nep-agr New Economics Papers
on Agricultural Economics
Issue of 2013‒11‒09
fourteen papers chosen by
Angelo Zago
University of Verona

  1. What should every Young Farmer know about Agro lending? By Kovachev, Goran
  2. Prioritizing countries for biofortification Interventions using country-level data By Asare-Marfo, Dorene; Birol, Ekin; Gonzalez, Carolina; Moursi, Mourad; Perez, Salomon; Schwarz, Jana; Zeller, Manfred
  3. Is participatory social learning a performance driver for Chinese smallholder farmers? By Huanxiu GUO; Sébastien Marchand
  4. Financing Agribusiness by State Development Banks - the Case of Macedonia By Kovachev, Goran
  5. The Transmission of Oil and Food Prices to Consumer Prices: Evidence for the MENA Countries By Ansgar Belke; Christian Dreger
  6. The Accession of Kazakhstan, Russia and Ukraine to the WTO: What will it Mean for the World Trade in Wheat? By Burkitbayeva, Saule; Kerr, William A.
  7. Health Insurance Coverage for Low-income Households: Consumption Smoothing and Investment. By Liu, Kai
  8. The Economic Role of RIN Prices By Bruce A. Babcock; Sebastien Pouliot
  9. Modelling production cost scenarios for biofuels and fossil fuels in Europe By Festel, Gunter; Würmseher, Martin; Rammer, Christian; Boles, Eckhard; Bellof, Martin
  10. Strategic Interactions Among Private and Public Efforts when Preventing and Stamping Out an Highly Infectious Animal Disease By David A. Hennessy
  11. A Collection of Slides on Rural Development and Public Policy By Debertin, David L.
  12. The social cost of atmospheric release By Shindell, Drew T.
  13. Distributional effects of water tariff reforms: An empirical study for Lima, Peru By Barde, Julia Alexa; Lehmann, Paul
  14. Land-use impacts in transport appraisal By Börjesson, Maria; Jonsson , Daniel; Berglund, Svante; Almström , Peter

  1. By: Kovachev, Goran
    Abstract: Viable agricultural and rural development is almost impossible without additional finances. Agro lending allows additional capital accumulation necessary for agricultural households to increase its productivity, thus income. Unfortunately, financial institutions perceive agriculture as highly risky to be financed. In fact there are seven major risks immanent for agriculture: production, market, legal, human, technical, financial and political risks. Anyway, young farmers should not be frightened to apply for a loan. In contrary, financial institutions are far less reluctant to borrow to younger than senior farmers because of their courage, entrepreneurship and ability to understand modern agriculture and finance.
    Keywords: young farmers; agriculture; agro-lending; loan; risks
    JEL: G23 H89 Q14
    Date: 2013–10
  2. By: Asare-Marfo, Dorene; Birol, Ekin; Gonzalez, Carolina; Moursi, Mourad; Perez, Salomon; Schwarz, Jana; Zeller, Manfred
    Abstract: Micronutrient malnutrition, also known as hidden hunger, affects two billion people worldwide. In recent years, the global challenge of reducing hidden hunger and hence improving related health outcomes through agricultural interventions has received much attention. One potential solution is biofortification—the process of breeding and delivering staple food crops with higher micronutrient content. Biofortification could prove to be a cost-effective and sustainable strategy, especially in rural areas of many developing countries where production and consumption of staple crops is high and high micronutrient deficiency rates are rampant. The aim of this paper is to develop and implement country-crop-micronutrient–specific biofortification prioritization indices (BPIs) that will rank countries according to their suitability for investment in biofortification interventions to be used by various stakeholders with differing objectives. BPIs combine subindices for production, consumption, and micronutrient deficiency, using country-level crop production and consumption data primarily from the Food and Agriculture Organization (FAO) of the United Nations and iron, zinc, and vitamin A deficiency data from the World Health Organization (WHO). BPIs are calculated for seven staple crops that have been developed and for 127 countries in Africa, Asia, and Latin America and the Caribbean. BPIs should not be used as a one-stop shop for making decisions on biofortification investment decisions because they have several limitations. As they are currently calculated, BPIs do not explicitly take cost-effectiveness into account, neither do they allow for a subnational analysis. Future research will address these shortcomings. For now, the BPIs presented in this paper are useful tools for highlighting those countries that may benefit from significant reductions in micronutrient deficiency through biofortification of staple crops.
