nep-agr New Economics Papers
on Agricultural Economics
Issue of 2019‒02‒18
nineteen papers chosen by

  1. Digital Opportunities for Trade in the Agriculture and Food Sectors By Marie-Agnes Jouanjean
  2. A Historical Review of Changes in Farm Size in Canada By Chen, Hongyu; Weersink, Alfons; Beaulieu, Martin; Lee, Yu Na; Nagelschmitz, Katrin
  3. Price Discovery in the United States Dairy Industry By Bolotova, Yuliya V.
  4. Comparing Pollution Where You Live and Play: A Hedonic Analysis of Enterococcus in the Long Island Sound By Megan Kung; Dennis Guignet; Patrick Walsh
  5. Agricultural Disaster Payments: Are They Still Politically Allocated? By Scott Callahan
  6. Political Economy, Uncertainty, and Contracting Costs: Agriculture and the Negotiation of Trade Agreements By Li, Na; Ker, Alan P.
  7. Price-Fixing in the United States Broiler and Pork Industries By Bolotova, Yuliya V.
  8. Estimating the Economic Impacts of Climate Change Using Weather Observations By Charles D. Kolstad; Frances C. Moore
  10. Preserve or retreat? Willingness-to-pay for Coastline Protection in New South Wales By Ali Ardeshiri; Joffre Swait; Elizabeth C. Heagney; Mladen Kovac
  11. How U.S. Agriculture Will Fare Under the USMCA and Retaliatory Tariffs By Chepeliev, Maksym; Tyner, Wallace E.; va der Mensbrugghe, Dominique
  12. Selling Wine In Downtown: Who Is The Urban Winery Consumer? By Natalia Velikova; Phatima Mamardashvili; Tim H. Dodd; Matthew Bauman
  13. The Production Effects of Crop Diversification Requirements Under the European Union Greening Policy. By Daniel Voica; Stefan Wimmer
  14. Regional Climate Policy under Deep Uncertainty By William Brock; Anastasios Xepapadeas
  15. Industry Competitiveness Indicators By Mette Asmild; Tomas Baležentis; Jens Leth Hougaard
  16. Precision Agriculture in Hungary: Are perceptions far from the facts? By Takács-György, Katalin; Molnár, András; Lámfalusi, Ibolya; Illés, Ivett; Gaál, Márta; Kiss, Andrea; Kemény, Gábor; Kemény-Horváth, Zsuzsanna; Péter, Krisztina; Domán, Csaba
  17. An Assessment of Product Turnover in the U.S. Food Industry and Effects on Nutrient Content By Martinez, Stephen W.; Levin, David
  18. The relationship between trade openness and economic growth: Some new insights on the openness measurement issue By Marilyne Huchet; Chantal Le Mouel; Mariana Vijil
  19. Natural hazards and internal migration: The role of transient versus permanent shocks By Tanvir Pavel; Syed Hasan; Nafisa Halim; Pallab Mozumder

  1. By: Marie-Agnes Jouanjean
    Abstract: How are new opportunities to create and share information shaping the digital transformation of the agriculture and food system, and thus potentially fostering its reorganisation? This report focuses on cross-border trade aspects along the global agriculture and food value chain, and looks at how changes brought about by digital technologies can influence who participates in the value chain, where value added is created, and how value is distributed between actors in the chain. However, it is not only changes in the agriculture and food sector from digital technologies that matters, but also the digital transformation of other actors in the global value chain (GVC) such as support services, logistics and governments. Digital technologies present a potential to reduce trade and transaction costs, including those related to identifying and negotiating a deal, proving compliance with standards and to delivering products across borders quickly and efficiently.
