nep-agr New Economics Papers
on Agricultural Economics
Issue of 2015‒07‒11
fifteen papers chosen by

  1. Dynamics of Land Use Competition in India: Perceptions and Realities By Sharma, Vijay Paul
  2. Does tenure insecurity explain the variations in land-related investment decisions in rural Ethiopia? By Muna Shifa; Murray Leibbrandt; Martin Wittenberg
  3. Do Regional Trade Agreements Really Boost Trade? Estimates for Agricultural Products By Sébastien Jean; Jean-Christophe Bureau
  4. Use of catastrophe risk models in assessing sovereign food security for risk transfer By SharmamMohan; Hohl,Roman
  5. Income mobility and income inequality in Scottish agriculture By Paul Allanson; Kalina Kasprzyk; Andrew P. Barnes
  6. The Agro-Food Industry, Public Health and Environmental Protection: Investigating the Porter Hypothesis in Food Regulation By PONSSARD Jean-Pierre; SINCLAIR DESGAGNÉ Bernard; SOLER Louis-Georges; GIRAUD HERAUD Eric
  7. Nitrogen Trading in Lake Taupo: An Analysis and Evaluation of an Innovative Water Management Policy By Madeline Duhon; Suzi Kerr
  8. Structural change in agriculture under capacity constraints: An equilibrium approach By Kersting, Stefan; Hüttel, Silke; Odening, Martin
  9. Economic Implications of Historically Evolved Self-Efficacy: Agent-Based Modeling and Empirical Evidence from Rural Ghana By Wuepper, David; Drosten, Barbara
  10. Helping consumers with a front-of-pack label: numbers or colours? Experimental comparison between Guideline Daily Amount and Traffic Light in a diet building exercice By Crosetto, P.; Muller, L.; Ruffieux, B.
  11. Volatility Spillovers between Energy and Agricultural Markets: A Critical Appraisal of Theory and Practice By Chia-Lin Chang; Yiying Li; Michael McAleer
  12. Quantifying through ex post assessments the micro-level impacts of sovereign disaster risk financing and insurance programs By De Janvry,Alain F.
  13. The indirect cost of natural disasters and an economic definition of macroeconomic resilience By Hallegatte,Stephane
  14. Price Dependence between Different Beef Cuts and Quality Grades: A Copula Approach at the Retail Level for the U.S. Beef Industry By Papagiotou, Dimitrios; Stavrakoudis, Athanassios
  15. Price asymmetry between different pork cuts in the USA: a copula approach By Panagiotou, Dimitrios; Stavrakoudis, Athanassios

  1. By: Sharma, Vijay Paul
    Abstract: Diversion of agricultural land to non-agricultural uses is an issue of public debate in every agrarian economy experiencing rapid urbanization and industrial development. However, the issue has become more complex and politicised in India due to widely varied perceptions about the extent of diversion of agricultural land and the causes and socio-economic consequences of loss of agricultural land. It is generally perceived that large-scale conversion of agricultural land to non-agricultural uses has occurred and the issue of acquisition of large tracts of fertile land by corporates and displacement of farmers, agricultural workers, and other rural communities has become a major political rather than socio-economic issue. We try to determine whether the perceptions are consistent with empirical evidence on land use competition and identify main drivers that contribute to loss of agricultural land. The evidence shows that agricultural land conversion has become a serious issue in the country but the extent and intensity varies across different states. Between triennium ending (TE) 1991-92 and TE2011-12, net sown area in the country declined by about 1.8 million ha but it increased in some states, e.g. about 20 lakh ha in Rajasthan and 9.5 lakh ha in Gujarat. In contrast, Odisha lost over 17 lakh ha net sown area, Bihar (including Jharkhand) 12.4 lakh ha, Maharashtra (7.6 lakh ha), Tamil Nadu (7.1 lakh ha), Karnataka (3.1 lakh ha), Andhra Pradesh (2.7 lakh ha) and West Bengal (2.6 lakh ha). Contrary to general perception, Gujarat is the only state which has been able to add about 3 lakh ha to its total agricultural land during last two decades. Area under non-agricultural uses increased from 21.3 million ha in TE1991-92 to 26.3 million ha in TE2011-12 and almost all states witnessed an increase in area under non-agricultural uses. The empirical results revealed that urbanization, road infrastructure expansion and industrial development were the most important factors affecting agricultural land. Therefore, proper planning and management of land resources and appropriate policy framework are required to check conversion of agricultural land. Managing urbanization process and industrial as well as infrastructure expansion in a desired way that protects productive agricultural land and uses barren and unculturable wastelands (about 17.2 million ha) is very critical to country’s prosperity and sustainability. Hence, restriction on conversion of agricultural land for non-agricultural uses (mainly for industrial estates) and proper planning and implementation of land use policies are needed. The recent and current trends in agriculture and non-agriculture land use should not be a cause for either panic or complacency. However, strategic planning that avoids land use conflict by identifying areas, mainly barren and unculturable wastelands, for non-agricultural activities such as urban and industrial expansion and protecting productive farm lands is necessary to address land use conflicts and co-existence of agriculture and other non-agricultural activities. The problem of small and fragmented farms underlines the need for revisiting tenancy laws so as to increase the effective farm size.
