nep-agr New Economics Papers
on Agricultural Economics
Issue of 2012‒05‒29
seventeen papers chosen by
Angelo Zago
University of Verona

  1. Modeling the Welfare Implications of Agricultural Policies in Developing Countries By Jonasson, Erik; Filipski, Mateusz; Brooks, Jonathan; Taylor, J. Edward
  2. Look who's talking: the impacts of the intrahousehold allocation of mobile phones on agricultural prices By Lee, Kyeong Ho; Bellemare, Marc F.
  3. International standards and small-scale farmer behaviors: evidence from Peru By Lemeilleur, S.
  4. More efficient production subsidies for emerging agriculture in micro Arab states: a conceptual model By Raboy, David G.; Basher, Syed Abul; Hossain, Ishrat; Kaitibie, Simeon
  5. Price expectations and price dynamics: the case of the rice sector in developing Asia By Thomas Barré
  6. Agricultural Productivity Differences and Credit Market Imperfections By Nishida, Keigo
  7. How Do New Cash Crops Spread or Not Spread?: The Case of Rice in a Suburban Area, Ghana By Tachibana, Towa; Sakurai, Takeshi
  8. Estimating transport costs and trade barriers in China: Direct evidence from Chinese agricultural traders By Zhigang Li; Xiaohua Yu; Yinchu Zeng; Rainer Holst
  9. Gradual Land-use Change in New Zealand: Results from a Dynamic Econometric Model By Kerr, Suzi; Olssen, Alex
  10. The Promise and Problems of Pricing Carbon: Theory and Experience By Stavins, Robert Norman; Aldy, Joseph Edgar
  11. Environmental Regulations, Air and Water Pollution, and Infant Mortality in India By Hanna, Rema N.; Greenstone, Michael
  12. Market Design in Cap and Trade Programs: Permit Validity and Compliance Timing By Stephen P. Holland; Michael R. Moore
  13. An Assessment of the Theory of Storage: Has the Relationship between Commodity Price Volatility and Market Fundamentals Changed Over Time? By Giulio Cifarelli; Paolo Paesani
  14. The Heterogeneity of the Cigarette Price Effect on Body Mass Index By George Wehby; Charles J. Courtemanche
  15. The Ensemble Kalman Filter in Bioeconomics By Kvamsdal, Sturla F.; Sandal, Leif K.
  16. « Comparing apples with pears. How differences in pesticide residues regulations impact trade? » By Drogué, S.; DeMaria, F.
  17. The Value of Terroir: Hedonic Estimation of Vineyard Sales Prices By Cross, Robin; Plantinga, Andrew J.; Stavins, Robert Norman

  1. By: Jonasson, Erik (Department of Economics, Lund University); Filipski, Mateusz (University of California, Davis); Brooks, Jonathan (OECD); Taylor, J. Edward (University of California, Davis)
    Abstract: This paper presents a new model which incorporates features of developing country agriculture that may be critical in shaping the welfare outcomes of alternative agricultural policies. The model features heterogeneous households linked through markets in a rural economy-wide structure, with endogenous market participation for farmers facing transactions costs. The model is used for policy simulations, including market price support, production subsidies, input subsidies, transaction cost removal, and unconditional cash transfers. Applications for six countries highlight the diversity of potential impacts of such policies. The simulation results suggest that there are circumstances under which some market interventions, such as input subsidies, may be only slightly less efficient at transferring incomes than direct payments.
    Keywords: agricultural household model; agricultural policy; simulation; transaction costs
    JEL: O12 O13 Q12 Q18
    Date: 2012–05–15
  2. By: Lee, Kyeong Ho; Bellemare, Marc F.
    Abstract: Using data from the Philippines, we study the impact of mobile phones on the prices agricultural producers receive for their cash crop. We first look at the impact on price of mobile phone ownership at the household level. Because this masks a considerable amount of heterogeneity, we then look at the impact on price of the intrahousehold allocation of mobile phones. We find that whether the household owns a mobile phone has no impact on price, but whether a farmer or his spouse own a mobile phone is associated with a 5- to 7-percent increase in price.