    Keywords: Biofortification, food security, Iron, malnutrition, Micronutrient malnutrition, Micronutrients, Micronutrients deficiency, Nutrition, Nutrition security, Vitamin A, Zinc
    Date: 2013
  3. By: Huanxiu GUO (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne : - CLERMONT-FERRAND I); Sébastien Marchand (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: This paper aims to test the effect of smallholder farmers' participatory social learning on their gain of performance in a village of southwest China. By exploring a panel structure survey data collected in the village, we identify the social learning effect using a Spatial Autoregressive (SAR) model. Particularly, we calculate the technical efficiency and environmental efficiency from a SFA model and use them as dependent variables of the model. Moreover, we investigate the social learning of different technologies, i.e., conventional and organic farming, by separating the estimations. Our identification results suggest that the effect of social learning is weak due to the technological heterogeneity in the general case, whilst it is significantly positive for organized organic farming. However, it appears that farmers learn to improve their economic performance (i.e., maximize yield) rather than environmental performance (i.e., minimize environmentally detrimental input). These results reveal a critical limitation of social learning, and demand more environmental orientation in the agricultural extension service, which is expected to guide smallholder farmers and foster their environmental performance for sustainable agricultural development.
    Keywords: Smallholder farming;Social learning;Organic farming;Technical efficiency;Environmental efficiency;China.
    Date: 2013–10–31
  4. By: Kovachev, Goran
    Abstract: In countries where agriculture has substantial role in generating domestic product, sustainable agro-finance can seriously increase economic development. It is well known that agriculture is perceived as risky to be financed by commercial banks. Therefore, creating specific agro-credit lines within state development banks is key element in enhancing agricultural activities. These state development banks, operating in close collaboration with the Government have a significant role in accelerating economic welfare of farmers and rural poor. This study tends to emphasize the importance of creating special lending products targeted towards agriculture. The focus will be put on comparison between the first pillar – direct lending to agriculture and second pillar – lending to agriculture through commercial banks showing the better viability of the later.
    Keywords: sustainable agro-finance; agriculture; risky; economic welfare; rural development; state development banks; agribusiness; direct lending; indirect lending
    JEL: E5 G2 H8 Q1
    Date: 2013–09
  5. By: Ansgar Belke; Christian Dreger
    Abstract: This paper investigates the effects of global oil and food price shocks to consumer prices in Middle East-North African (MENA) countries using threshold cointegration methods. Oil and food price shocks increase domestic prices in the long run, whereby the impact of food prices dominates. While global prices are weakly exogenous, consumer prices respond to deviations from the equilibrium relationship. The short run adjustment pattern exhibits asymmetries and is particularly strong after positive shocks. Downward rigidities on wages may play a crucial role in this regard, as the relatively weak reactions of consumer prices after negative shocks are related to labour market institutions and public subsidies. The more rigid the regulations the more pronounced are the asymmetries. Robustness checks show that international price shocks do not affect GDP growth.
    Keywords: Oil and food price transmission, asymmetric error correction, MENA region
    JEL: C22 E31 Q02
    Date: 2013
  6. By: Burkitbayeva, Saule; Kerr, William A.
    Abstract: International trade in wheat accounts for approximately one third of world grain trade and is expected to double by 2050.The KRU (Kazakhstan, Russia and Ukraine) countries account for approximately a quarter of world wheat exports and are collectively considered one of the key wheat exporting regions. The Ukraine became a member of the WTO only in 2008. Russia became an official member of the WTO in 2012 and Kazakhstan is expected to follow Russia and reach an accession deal with WTO members shortly. As a result of WTO accession, all three countries will be entitled to “most favoured nation” (MFN tariffs), and hence, gain improved access to a number of important markets that have been largely inaccessible due to very high tariffs that could be charged on imports from non-WTO countries. World wheat trade liberalization, reflecting the move to the MFN tariff as a result of accession, was simulated using the global simulation model (GSIM). The KRU region’s increased market accessibility as a result of successful accession to the WTO has the potential to foster important re-alignments in world wheat trade flows, prices and changes in welfare among major wheat trading countries. The simulation results suggest that the change to MFN tariffs leads to KRU countries trading more with now freer markets such as Turkey, the EU and China. Major traditional wheat exporters such as Australia, Canada, the EU, and the US do not seem to be negatively impacted to any important degree. Their relative market access conditions, however, erode in Turkish, Middle Eastern, and North African markets with their exports being diverted and broadly distributed among other countries and regions at marginally reduced prices. Trade liberalization is not uniform across regions and, hence, leads to different net welfare changes across countries. Those welfare changes, however, appear to be modest.