  2. By: Muna Shifa (School of Economics, University of Cape Town); Murray Leibbrandt (SALDRU, School of Economics, University of Cape Town); Martin Wittenberg (DataFirst, School of Economics, University of Cape Town)
    Abstract: We examine the relationship between land tenure security and land-related investments in rural Ethiopia. We control for both household heterogeneity and possible endogeneity of tenure security in estimating the impact of tenure security on investment. Empirical results show that variations in levels of tenure security do not explain the observed differences in investment behaviour among farm households in rural Ethiopia. In contrast, land size, access to labour and extension services, and location are seen to be important determinants of land-related investments. The results suggest that without addressing other barriers to investment, land reforms (titling) may not be sufficient to improve land-related investments.
    Keywords: Property rights, land tenure, land titling, agricultural extension services, Africa
    JEL: P14 Q15 Q16
    Date: 2015
  3. By: Sébastien Jean; Jean-Christophe Bureau
    Abstract: The trade effects of tariff preferences are assessed using difference-in-differences panel estimations, whereby exports to third destinations and imports from third origins are used as benchmarks. The method is applied at a detailed product level for 74 agreements, over the period 1998-2009, for the agricultural and food sector. We estimate the mean elasticity of substitution across imports at the product level to be slightly below 4, with significant but limited differences across types of agreements and level of preferential margin. Counterfactual simulations suggest that RTAs have increased bilateral agricultural and food exports between partners by 30% to 40% on average, with a marked heterogeneity across agreements. RTAs are also found to increase the probability to export a given a product to a partner country, but this impact is estimated to be lesser than one percentage point on average.
    Keywords: regional trade agreement;international trade;agricultural products;tariff protection
    JEL: F13 Q17
    Date: 2015–06
  4. By: SharmamMohan; Hohl,Roman
    Abstract: This paper discusses how catastrophe crop risk models can be used to assess food security needs at the sovereign level for the purpose of risk transfer. The rationale for a system to evaluate food security needs at the national level is discussed. The role of technology and remote sensing data availability as an enabler of catastrophe crop risk models is discussed followed by a description of the framework of catastrophe crop models for droughts, representing the peril for which catastrophe models have had the most success. The integration of the output of catastrophe crop models with a food security vulnerability assessment model is described next. Recent advances in analytical modeling of various types of shocks in assessing food security are described but the operational use of these analytical models in the development of food security assessment for risk transfer is seen to be limited for now because of the complexity of these analytical models. The food security vulnerability modeling in the African Risk Capacity, ARC, model is then described as showing a practical solution to the complex problem of assessing food security via a model. Lastly, the challenges faced in risk transfer of sovereign food security risks are discussed.