    Keywords: Agriculture; Prices Agricultural Prices; Household Models; Intrahousehold Allocations
    JEL: D13 Q13 O13 Q12 O12
    Date: 2012–05–19
  3. By: Lemeilleur, S.
    Abstract: The prevalence of food quality standards in international trade is constantly increasing and has a growing influence on developing countries. A wide range of literature in development economics focused on the determinants of the standard adoption and on the debate of whether international standards exclude small-scale farmers from high-value food markets. Otherwise, when exclusion is pointed out, very little is said on how problematic such forms of exclusion are. In this paper, we use the Hirschman’s (1970) conceptual framework to examine which behaviors small-scale farmers adopt face to the incontrovertible standards, what happens to the farmers that are excluded from a specific certified market, and to what extent small farmers are affected to not be certified. Based on an analysis of primary data collected to examine the implication of GlobalGAP on the mango sector in Peru, we consider three main options for the small-scale farmers: “loyalty” (implementation of the standard under specific conditions), “switch” of market segment, and “exit” from the market. The last option leads farmers to sell all their production to small and volatile exporters, called golondrinos (swallows). We show empirically that some small-scale farmers (8% of the sample) comply with GlobalGAP standard thanks to the support from exporters (farming contracts which include the certification cost), while others switch of market segment by complying with the organic certification (12,5%). Organic certification substitutes for the GlobalGAP requirement in the EU market. Finally, we find a significant level of exit option (24%), especially among smaller farms, less specialized, and furthest from exporter plants. The latter seem very affected by the changes related to the GlobalGAP standard requirements: price risk on their production has increased and their bargaining power and agricultural income have decreased. They are particularly vulnerable because their level of investment (mango trees) impedes to radically change of farm activity. ...French Abstract : L’importance grandissante des standards durables pour les produits agricoles dans le commerce international a un impact de plus en plus important dans les pays en développement. Dans ce papier, nous nous intéressons aux implications de la mise en place du standard Globalgap dans la filière mangue au Pérou pour les petits producteurs locaux.
    JEL: L22 O12 Q13
    Date: 2012
  4. By: Raboy, David G.; Basher, Syed Abul; Hossain, Ishrat; Kaitibie, Simeon
    Abstract: Import-dependent arid Arab micro states such as those in the Persian Gulf are particularly vulnerable to food-security risk. Among the many remedial policy suggestions is some initiation or increase in domestic production to insulate these countries from supply disruption, import price volatility and high import prices. This paper does not address the efficacy of domestic production but notes that such production will require government intervention in the form of production subsidies to mitigate market risk. The narrow focus of this paper is to provide a conceptual model of subsidies that avoids many previous problems in established subsidy systems. The paper describes a subsidy model that makes the most use of market signals, avoids perverse incentives, and provides a structure to encourage efficiency, quality enhancement and product differentiation in agricultural products. The system is designed to be WTO compliant. The model has two components: a calculation of the true economic cost of a unit of an agricultural product and a deficit payment that is calculated to bridge the gap between true economic cost and market remuneration. The structure of the deficit payment is crucial to the establishment of a beneficial incentive system. The paper provides a mathematical rendering of the model, analysis of the associated incentive structure and a numerical example for a hypothetical Arab micro state.
    Keywords: Production subsidies; Arab micro states; Cost of capital; Economic efficiency
    JEL: L11 H21 N55 H25 D24
    Date: 2012–05–17
  5. By: Thomas Barré (CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon Sorbonne, ERUDITE - Equipe de Recherche sur l'Utilisation des Données Individuelles Temporelles en Economie - Université Paris XII - Paris Est Créteil Val-de-Marne : EA437 - Université Paris Est Marne-la-Vallée)
    Abstract: Uncertainty is a crucial issue for producers who must make input decisions without knowing prices and without perfect knowledge of realized output. In this context, price expectations strongly determine the production choices and market prices that result from market-clearing conditions. This study analyzed the role that price expectations play in price dynamics, developing a theoretical model of trade in varieties following Armington (1969) and augmented with yield and price uncertainty to highlight several main determinants of domestic producer prices, including exchange rates, proximity to world markets, input prices, natural disasters, and producers' expectations. An econometric estimation of the rice sector, using a panel of 13 developing Asian countries during 1965-2003, confirmed that expectations count, with a 1% increase in the expected price resulting in a 1.18% decrease in the market price. A simulation exercise based on these empirical results demonstrated that forecasting errors are large. Specifically, Asian rice farmers have a 50% chance of making prediction errors of 10% or more on the final market price. This high error rate suggests the need for developing ways of sharing information, such as radio programs dedicated to agricultural producers or the introduction of futures markets, to stabilize agricultural incomes.