    Keywords: agricultural trade, agriculture and food standards, Digital technology, market access, SPS, traceability, trade facilitation
    JEL: Q16 Q17 Q13 F13
    Date: 2019–02–15
  2. By: Chen, Hongyu; Weersink, Alfons; Beaulieu, Martin; Lee, Yu Na; Nagelschmitz, Katrin
    Abstract: The structure of Canadian agriculture sector has changed significantly. There are fewer farms and farmers but the average farm size for those remaining has increased. The extent of the change varies by region and commodity. For example, average farm size has grown more in Saskatchewan than Ontario and the rate of growth is higher for hog farms than for other livestock farms. The growth in the average farm size is driven by an increase in the absolute number of large farms but the growing share of small farms tempers the extent of the increase in average farm size. Regardless of sector, the number of mid-sized farms that dominated production a generation ago has declined significantly. The hollowing out of the middle has resulted in a movement away from a bell-shaped distribution for farm size to a more uniform distribution. Those in the largest size categories consequently represent a growing percentage of total farm sales. In addition to size, which has been the focus of this review, farm structure can also be assessed in terms of by attributes such as specialization, focus, contracts, ownership structure, and markets. These attributes have also changed resulting in a sector with a heterogeneous group of participants. The variation makes it difficult to assess the need for policy action and what should be the focus of any interventions. The growing heterogeneity also suggests that there are different drivers for entry and exit within the sector and that understanding those drivers will help explain the underlying structural changes in agriculture.
    Keywords: Agricultural and Food Policy, Labor and Human Capital
    Date: 2019–01–31
  3. By: Bolotova, Yuliya V.
    Abstract: The organized Exchange spot (cash) cheese market is a private industry institution that has historically performed a primary price discovery function in the U.S. dairy industry. In addition to affecting cheese prices in contract cheese market, the Exchange spot cheese prices have influenced prices paid for milk at the farm level that are set within the system of Federal Milk Marketing Orders (FMMOs). The effects that the Exchange spot cheese market has on FMMOs milk pricing attract increased attention in light of the most recent concerns about increasing milk price volatility and its effect on the dairy farm profitability. While the design of milk pricing within FMMOs has evolved over the last three decades, the effect of the Exchange spot cheese prices on FMMOs milk pricing has intensified. This research conducts an econometric analysis of the behavior (i.e. the level and volatility) of the Exchange spot cheese price over three FMMOs milk pricing regimes.
    Keywords: Agricultural and Food Policy, Demand and Price Analysis
    Date: 2019–02
  4. By: Megan Kung; Dennis Guignet; Patrick Walsh
    Abstract: Hedonic property value studies of water quality conventionally focus on quality levels measured nearest a home. This study examines whether quality at the nearest access point, i.e., a beach, matters more to local residents. We conduct a hedonic analysis focusing on water quality in the Long Island Sound, where an aging infrastructure and heavy precipitation lead to frequent sewage overflows. The analysis focuses on bacteria contamination and beach closures. Results suggest that decreases in water quality measured at the nearest beach yield a larger negative effect and impact homes at a much farther spatial extent than previously suggested in the literature. Key Words: beach; enterococcus; hedonic; Long Island Sound; property value; water quality
    JEL: Q24 Q51 Q53
    Date: 2019
  5. By: Scott Callahan
    Abstract: This paper studies the allocation of agricultural disaster subsidies. Exploiting a regime change in agricultural disaster policy which occurred with the passage of the 2008 Farm Bill, disaster subsidy disbursement under both the 2005-2007 Crop Disaster Program and the SURE program that ran from 2008-2014 are estimated, and the effects of political factors on subsidy disbursement are compared. Results indicate that the transition from ad-hoc emergency disaster programs to a permanent agricultural disaster program did not reduce the political allocation of agricultural disaster subsidies, in contrast to results from the FEMA disaster payment literature. Key Words: Agricultural Policy, Campaign Finance, Lobbying, Rent Seeking
