juan Infante Amate (Agro-Ecosystems History Laboratory. Pablo de Olavide University)
    Abstract: The purpose of this paper is to provide interested researchers with a simple tool to evaluate the efficacy of different methods of fertility replenishment that have accompanied and made possible the contemporary agriculture. We propose a nutrient balance model created especially to be applied to the past. In the first part of this working paper each term in the balance is defined and specified the information the user must input into the model. The second part of this paper reports on the application of this methodology based on the balances of nutrients to the evolution of Andalusian agriculture since the mid 18th Century. The nutrient balances show the effects of agrarian growth in an environmentally limited context, offering reasonable doubt regarding the medium and long-term stability of certain forms of cultivation. The balances show that in the last decades of the 19th Century, productive intensification had reached its ceiling, with livestock numbers levelling off or clearly declining. The deficits of nutrients even began to exceed the fertilisation capacity of the available livestock. The intensification applied in unfertilised rotations and crops had to be sustained through the extraction of soil reserves.
    Keywords: Soil fertility management, Nutrient balances, Past organic agricultures, Agrarian growth, Socio-ecological transition, Agricultural change
    JEL: Q10 Q11 Q19 N53
    Date: 2010–09
  9. By: Grace Gao (UWA Business School, The University of Western Australia)
    Abstract: Food occupies a role of particular importance in the consumer’s budget, especially in poor countries. This paper deals with special issues arising from modelling food consumption patterns in 138 countries, where per capita incomes differ by as much as a factor of 100. We explore various forms of the Engel curve, and emphasise the economic behaviour of the income elasticity and the [0, 1] domain of the budget share. Using a new functional form to allow for the substantial variation in prices across countries, we provide estimates of income and price elasticities in each country. Stress testing is also employed by considering the implications of extreme values of income.
    Date: 2010
  10. By: Scheierling, Susanne M.; Bartone, Carl; Mara, Duncan D.; Drechsel, Pay
    Abstract: Wastewater use in agriculture is a growing practice worldwide. Drivers include increasing water stress, in part due to climate change; increasing urbanization and growing wastewater flows; and more urban households engaged in agricultural activities. The problem with this trend is that in low-income countries, but also in many middle-income countries, it either involves the direct use of untreated wastewater or the indirect use of polluted waters from rivers that receive untreated urban discharges. This poses substantial risks, in particular microbial risks to public health. To address these risks, the World Health Organization in 2006 issued new guidelines for the safe use of wastewater.This paper aims to highlight the growing importance of improving wastewater use in agriculture across the spectrum from lower to high-income countries. It presents an innovative approach linking key issues related to different aspects of wastewater irrigation to a country’s level of economic development. Based on data presented in the World Bank’s World Development Report, it differentiates between four country income levels to create a typology for analyzing current issues, trends, and priorities for improving agricultural wastewater use with a focus on reducing the risks to public health. It also presents the basic principles of the new 2006 World Health Organization Guidelines, and how to apply them. Beyond regulatory aspects, the paper also discusses other aspects that are important for achieving a more integrated approach to agricultural wastewater use, including institutional/planning, technological, economic/financial, and social issues. Finally, the paper provides recommendations for moving the wastewater irrigation agenda forward.
    Keywords: Water and Industry,Wastewater Treatment,Sanitation and Sewerage,Water Supply and Systems,Water Conservation
    Date: 2010–09–01
  11. By: Kazuko Kano (Faculty of Economics, University of Tokyo); Takashi Kano (School of Finance and Economics, The University of Technology Sydney); Kazutaka Takechi (Faculty of Economics, Hosei University)
    Abstract: Past studies in the literature of the law of one price (LOP) show statistically significant but economically subtle roles of geographical distance in regional price dispersions. In this paper, we challenge this empirical "death of distance" as a primary source of LOP violations investigating a unique daily data set of wholesale prices of agricultural products in Japan that enables us to identify source regions and observe product-delivery patterns to consuming regions. We build a simple structural model to explain the observed product-delivery patterns and argue that ignoring the underlying delivery choice results in a serious under-bias toward inferences on distance effects on regional price dispersions due to sample selection. Estimating a sample-selection model, on which theoretical restrictions of our structural model are imposed, with data of several agricultural products, we find quite large estimates of the distance elasticity of price differential compared with conventional estimates. This paper, hence, provides evidence that conventional estimates of the distance elasticity could be heavily biased downwards and spuriously underestimate the role transportation costs play in regional price dispersions and LOP violations.
    Date: 2010–09
  12. By: Amit, Kundu; Suranjana, Mitra
    Abstract: The basic objective of the paper is to identify the effectiveness of group lending based microfinance programme operating through Primary Agricultural Credit Society to improve the economic condition among the rural participants in two blocks of Hooghly district in West Bengal. Here to do the impact study we have considered both Difference-in-Difference and First Difference Method with the help of longitudinal data and it is applied to minimize the possibility of selection bias during the time of drawing samples. It came out from field survey that very few marginal farmers had taken credit from their respective groups for agricultural purposes. Results reveal that there has been no significant impact of microfinance programme in terms of improvement of the outcome variables among the member households in spite of low interest rate charged on loans, high repayment rate within groups and small size of self-help groups. The reasons responsible are lack of skill-based training programmes for the members of groups and lack of marketing facilities to promote and sell the products produced by the members of self-help groups. The only positive aspect is the members can now protect themselves from the crunches of professional money lenders who charged exorbitant interest rates
    Keywords: Microfinance; Self-help groups; Joint liability Credit Contract; Primary Agricultural Credit Society.