    Keywords: Food Security,Regional Economic Development,Rural Poverty Reduction,Hazard Risk Management,Food&Beverage Industry
    Date: 2015–07–02
  5. By: Paul Allanson; Kalina Kasprzyk; Andrew P. Barnes
    Abstract: The paper proposes the use of a range of alternative measures to provide a rounded evaluation of the distributional consequences of farm income mobility, where this multifaceted approach is designed to shed light both on the extent to which farm income inequality is a short-run phenomenon due to transitory shocks rather than a chronic or persistent problem due to structural factors, and on the nature of the dynamic processes driving changes in farm income inequality over time. An illustrative empirical study of Scottish agriculture using Farm Accounts Survey data reveals that the majority of farm income inequality was structural in nature despite a substantial degree of income risk due to the volatility of agricultural incomes. Results on the micro-dynamics of inequality change have to be interpreted with caution due to the particular rules governing the assignment of farm identifiers in the survey.
    Keywords: farm incomes, income mobility, income inequality, Scotland
    JEL: D31 D63 Q18
    Date: 2015–07
  6. By: PONSSARD Jean-Pierre; SINCLAIR DESGAGNÉ Bernard; SOLER Louis-Georges; GIRAUD HERAUD Eric
    Abstract: Sustainable food concerns have pushed public authorities to act by means of regulations,\r\nstandards and other devices, and businesses to innovate in their products and production processes.\r\nWe argue that the Porter Hypothesis – which asserts that properly designed and implemented\r\nenvironmental regulation might be good for society as well as the targeted firms – might well be verified in this context. After reviewing and illustrating the working principles and main criticisms of this hypothesis, we provide a more in-depth discussion of nutritional issues. While the literature generally points to organizational imperfections and market failures to validate the Porter Hypothesis,we submit and model another rationale for the agro-food industry, a rationale that is based on consumer behavior.
    Keywords: Sustainable food; Regulation; Innovation; Consumer behavior; Porter Hypothesis.
    JEL: L13 L51 Q55 Q58
    Date: 2015
  7. By: Madeline Duhon (Motu Economic and Public Policy Research); Suzi Kerr (Motu Economic and Public Policy Research)
    Abstract: This paper provides an overview and early evaluation of the Lake Taupo nitrogen cap and trade programme, established as part of Waikato Regional Council’s 2011 Regional Plan Variation Five. The policy establishes a catchment-wide cap on nitrogen losses by allocating farmers individual nitrogen discharge allowances and allowing those farmers flexibility to trade allowances amongst themselves and to sell allowances to a public fund while remaining within the overall catchment cap. The Taupo trading scheme is the world’s first agricultural non-point-source water-quality cap and trade scheme. This paper explains the structure and evolution of the nitrogen trading market, and analyses its impact thus far. Research drawn from written material and descriptive quantitative data provides the basis for analysing the policy, while interviews with relevant stakeholders provide insight into the successful, surprising and contentious issues that arose throughout its development and implementation.
    Keywords: Water quality, water trading, water management, policy
    JEL: C69 Q53 Q57 Q58
    Date: 2015–06
  8. By: Kersting, Stefan; Hüttel, Silke; Odening, Martin
    Abstract: This paper analyses the impact of a tradable production quota on firm entry and exit in the agricultural industry. We develop a dynamic stochastic equilibrium framework considering that a release of production capacity by exiting firms affects the investment options for entrants. Firms' investment and exit decisions depend on future output and quota prices, which in turn will be affected by the evolution of industry structures themselves. Contrary to many static models we find that introducing a quota system may foster structural change. A tradable quota increases the liquidation value and makes inefficient firms cease production despite higher output prices.
    Keywords: dynamic stochastic equilibrium,production quota,firm entry and exit,dairy sector
    JEL: D41 L11 Q11
    Date: 2015
  9. By: Wuepper, David; Drosten, Barbara
    Abstract: We argue that self-efficacy is important for economic performance. Self-efficacy is at the psychological core of agency and entrepreneurship. It enables people to learn, and change and act to better their livelihood. In an agent-based model we show how different levels of individual self-efficacy can evolve as a reaction to environmental demands and rewards to human intervention. The basic idea is that people learn how to best survive in their specific environment and teach this knowledge to their children. Because this cultural heritage only adapts very slowly to the current environment, people might have self-efficacy levels that better fit to the context of their ancestors than to their own. With empirical data from Ghana, we defind that different-levels of self-efficacy have developed from different historic environmental conditions and directly influence today´s household incomes, controlling for observable incentives and constraints. Specifically, the historic returns on agricultural investments are found to have shaped the cultural evolution of self-efficacy. In contrast, current returns on investment explain far less variation in self-efficacy. We find that this cultural trait significantly affects income levels through shaping the farmers’ investment behavior. Regarding the measurement of self-efficacy, we find self-efficacy to be a process- rather than a goal-oriented belief and it is mainly culturally transmitted.