    JEL: Q18 D72
    Date: 2018
  6. By: Li, Na; Ker, Alan P.
    Abstract: Recent negotiations of the United States Mexico Canada Agreement (USMCA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) highlight the impact of contracting costs, uncertainty, and the importance of political welfare. Agriculture exhibits these traits perhaps more than any other sector and subsequently tends to be pivotal in many trade negotiations. Moreover, these traits are -- to some extent -- responsible for the large increase in Regional Trade Agreements (RTAs). In this manuscript we extend the political economy model of trade agreements to include both contracting costs and uncertainty. Uncertainty is incorporated through trade and policy shocks while contracting costs are incorporated as a function of the number of policy instruments. The optimal conditions on domestic support differ considerably if governments maximize social surplus only versus some linear combination of both social surplus and private political welfare. We also show that the politically optimal structure of trade agreements allows for countervailing duties. Our model helps explain: (a) why tariffs rather than production subsidies are more common in agriculture; (b) differential treatment of agricultural producers in developed versus developing countries; (c) continued presence of agricultural subsidies in many RTAs even under significant trade volume growth; and (d) the trend toward harmonization of Sanitary and Phytosanitary Standards (SPS) measures.
    Keywords: Agricultural and Food Policy
    Date: 2019–01–31
  7. By: Bolotova, Yuliya V.
    Abstract: During the recent decade a group of large meat processors in the U.S. broiler and pork industries implemented a series of production control practices at various stages of the broiler and pork supply chains. The meat processors used these practices to mitigate agricultural supply volatility and increases in agricultural input prices (i.e. feed prices), which led to the over-supply problem adversely affecting their profitability. Direct and indirect buyers of broilers and pork filed antitrust lawsuits alleging that by implementing these production control practices (i.e. production cuts), the meat processors engaged in unlawful conspiracies with the purpose of fixing, increasing and stabilizing prices of broilers and pork paid by various participants in the broiler and pork supply chains. The research presented in the paper applies a traditional theoretical framework explaining the seller market power to understand the economics of the conduct and performance of the U.S. broiler and pork industries in light of the alleged price-fixing conspiracies. It also provides a basic empirical evidence on the market and price behavior during the period of alleged price-fixing conspiracies (i.e. the implementation of production cuts) and the period preceding the implementation of production cuts.
    Keywords: Demand and Price Analysis, Productivity Analysis
    Date: 2019–02
  8. By: Charles D. Kolstad; Frances C. Moore
    Abstract: This paper reviews methods that have been used to statistically measure the effect of climate on economic value, using historic data on weather, climate, economic activity and other variables. This has been an active area of research for several decades, with many recent developments and discussion of the best way of measuring climate damages. The paper begins with a conceptual framework covering issues relevant to estimating the costs of climate change impacts. It then considers several approaches to econometrically estimate impacts that have been proposed in the literature: cross-sections, linear and non-linear panel methods, long-differences, and partitioning variation. For each method we describe the kind of impacts (short-run vs long-run) estimated, the type of weather or climate variation used, and the pros and cons of the approach.
    JEL: H41 Q51 Q54
    Date: 2019–02
  9. By: Ilya Stepanov (National Research University Higher School of Economics); Johan Albrecht (National Research University Higher School of Economics)
    Abstract: The issue of instrument choice is vital for climate policy. Carbon pricing is used next to a range of traditional energy taxes and renewable energy policies such as feed-in tariffs and minimal renewable generation targets. Several countries introduced carbon taxes alongside existing energy taxes such as excise duties on vehicle fuels. Since 2005, the EU Emissions Trading Scheme (EU ETS) has attached a direct price to the GHG emissions of ETS companies. The combination of multiple instruments and explicit and indirect carbon price signals created a complex and frequently changing institutional landscape that blurs the contribution of each policy instrument. Can the decarbonization of the European economy be attributed to carbon price instruments or to renewable energy policies together with other fiscal instruments? This paper clarifies the relative impact of explicit carbon price instruments (carbon taxes and EU ETS) compared to other instruments, namely renewable energy policies and indirect carbon price signals (general energy taxes). The methodology is based on the calculation of the implicit carbon price in existing fiscal systems. On the basis of panel data for 30 European countries 1995–2016, several fixed-effect regression estimations were performed. The results indicate a greater but decreasing impact of price instruments on carbon intensity compared to renewable energy policies and a greater but decreasing relative impact of indirect price signals compared to explicit ones.