    Keywords: Rice ; Asia ; price dynamics ; price expectations ;
    Date: 2011–10–02
  6. By: Nishida, Keigo
    Abstract: This paper presents a simple model to examine the implication of credit market imperfections when considering the massive variation of agricultural labor productivity across countries. The development of credit markets enables more agents to acquire skills to work in non-agricultural sectors. The expansion of the sectors decreases the labor supply to agriculture as well as increases the supply of modern intermediate inputs to agriculture. Agricultural producers accordingly substitute the relatively cheap intermediate inputs for labor to produce a given level of an agricultural good, and, thereby, output per worker in agriculture is improved. Poor countries with less-developed credit markets are, therefore, far less productive in agriculture than rich countries with well-developed credit markets.
    Keywords: productivity; credit market imperfection; agriculture; skill acquisition; human capital investment; occupational choice
    JEL: O1 O4
    Date: 2012–05–22
  7. By: Tachibana, Towa; Sakurai, Takeshi
    Abstract: This paper examines the determinants of rice-cultivation adoption in inland-valley bottom areas in Ghana. In West African countries, surging import of rice has shown farmers a new and potentially huge income source. Around the second largest urban area in Ghana, Kumsi, there are inland-valley bottoms which are suitable for rain-fed rice cultivation. The puzzle is that not much part of these inland-valley bottoms has been utilized for rice production. In 2001, in four villages around Kumasi, we conducted a detailed household survey both on lowland-rice and upland-maize farmers. We found that the profit from lowland-rice cultivation was significantly lower than that from upland-maize farming. This paper also examines our predictions made from the profit comparisons in 2001 with the results of rice-farmer census conducted in 2011 in the same four villages.
    Date: 2012–04
  8. By: Zhigang Li (University of Hong Kong); Xiaohua Yu (Georg-August-University Göttingen); Yinchu Zeng (Renmin University of China); Rainer Holst (Georg-August-University Göttingen)
    Abstract: Using a unique survey data on agricultural traders in China in 2004, this study provides direct evidence on the significance of inter-regional trade barriers and their key components. Our major findings are as follows. (1) The trade barriers within China are fairly small, accounting for about 20 percent of trade value. (2) Transport and non-transport costs respectively contribute 42% and 58% to the trade barriers. (3) Labor and transport-related taxes are the two largest proportions of total transport costs, and respectively accounts for 35% and 30%. (4) Artificial trade barriers created by the government are not sizable as we perceived. (5) Road quality is crucial for reducing transport costs within China: Increasing transport speed by 1 km per hour, the total transport costs for Chinese agricultural traders would decrease by 0.6 percent mainly due to improved fuel-burning efficiency and reduced labor requirement.
    Keywords: Transport Costs; China; Agricultural Traders; Infrastructure
    Date: 2012–05–16
  9. By: Kerr, Suzi (Motu Economic and Public Policy Research); Olssen, Alex (Motu Economic and Public Policy Research)
    Abstract: Rural land use is important for New Zealand’s economic and environmental outcomes. Using a dynamic econometric model and recent New Zealand data, we estimate the response of land use to changing economic returns as proxied by relevant commodity prices. Because New Zealand is small, export prices are credibly exogenous. We show that land use responses can be slow. Our result implies that policy-induced land-use change is likely to be slow or costly.