    Keywords: Self-Efficacy; Economic Performance; Economic Development, Economic History, Cultural Evolution; Smallholder Farming
    JEL: D22 N57 O12 O13 O21 Q12
    Date: 2015–06
  10. By: Crosetto, P.; Muller, L.; Ruffieux, B.
    Abstract: This paper contributes to the debate on front-of-pack nutritional labels. Because of their dissimilar formats, Guideline Daily Amount (GDA) and Traffic Light (TL) may trigger different responses among consumers. While GDA is comprehensive and cognitively demanding, information is coarser and more salient in TL. We implement an incentivized laboratory experiment to assess the relative performance of GDA and TL labelling schemes in assisting consumers to build a healthy daily diet. Participants must compose a daily diet, choosing from a finite set of products, and are paid a fixed cash amount only if the diet satisfies pre-determined nutritional goals. Goals correspond to the guideline daily amount values for different nutritional attributes, whose number varies from 1 (kcal) to 7 (kcal, fat, sugar, salt, fibre, vitamin C and calcium). Three different labels, GDA, TL and a combined GDATL are provided. Results show that GDA performs better than TL when subjects do not face time constraints. When time is limited however, TL and GDA have identical efficacy with 4 nutritional goals, and TL even outperforms GDA with 7 nutritional goals.
    JEL: D12 D18 C91 C93
    Date: 2015
  11. By: Chia-Lin Chang (National Chung Hsing University, Taiwan); Yiying Li (National Tsing Hua University, Taiwan); Michael McAleer (National Tsing Hua University, Taiwan; Erasmus School of Economics, Erasmus University Rotterdam; Complutense University of Madrid, Spain)
    Abstract: Energy and agricultural commodities and markets have been examined extensively, albeit separately, for a number of years. In the energy literature, the returns, volatility and volatility spillovers (namely, the delayed effect of a returns shock in one asset on the subsequent volatility or covolatility in another asset), among alternative energy commodities, such as oil, gasoline and ethanol across different markets, have been analysed using a variety of univariate and multivariate models, estimation techniques, data sets, and time frequencies. A similar comment applies to the separate theoretical and empirical analysis of a wide range of agricultural commodities and markets. Given the recent interest and emphasis in bio-fuels and green energy, especially bio-ethanol, which is derived from a range of agricultural products, it is not surprising that there is a topical and developing literature on the spillovers between energy and agricultural markets. Modelling and testing spillovers between the energy and agricultural markets has typically been based on estimating multivariate conditional volatility models, specifically the BEKK and DCC models. A serious technical deficiency is that the Quasi-Maximum Likelihood Estimates (QMLE) of a full BEKK matrix, which is typically estimated in examining volatility spillover effects, has no asymptotic properties, except by assumption, so that no statistical test of volatility spillovers is possible. Some papers in the literature have used the DCC model to test for volatility spillovers. However, it is well known in the financial econometrics literature that the DCC model has no regularity conditions, and that the QMLE of the parameters of DCC has no asymptotic properties, so that there is no valid statistical testing of volatility spillovers. The purpose of the paper is to evaluate the theory and practice in testing for volatility spillovers between energy and agricultural markets using the multivariate BEKK and DCC models, and to make recommendations as to how such spillovers might be tested using valid statistical techniques. Three new definitions of volatility and covolatility spillovers are given, and the different models used in empirical applications are evaluated in terms of the new definitions and statistical criteria.