    Keywords: energy taxes, carbon tax, cap-and-trade, renewable energy policy, climate change, climate policy
    JEL: Q52 Q58 Q48
    Date: 2019
  10. By: Ali Ardeshiri; Joffre Swait; Elizabeth C. Heagney; Mladen Kovac
    Abstract: Coastal erosion is a global and pervasive phenomenon that predicates a need for a strategic approach to the future management of coastal values and assets (both built and natural), should we invest in protective structures like seawalls that aim to preserve specific coastal features, or allow natural coastline retreat to preserve sandy beaches and other coastal ecosystems. Determining the most suitable management approach in a specific context requires a better understanding of the full suite of economic values the populations holds for coastal assets, including non-market values. In this study, we characterise New South Wales residents willingness to pay to maintain sandy beaches (width and length). We use an innovative application of a Latent Class Binary Logit model to deal with Yea-sayers and Nay-sayers, as well as revealing the latent heterogeneity among sample members. We find that 65% of the population would be willing to pay some amount of levy, dependent on the policy setting. In most cases, there is no effect of degree of beach deterioration characterised as loss of width and length of sandy beaches of between 5% and 100% on respondents willingness to pay for a management levy. This suggests that respondents who agreed to pay a management levy were motivated to preserve sandy beaches in their current state irrespective of the severity of sand loss likely to occur as a result of coastal erosion. Willingness to pay also varies according to beach type (amongst Iconic, Main, Bay and Surf beaches) a finding that can assist with spatial prioritisation of coastal management. Not recognizing the presence of nay-sayers in the data or recognizing them but eliminating them from the estimation will result in biased WTP results and, consequently, biased policy propositions by coastal managers.
    Date: 2019–02
  11. By: Chepeliev, Maksym; Tyner, Wallace E.; va der Mensbrugghe, Dominique
    Abstract: A hallmark of the Trump Administration has been to reverse the post-World War II consensus on lowering of trade barriers and a commitment towards multilateral free trade, towards a more protectionist and perhaps mercantilist position vis-à -vis trade policy. One of the Administration's first actions in this regard was the decision to leave the Trans-Pacific Partnership (TPP) agreement, followed thereafter by raising tariffs on steel and aluminum imports. President Trump left no doubt where he stood on the North American Free Trade Agreement (NAFTA), which he often stated was the worst trade deal maybe ever signed anywhere.†The administration's actions on trade are likely to have significant implications for U.S. farmers as these actions target three of the largest markets for U.S. agricultural exports ”Canada, China and Mexico accounting" for some 44% of U.S. agricultural exports representing an average of $63 billion from 2013 to 2015.
    Keywords: Agricultural and Food Policy
    Date: 2018–10
  12. By: Natalia Velikova (Texas Tech University, USA); Phatima Mamardashvili (International School of Economics at Tbilisi State University, Georgia); Tim H. Dodd (Texas Tech University, USA); Matthew Bauman (Texas Tech University, USA)
    Abstract: Urban tasting rooms are a relatively new and growing phenomenon in the U.S. wine market. However, there has been little research concerning the specific marketing strategies that contribute to the success of urban wineries, including their desired target markets. The current study is an initial attempt to explore consumers’ choices of urban wineries. Based on the data obtained through an online survey (N = 1,412) incorporating a discrete choice experiment (DCE) with visual simulations, the study offers a profile of the urban winery consumer. Managerial implications, limitations, and suggestions for future research are included.