    Keywords: accession, Kazakhstan, MFN, Russia, tariff reduction, Ukraine, wheat, Agribusiness, Agricultural and Food Policy, Demand and Price Analysis, International Development, International Relations/Trade,
    Date: 2013–09
  7. By: Liu, Kai (Dept. of Economics, Norwegian School of Economics and Business Administration)
    Abstract: I estimate the effects of public health insurance on consumption smoothing and investigate the extent to which the public insurance interacts with private arrangements of self-insurance. Exploiting a dramatic expansion in health insurance coverage in rural China, I find that the introduction of public health insurance helps households completely insure against severe health shocks. The health insurance also reduces the magnitude of decline during a health shock in investments in children's education, agricultural activities and durable goods. The evidence suggests that the benefit of social insurance for low-income households could also come from reducing the use of costly smoothing mechanisms.
    Keywords: Public health insurance; Rural China
    JEL: D10 I10 O10
    Date: 2013–10–24
  8. By: Bruce A. Babcock (Center for Agricultural and Rural Development (CARD)); Sebastien Pouliot (Center for Agricultural and Rural Development (CARD))
    Abstract: The Environmental Protection Agency created a tradable commodity called RINs (Renewable Identification Numbers)—serial numbers that allow tracking batches of biofuels—to enforce biofuel mandates. To prove they have met their annual biofuel obligations under the Renewable Fuels Standard gasoline and diesel producers and importers accumulate RINs, by either buying biofuels with attached RINs or by buying detached RINs offered in the RIN market. RINs become detached when biofuels are blended with diesel or gasoline. Blenders who are not obligated parties have no use for their RINs; thus they are willing sellers in the RIN market. The price at which RINs are bought and sold is measured in cents per gallon of ethanol. In 2013, RIN prices have varied dramatically, from less than 10 cents per gallon in January to over 140 cents per gallon in July. As of late October, RIN prices for corn ethanol are about 25 cents per gallon.
    Date: 2013–11
  9. By: Festel, Gunter; Würmseher, Martin; Rammer, Christian; Boles, Eckhard; Bellof, Martin
    Abstract: This paper presents the results of a calculation model for biofuel production costs in 2015 and 2020 based on raw material price projections and considering scale and learning effects. Distinguishing six types of biofuels, the paper finds that scale economies and learning effects are critical for 2nd generation biofuels to become competitive. In case these effects can be utilized, cost saving potentials for 2nd generation biofuels are significant. --
    Keywords: Biofuels,Production Cost Scenarios,Raw Material Price Projection,Conversion Costs
    JEL: L25 L26 J24
    Date: 2013
  10. By: David A. Hennessy (Center for Agricultural and Rural Development (CARD))
    Abstract: Upon outbreak of a contagious animal disease, a primary motive for restoring disease-free status is often to regain access to international product markets. Efforts applied toward continuing or regaining such access is a public good—all growers benefit regardless of extent of private efforts taken while exclusion is impractical. Private incentives to take preventive measures and stamp-out efforts interact in complex ways. There are intra-farm temporal interactions and also inter-farm contemporaneous interactions. Public effort also takes place and interacts with private efforts. This paper provides a succinct multi-agent model to explore these interactions in social optimum and in Nash equilibrium, and also to explore how socially optimal and Nash behavior differ. Comparative statics under social optimality are more straightforward than under Nash equilibrium. Whether in social optimum or Nash equilibrium, public prevention efforts complement both private prevention and private stamp-out efforts. However, public stamp-out efforts substitute for both private stamp-out and private prevention efforts. Reasonable conditions are identified under which Nash levels of private prevention and stamp-out efforts are both below socially optimal levels. Concerning policy prescriptions, efforts to secure property rights and reduce property transfer costs should promote prevention and eradication efforts. Other things equal, public prevention effort should be more effective in promoting welfare than comparable public stamp-out effort. Subsidies on private efforts should favor prevention efforts because subsidies on eradication effort may discourage prevention effort. Even if produce from diseased animals is safe to consume and acceptable to consumers, it may be optimal to destroy such produce.
    Keywords: animal health management, biosecurity; disease prevention; SIS; strategic interactions; trade ban
    JEL: Q17 D62 I10 H40
    Date: 2013–10
  11. By: Debertin, David L.
    Abstract: The slides that follow provide an introduction to rural economic development and public policy. I have scanned the original slides and inserted them into modern PDF and PowerPoint presentations. Some of the hand-made charts have older data, but could be easily updated. These color slides were created in 1979-1980, before the widespread use of personal computers and computer graphics. Programs such as Harvard Graphics were unavailable, let alone in PowerPoint. The Department of Agricultural Economics at the University of Kentucky employed a technical graphics artist who was responsible for designing the charts and graphs by hand, as well as providing visual art work. I have purposely largely kept the slides looking like they would have looked for a presentation made in 1980. These now public-domain slides provide a useful introduction to rural development and public policy for undergraduates, and may still have applications in extension.