    Keywords: Energy markets; agricultural markets; volatility and covolatility spillovers; univariate and multivariate conditional volatility models; BEKK; DCC; definitions of spillovers
    JEL: C22 C32 C58 G32 O13 Q42
    Date: 2015–07–06
  12. By: De Janvry,Alain F.
    Abstract: Uninsured natural disasters can have devastating effects on human welfare and economic growth, particularly in developing countries where large segments of the population are in poverty and government resources and capacity to assist in relief, recovery, and reconstruction are limited. Therefore there is interest in exploring how these countries can design and implement disaster relief financing and insurance programs. This paper discusses four aspects of the microeconomics of disaster relief financing and insurance programs that are important for the ex post impact evaluation of such programs: (1) use of game setups to analyze the private willingness-to-pay for disaster protection through risk transfer or risk retention instruments; (2) use of ex post analysis of existing disaster relief financing and insurance schemes (such as Mexico?s programs) to analyze the willingness to provide political support to such schemes; (3) use of ex post analysis of existing schemes to analyze not only ex post coping with shock, but also the ex ante risk management impact of disaster relief financing and insurance schemes, with the expectation that the latter can have a large effects on growth; and (4) use of mainly global data to do ex post impact analysis of natural disasters and the resilience-enhancing value of disaster relief financing and insurance schemes (examples exist for the disaster-impact relationship that can be extended to the role of disaster relief financing and insurance in risk reduction, coping with shock, and risk management). The paper proposes concrete research projects to pursue the analysis of these four dimensions of micro-level impacts of disaster relief financing and insurance.
    Keywords: Labor Policies,Hazard Risk Management,Insurance&Risk Mitigation,Climate Change Economics,Natural Disasters
    Date: 2015–07–02
  13. By: Hallegatte,Stephane
    Abstract: The welfare impact of a disaster does not depend only on the physical characteristics of the event or its direct impacts in terms of lost lives and assets. Depending on the ability of the economy to cope, recover, and reconstruct, the reconstruction will be more or less difficult, and the welfare effects smaller or larger. This ability, which can be referred to as the macroeconomic resilience of the economy to natural disasters, is an important parameter to estimate the overall vulnerability of a population. Here, resilience is decomposed into two components: instantaneous resilience, which is the ability to limit the magnitude of the immediate loss of income for a given amount of capital losses, and dynamic resilience, which is the ability to reconstruct and recover quickly. The paper proposes a rule of thumb to estimate macroeconomic resilience, based on the interest rate (a higher interest rate decreases resilience and increases welfare losses), the reconstruction duration (a longer reconstruction duration increases welfare losses), and a ?ripple-effect? factor that increases or decreases immediate losses (negative if enough idle resources are available to cope; positive if cross-sector and supply-chain issues impair the production of non-affected capital). An optimal risk management strategy is very likely to include measures to reduce direct impacts (disaster risk reduction actions) and measures to reduce indirect impacts (resilience building actions).
    Keywords: Economic Theory&Research,Disaster Management,Hazard Risk Management,Climate Change Economics,Natural Disasters
    Date: 2015–07–02
  14. By: Papagiotou, Dimitrios; Stavrakoudis, Athanassios
    Abstract: The objective of this study is to assess the degree and the structure of price dependence between different cuts of the beef industry in the USA. This is pursued using the statistical tool of copulas. To this end, it utilizes retail monthly data of beef cuts, within and between the quality grades of Choice and Select, over the period 2000--2014. For the Choice quality grade, there was evidence of asymmetric price co-movements between all six pairs of beef cuts under consideration. No evidence of asymmetric price co-movements was found between the three pairs of beef cuts for the Select quality grade. For the pairs of beef cuts formed between the Choice and Select quality grades, the empirical results point to the existence of price asymmetry only for the case of the chuck roast cut.
    Keywords: Beef cuts, copula, price asymmetry
    JEL: C13 L66 Q11
    Date: 2015–03–17
  15. By: Panagiotou, Dimitrios; Stavrakoudis, Athanassios
    Abstract: The objective of this study is to assess the degree and the structure of price dependence between different cuts in the US pork industry at the retail level. To this end, it utilizes monthly retail data of pork cuts and the statistical tool of copulas. The empirical results suggest that for all pairs, retail prices are not likely neither to boom nor to crash together, even though overall dependence is quite considerable for two of the three pairs considered in this study. No evidence of asymmetric price co-movements was found.
    Keywords: Price asymmetry, Pork cuts, Copula
    JEL: C13 Q11
    Date: 2015–01–29

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