    Keywords: urban winery; consumer profile; discrete choice experiment
    Date: 2019
  13. By: Daniel Voica (School of Economics and Finance, Massey University); Stefan Wimmer (School of Life Sciences Weihenstephan, Technical University of Munich, Freisling)
    Abstract: This paper explores the potential production and land use effects of making subsidy payments subject to crop diversification. We first derive a theoretical model for a rational farmer who receives subsidies contingent on the degree of crop diversification. A state-contingent framework is used to show that crop diversification decisions are independent of risk preferences if farmers have access to off-farm opportunities, such as financial markets. Pricing equations for land allocation and output decisions are derived from the theoretical model and used in a Generalized Method of Moments framework to estimate parameters of interest. We use a panel of crop farms from France, Germany, Poland, and the UK obtained from the EU Farm Accounting Data Network (FADN).
    Date: 2018
  14. By: William Brock; Anastasios Xepapadeas
    Abstract: We study climate change policies by using the novel pattern scaling approach of regional transient climate response to develop an economyclimate model under conditions of deep uncertainty associated with: (i) temperature dynamics, (ii) regional climate change damages, and (iii) policy in the form of carbon taxes. We analyze both cooperative and noncooperative outcomes in a regional model. Under deep uncertainty, robust control policies are more conservative regarding emissions, the higher the aversion to ambiguity, while damage uncertainty seems to produce more conservative behavior than climate dynamics uncertainty. Cooperative policies tend to be more conservative than noncooperative policies for similar concerns about uncertainty but, as concerns about uncertainty increase, policies tend to move closer to each other. Asymmetries in concerns about uncertainty tend to produce large deviations in regional emissions policy at the noncooperative solution. If aversion to ambiguity is sufficiently high, optimal regulation aiming to attain a cooperative steady state or a steady state that satisfies conditions for a Nash equilibrium might not be possible. The result is associated with the existence of regional hot spots and temperature spillovers across regions, a situation which emerges in the real world. In such cases, deep uncertainty about the impacts of climate change makes robust regulation infeasible.
    Keywords: Regional climate change policy, Regional temperature anomalies, Deep uncertainty, Robust control, Cooperative and noncooperative solutions.
    JEL: Q54 Q58 D81
    Date: 2019–01–26
  15. By: Mette Asmild (Department of Food and Resource Economics, University of Copenhagen); Tomas Baležentis (Lithuanian Institute of Agrarian Economics); Jens Leth Hougaard (Department of Food and Resource Economics, University of Copenhagen)
    Abstract: It can be argued that the competitiveness of an industry consists of two main parts: The production conditions and the utilization of these. The production conditions are largely determined by factors exogenous to the firms comprising the industry, including the economic environment, regulatory framework, etc. The utilization of the production conditions corresponds to the classic economic notion of structural efficiency. We here argue that it is crucial for policy analysis to be able to quantify each of these two aspects separately, since the production conditions are partly in the hands of the policy makers, whereas the utilization is mainly the responsibility of firm management. In this paper we define two new bilateral indicators; the Bilateral Industry Utilization (BIU) indicator, and the Bilateral Production Conditions (BPC) indicator. These are applied to a large data set of dairy farms across 19 European countries provided by the Farm Accountancy Data Network (FADN). With focus on the competitiveness of Danish dairy farms we show that dairy farms in most other countries have significantly better production conditions than those in Denmark while Sweden is the only country with significantly better utilization. Finally, we asses potential causes behind the differences and discuss possible remedies.
    Keywords: Competitiveness indicators; Production conditions; Structural efficiency; Bilateral indicators; Dairy farms; Efficiency; Frontier analysis; Jackknifing.
    JEL: C61 D04 E23 O47 Q12
    Date: 2019–02
  16. By: Takács-György, Katalin; Molnár, András; Lámfalusi, Ibolya; Illés, Ivett; Gaál, Márta; Kiss, Andrea; Kemény, Gábor; Kemény-Horváth, Zsuzsanna; Péter, Krisztina; Domán, Csaba
    Abstract: Technological progress can possibly offer multiple solutions to the most significant challenges faced by agriculture. Although benefits of precision agriculture are promoted from a long period, however, its diffusion progressing in a slower manner. Perceptions of Hungarian FADN arable farms collected through a survey (2016) is contrasted with the cost-benefit analysis of farms already applying certain parts of precision agriculture technology. The survey revealed the details of the application of different technologies and their impacts as perceived among arable farms. Special subsidies implementing into the “greening” component of CAP will be an inciting factor for supporting the wider spread of PA.