    Keywords: Land use, New Zealand, time series
    JEL: Q15 Q24
    Date: 2012–05
  10. By: Stavins, Robert Norman; Aldy, Joseph Edgar
    Abstract: Because of the global commons nature of climate change, international cooperation among nations will likely be necessary for meaningful action at the global level. At the same time, it will inevitably be up to the actions of sovereign nations to put in place policies that bring about meaningful reductions in the emissions of greenhouse gases. Due to the ubiquity and diversity of emissions of greenhouse gases in most economies, as well as the variation in abatement costs among individual sources, conventional environmental policy approaches, such as uniform technology and performance standards, are unlikely to be sufficient to the task. Therefore, attention has increasingly turned to market-based instruments in the form of carbon-pricing mechanisms. We examine the opportunities and challenges associated with the major options for carbon pricing: carbon taxes, cap-and-trade, emission reduction credits, clean energy standards, and fossil fuel subsidy reductions.
    Date: 2011
  11. By: Hanna, Rema N.; Greenstone, Michael
    Abstract: Using the most comprehensive data file ever compiled on air pollution, water pollution, environmental regulations, and infant mortality from a developing country, the paper examines the effectiveness of India’s environmental regulations. The air pollution regulations were effective at reducing ambient concentrations of particulate matter, sulfur dioxide, and nitrogen dioxide. The most successful air pollution regulation is associated with a modest and statistically insignificant decline in infant mortality. However, the water pollution regulations had no observable effect. Overall, these results contradict the conventional wisdom that environmental quality is a deterministic function of income and underscore the role of institutions and politics.
    Date: 2011
  12. By: Stephen P. Holland; Michael R. Moore
    Abstract: Cap and trade programs have considerable heterogeneity in permit validity and compliance timing. For example, permits have different validity across time (e.g., banking, borrowing, and seasons) and space (e.g., zonal restrictions), and compliance timing can be annual, in overlapping cycles, or in multi-year periods. We compare and contrast nine prominent cap and trade programs along these dimensions and construct a general model of permit validity and compliance timing. We derive sufficient conditions under which abatement is invariant to compliance timing, i.e., compliance timing cannot smooth abatement cost shocks. Under these conditions, i) expected compliance costs are invariant, ii) the variance of compliance costs increases with delayed compliance, iii) equilibrium prices may not be unique, and iv) the delayed compliance equilibrium may rely upon non-unique, “degenerate” prices not determined by marginal abatement costs. Degenerate prices are unlikely to be discovered by market forces. We then present two examples which are not invariant to compliance timing. If permit allocation is delayed or if a price cap is implemented with a reserve fund, abatement may depend on compliance timing. We demonstrate the model’s broad applicability by illustrating different types of temporal and spatial permit validity.
    JEL: H4 Q4 Q5
    Date: 2012–05
  13. By: Giulio Cifarelli (DIpartimento Scienze Economiche, Università di Firenze); Paolo Paesani (University of Rome “Tor Vergata”)
    Abstract: In this paper we investigate the relationship between commodity price volatility and market fundamentals comparing the 1920s with the present decade and focusing on cotton and tin. The theory of storage provides the theoretical reference for the analysis. Our first result is to find that the series have widely different properties which reflect the speedier diffusion of information in the markets today. This emerges both in the order of autocorrelation of the VECMs used to analyze the dynamics of the spot and futures returns and in the structure of the GARCH parameterization. Our second finding is to show that, based on full sample correlations, the theory of storage seems to capture the dynamics of data with the exception of historical tin. Rolling correlations, however, qualify this result and show that dynamic correlation for historical tin largely corroborate the theory of reference while recent inroads of financial agents in commodity markets seem to have affected the cotton market, giving prominence to financial risk factors.
    Keywords: Commodities, multivariate GARCH, theory of storage
    JEL: C22 G10 Q14
    Date: 2012
  14. By: George Wehby; Charles J. Courtemanche
    Abstract: Previous studies estimate the average effect of cigarette price on body mass index (BMI), with recent research showing that their different methodologies all point to a negative effect after several years. This literature, however, ignores the possibility that the effect could vary throughout the BMI distribution or across socioeconomic and demographic groups due to differences in underlying preferences for health or risks for obesity. We evaluate heterogeneity in the long-run impact of cigarette price on BMI by performing quantile regressions and stratifying the sample by race, education, age, and sex. Cigarette price has a highly heterogeneous negative effect that is more than three times as strong at high BMI levels – where weight loss is most beneficial for health – than at low levels. The effects are also strongest for blacks, college graduates, middle-aged adults, and women. We also assess the implications for disparities, conduct robustness checks, and evaluate potential mechanisms.