    JEL: I38 Q14 G21
    Date: 2010–04–02
  13. By: Tong Wang; David A. Hennessy (Center for Agricultural and Rural Development (CARD)); Annette M. O'Connor
    Abstract: This paper describes an econometric model to evaluate factors associated with a county’s likelihood of being designated as a private practice shortage area under the United States’ Veterinary Medicine Loan Repayment Program (VMLRP). Study determinants of equilibrium food animal veterinarian location choices were also evaluated and used as a benchmark to assess the shortage designation process. On the whole the program appears to perform quite well. For several states, however, VMLRP shortage designations are inconsistent with the model of food animal veterinarian shortages. Comparative shortage is generally more severe in states that have no VMLRP designated private practice shortage counties than in states that do.
    Keywords: economic externalities, food animal veterinarians, loan repayment program.
    Date: 2010–09
  14. By: Brooke Peterson; Carl Middleton
    Abstract: This paper reviews the available literature that links regional food security to the Mekong River’s wild capture fisheries, and argues for recognition of the existing contribution that the fisheries make to regional development. With a focus on the proposed Mekong mainstream dams, it explores how decision-making on large water infrastructure should be strengthened by appropriately recognizing and accounting for basin-wide environmental, social and cultural considerations, in addition to economic factors.
    Keywords: economic factors, regional, food security, Mekong, river, fisheries, development, water, infrastructure, environmental,
    Date: 2010
  15. By: Neba, Cletus; Ngassam, Sylvain; Nzomo, Joseph
    Abstract: This paper, seeks to evaluate the technical efficiency of cotton farms in the northern part of Cameroon through the use of a parametric production frontier. The evaluation approach used is a stochastic type which shows that in spite of the fact that cotton yields in Cameroon are amongst the highest in sub-Saharan Africa, efficiency indexes are still as low as 60% in average. Having had a diagnosis overview aimed at identifying the determinant of technical efficiency with the use of a regression function, the main findings show that the characteristics of the producer as well as environmental factors all influence technical efficiency.
    Keywords: technical efficiency; cotton farms; northern Cameroon
    JEL: D24 Q12
    Date: 2010–06–16
  16. By: Leroux, Justin (HEC Montréal, CIRANO and CIRPEE); de Villemeur, Étienne (Toulouse School of Economics (IDEI & GREMAQ))
    Abstract: Due to meteorological factors, the distribution of the environmental damage due to climate change bears no relationship to that of global emissions. We argue in favor of offsetting this discrepancy, and propose a "global insurance scheme" to be fincanced according to countries responsibility for climate change. Because GHG decay very slowly, we argue that the actual burden of global warming should be shared on the basis of cumulated emissions, raher than sharing the expected costs of actual emissions as in a Pigovian taxation scheme. We characterize new versions of two well-known cost-sharing schemes by adapting the responsibility theory of Bossert and Fleurbaey (1996) to a context with externalities.
    JEL: D62 D63 Q54
    Date: 2010–07
  17. By: Pushkar Maitra; Anu Rammohan; Ranjan Ray; Marie-Claire Robitaille
    Abstract: Despite its economic success, India has made little progress towards meeting its Millennium Development Goal targets of reducing undernourishment, particularly among children. Using nationally representative data, our analysis finds evidence of an improvement in the anthropometric measures of height-for-age, but a worsening in weight-for-height z-scores for children aged 0 – 3 over the period 1998 – 2006. There is also a worsening in both cereal consumption and calorie intake over this period, with some of the most noticeable declines taking place in households with children aged 0 – 3. This suggests a possible link between declining food intake and poor nutritional outcomes of children during this period.
    Keywords: India, Weight-for-height, Height-for-age, calorie consumption, expenditure patterns
    JEL: I12 C25 O12
    Date: 2010–05
  18. By: Cioffi, Antonio; Santeramo, Fabio Gaetano; Vitale, Cosimo
    Abstract: The paper assesses the stabilization effects of the EU import regime for fresh fruit and vegetables based on the entry price system. The analysis is carried out on the EU prices of tomatoes and lemons and those of imports from some of the main competing countries on the EU domestic markets: Morocco, Argentina and Turkey. It is based on the estimation of a threshold vector autoregressive econometric model that is shown capable of taking the workings of the import regime into account. The model shows that prices behave differently when import prices are above/below the trigger entry price. This paper allowed to highlight the cases for which the isolation effect of EPS seems reached and the resulting stabilization effects.
    Keywords: Fruit and vegetables; Entry price system; stabilisation effects; TVAR
    JEL: F13 Q17 Q18
    Date: 2010–07
  19. By: Matthias Ritter; Oliver Mußhoff; Martin Odening
    Abstract: In usual pricing approaches for weather derivatives, forward-looking information such as meteorological weather forecasts is not considered. Thus, important knowledge used by market participants is ignored in theory. By extending a standard model for the daily temperature, this paper allows the incorporation of meteorological forecasts in the framework of weather derivative pricing and is able to estimate the information gain compared to a benchmark model without meteorological forecasts. This approach is applied for temperature futures referring to New York, Minneapolis and Cincinnati with forecast data 13 days in advance. Despite this relatively short forecast horizon, the models using meteorological forecasts outperform the classical approach and more accurately forecast the market prices of the temperature futures traded at the Chicago Mercantile Exchange (CME). Moreover, a concentration on the last two months or on days with actual trading improves the results.
    Keywords: Weather forecasting, weather risk, price forecasting, nancial markets, temperature futures, CME
    JEL: C53 G13 N23
    Date: 2010–09

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