    Keywords: Agricultural and Food Policy
    Date: 2017–08–30
  17. By: Martinez, Stephen W.; Levin, David
    Abstract: ERS researchers use IRI retail store data from 2008 to 2012 to describe the extent of product entry and exit in 17 food and beverage categories. As consumers demand healthier food and beverage products, research is needed to highlight changes in nutrient composition associated with product innovation strategies. The nutrient content implications of product turnover are examined by comparing nutritional quality of products entering the market, products exiting the market, and “established” products (i.e., neither entered nor exited). Differences in nutritional content of entering and exiting products have significant implications over time for changes in the nutritional profiles of product categories with relatively high turnover rates.
    Keywords: Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety
    Date: 2017–11
  18. By: Marilyne Huchet (SMART - Structures et Marché Agricoles, Ressources et Territoires - INRA - Institut National de la Recherche Agronomique - AGROCAMPUS OUEST); Chantal Le Mouel (SMART - Structures et Marché Agricoles, Ressources et Territoires - INRA - Institut National de la Recherche Agronomique - AGROCAMPUS OUEST); Mariana Vijil (SMART - Structures et Marché Agricoles, Ressources et Territoires - INRA - Institut National de la Recherche Agronomique - AGROCAMPUS OUEST)
    Abstract: Empirical results on the links between trade openness and economic growth often suggest that, in the long run, more outward-oriented countries register better economic growth. However, a similar level of trade openness can hide different types of trade structures. The aim of this paper is to enrich the way of measuring trade openness taking into account two different dimensions of countries' integration in world trade: export quality and export variety. Based on the estimation of an endogenous growth model on a panel of 169 countries between 1988 and 2014 using a Generalized Method of Moments estimator, our results confirm that countries exporting higher quality products and new varieties grow more rapidly. More importantly, we find a non-linear pattern between the export ratio and the quality of the export basket, suggesting that openness to trade may impact growth negatively for countries which are specialized in low quality products. A non-linear relationship between exports variety, the export ratio and growth is also found, suggesting that countries increasing their exports will grow more rapidly after reaching a certain degree of the extensive margin of exports.
    Keywords: GMM,dynamic panel model,growth,trade openness,quality,variety,extensive margin
    Date: 2018
  19. By: Tanvir Pavel (Department of Economics, Florida International University, Miami, USA); Syed Hasan (School of Economics and Finance, Massey University, Palmerston North, New Zealand); Nafisa Halim (Department of Global Health, Boston University, Boston, USA); Pallab Mozumder (Department of Earth and Environment and Department of Economics, Florida International University, Miami, USA)
    Abstract: We analyse internal migration triggered by natural disasters in Bangladesh. We conducted a survey in nine coastal districts and two major cities in Bangladesh to investigate whether floods and cyclones, which can be considered as transient shocks, affect interregional migration differently compared to riverbank erosion that causes loss of lands and thus generates shocks that are permanent in nature. Our findings suggest that transient shocks induce households to move to nearby cities while permanent shocks push people to big cities with more opportunities. Comparing income and expenditure of migrants and non-migrant households, we find that the former group is better-off relative to their counterpart, indicating that welfare can be improved\ by facilitating migration. Rising exposure to climate change induced natural disasters around the world imply that our findings will be increasingly relevant for designing policies to address vulnerability, particularly for disaster prone countries with weak social safety nets.
    Keywords: Climate change, Natural disaster, Coastal area, Permanent shock, Transient shocks, Internal migration
    JEL: I38 Q54 Q56 R23
    Date: 2018

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