    JEL: I10
    Date: 2012–05
  15. By: Kvamsdal, Sturla F. (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration); Sandal, Leif K. (Dept. of Finance and Management Science, Norwegian School of Economics and Business Administration)
    Abstract: We demonstrate the power of the Ensemble Kalman Filter in specifying ecosystem models ideal for bioeconomic analysis. Bioeconomic analysis requires models to be relatively simple, but models must still capture the nature and dynamics of the system. With the Ensemble Kalman Filter, we are able to capture complex dynamics in multispecies models with models simple enough to allow further bioeconomic analysis. While bioeconomic analysis has had limited influence on management decisions, the advent of new methods and the need for high dimensional ecosystem based management models may make bioeconomic research more relevant in the future. The filter is applied to a ecosystem model of the commercially most important species in the Barents Sea. The simpler, aggregated stochastic biomass models capture the complex dynamics of the pelagic stocks on the level needed for making decisions on for example allowable catches.
    Keywords: Ensemble Kalman Filter; Ecosystem Management; Bioeconomics; Aggregated Biomass Models
    JEL: Q00 Q50 Q57
    Date: 2012–05–14
  16. By: Drogué, S.; DeMaria, F.
    Abstract: The impact of food safety standards on international trade has already been addressed. Generally, economists try to assess trade losses borne by exporters when importing countries impose stricter regulations. In this paper we assess the impact of the Maximum Residue Levels (MRL) of pesticides on the trade of apples and pears. Rather than focusing on a particular pesticide we take into account the entire list of substances set out by the various regulations with the aim of understanding how the similarity (or dissimilarity) of these can affect trade. Most studies assess the impact of sanitary standard regulations introducing directly in the analysis the MLR put in force in the importing country. We assume that what can be crucial is the difference in the tolerance levels of both the importing and exporting country. Having built a similarity index we then introduce it into a gravity equation to assess the impact of differences in MRL of pesticides on the trade of apples and pears of seven exporting and seven importing countries. Results suggest that harmonizing regulations impacts trade differently depending on the exporter. ...French Abstract : L’impact sur le commerce international des standards de sécurité alimentaire a souvent éte étudié. Généralement les économistes essaient d’évaluer les pertes supportées par les exportateurs quand les pays importateurs imposent des réglementations plus strictes. Dans cet article, nous évaluons l’impact des Limites Maximales de Résidus (LMR) de pesticides sur le commerce de pommes et de poires. Plutôt que de se focaliser sur un pesticide en particulier, nous prenons en considération la liste complète des substances établie par les diverses réglementations avec pour but de comprendre comment les similarités (ou différences) entre elles affectent le commerce. La plupart des études évaluent l’impact des réglementations sanitaires en introduisant directement dans l’analyse le LMR en vigueur dans le pays importateur. Nous faisons l’hypothèse que ce qui importe c’est plutôt la différence entre les niveaux de tolérance du pays exportateur et importateur. Après avoir construit un indice de similarité, nous l’introduisons dans une équation de gravité pour évaluer l’impact sur le commerce de pommes et poires des différences entre niveaux acceptables de résidus de pesticides pour sept pays exportateurs et sept pays importateurs. Les résultats suggèrent qu’harmoniser les réglementations aurait un impact différent selon le pays exportateur.
    JEL: Q13 F13
    Date: 2012
  17. By: Cross, Robin; Plantinga, Andrew J.; Stavins, Robert Norman
    Abstract: We examine the value of terroir, which refers to the special characteristics of a place that impart unique qualities to the wine produced. We do this by conducting a hedonic analysis of vineyard sales in the Willamette Valley of Oregon to ascertain whether site attributes, such as slope, aspect, elevation, and soil types, or designated appellations are more important determinants of price. We find that prices are strongly determined by sub-AVA appellation designations, but not by specific site attributes. These results indicate that the concept of terroir matters economically, although the reality of terroir – as proxied for by locational attributes – is not significant.
    Date: 2011

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