    Keywords: public policy, community development, facts and values, Labor and Human Capital, Political Economy, Teaching/Communication/Extension/Profession, Q58,
    Date: 2013–10
  12. By: Shindell, Drew T.
    Abstract: The author presents a multi-impact economic valuation framework called the Social Cost of Atmospheric Release (SCAR) that extends the Social Cost of Carbon (SCC) used previously for carbon dioxide (CO2) to a broader range of pollutants and impacts. Values consistently incorporate health and agricultural impacts of air quality along with climate damages. The latter include damages associated with aerosol-induced hydrologic cycle changes that lead to net climate benefits when reducing cooling aerosols. Evaluating a 1% reduction in current global emissions, benefits with a high discount rate are greatest for reductions of sulfur dioxide (SO2), followed by co-emitted products of incomplete combustion (PIC) and then CO2 and methane. With a low discount rate, benefits are greatest for CO2 reductions, and are nearly equal to the total from SO2, PIC and methane. These results suggest that efforts to mitigate atmosphere-related environmental damages should target a broad set of emissions including CO2, methane and aerosols. Illustrative calculations indicate environmental damages are $150-510 billion per year for current US electricity generation (~6-20¢ per kWh for coal, ~2-11¢ for gas) and $0.73±0.34 per gallon of gasoline ($1.20±0.70 per gallon for diesel). These results suggest that total atmosphere-related environmental damages plus generation costs are greater for coal-fired power than other sources, and damages associated with gasoline vehicles exceed those for electric vehicles. --
    Keywords: environmental economics,valuation,air pollution,climate,government policy
    JEL: Q51 Q53 Q54 Q58
    Date: 2013
  13. By: Barde, Julia Alexa; Lehmann, Paul
    Abstract: This study analyzes the affordability and distributional implications of water tariff reforms for poor water customers under means-tested tariffs in comparison to increasing block tariffs (IBTs) using volumetric targeting. For this purpose, we employ a unique data set for Lima, Peru. Our analysis reveals that from a pro-poor perspective, the performance of means-tested tariffs is mixed. On the one hand, they distribute more income to poor households than the IBTs, given the assumption that the overall revenue to the water supplier remains constant. On the other hand, the share of poor customers who actually benefit from water subsidies declines with means-testing. Nevertheless, means-tested tariffs clearly outperform IBTs in terms of excluding non-poor customers from being subsidized. These findings should be generalized with care as the performance of the tariff crucially depends on the cut-off value for cross-subsidies and the block prices chosen under volumetric targeting and on the design of the means-test. Our analysis further suggests that a proper assessment of individual welfare effects should take household size into account and rest on a broad set of affordability and distributional indicators. Interestingly, our results are relatively insensitive to the price elasticity of water demand. --
    Date: 2013
  14. By: Börjesson, Maria (KTH); Jonsson , Daniel (KTH); Berglund, Svante (WSP); Almström , Peter (WSP)
    Abstract: Cost-Benefit analysis (CBA) is sometimes criticized for not taking account of induced demand due to planning policy or relocalization triggered by large infrastructure investments. There is also a notion among planers and decision makers that accounting for these effects can underestimate the relative merits of rail investments. In this paper we explore if induced demand from relocalization triggered by an infrastructure investment have any significant impact on the CBA outcome. A second aim is to investigate the robustness of the relative CBA ranking of rail and road investments with respect to the general planning policy in the region 25 years ahead. We use a large-scale integrated land-use and traffic model calibrated for the Stockholm region. We find that the induced demand from relocalization triggered by infrastructure investments has a very limited impact on the CBA outcome. This result is largely due to the fact that the population that relocates over 20-30 years is limited in comparison to the total population. Moreover, the uncertainty in the CBA outcome, and in particular the relative ranking of rail and road investments, caused by uncertainties in future land-use policies is limited. As expected, however, the CBA outcome of rail investments is to a larger extent dependent on stronger planning policy than road investments. The results underscores that the planning policy in the region have a considerably stronger impact on accessibility and total car use than individual road or rail investments. Only the largest road investment, a second bypass in the region, induces car use of the same magnitude as the impact of the planning policy in the region.
    Keywords: Cost-Benefit Analysis; Transport planning; Land-use planning
    JEL: C25 D61 J22 R41 R42
    Date: 2013–10–28

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