Showing papers in "Agricultural and Food Economics in 2016"

Agricultural technology adoption, commercialization and smallholder rice farmers’ welfare in rural Nigeria

Abstract: This study assessed the determinants of intensity of adoption of Improved Rice Varieties (IRVs) and the effect of market participation on farmers’ welfare in Nigeria using the Tobit and Heckman two-stage models, respectively. The sample consists of cross-sectional data of 600 rice farmers selected randomly from three notable rice producing States in Nigeria. The variables that positively and significantly influenced the intensity of IRVs adoption include income from rice production, membership of a farmers’ organization, and the distance to the nearest sources of seed, cost of seed, yield and level of training. Gender of household head, access to improved seed, years of formal education, and average rice yield were those variables that are positive and statistically significant in increasing the probability that a farmer would participate in the market. The result further suggests that any increase in the farmers’ welfare is conditional on the probability of the farmer participating in the rice output markets. In addition, higher yield, income from rice production, gender of household head, and years of formal education are the variables that are positive and statistically significant in determining households’ welfare. Therefore, it is recommended that formation of associations among the rural farmers should be encouraged. Access to seed and information about the IRVs are also essential to increase the intensity of its adoption. Programmes to improve contact with extension agents, increased access to credit, raising educational background and increasing the area devoted to cultivating IRVs are the factors to be promoted in order to increase market participation and hence improve the welfare of rural households.

Determinants of agricultural technology adoption under partial population awareness: the case of pigeonpea in Malawi

Abstract: There is exhaustive literature on technology adoption rates and the relationship between technology adoption and relevant socioeconomic and policy variables. Yet adoption estimates derived from the application of standard techniques such as the probit and tobit yield biased estimates. This paper applies the modern evaluation technique: the counterfactual outcome framework to data from about 400 households in Malawi to assess the patterns of diffusion and adoption of improved pigeonpea varieties and their determinants. We find the sample adoption rate of improved varieties to be 14 % while the potential adoption rate if the improved varieties were widely disseminated is estimated at 41 %. The adoption gap resulting from the incomplete exposure to the improved pigeonpea is 27 %. Moreover, adoption is also found to be high among female-headed households, older farmers and those with access to credit. The findings suggest that for increased adoption, there is need for increased involvement of extension workers is the dissemination of information about improved pigeonpea varieties, a robust pigeonpea seed system to increase seed availability to farmers as well as the need for improved access to credit.

Determinants of household food insecurity in Mexico

Abstract: Using a national household survey and a newly established food security scale, socio-demographic factors affecting the level of household food insecurity in Mexico were identified. Households more likely to be food insecure include those with younger, less-educated household heads, headed by single, widowed or divorced women, with disabled household members, with native language speakers, with children, as well as rural and lower-income households. The model was also estimated for the rural and lower-income subpopulation, finding that low levels of education, native language speakers, and number of kids are factors associated with higher levels of food insecurity.

Do CAP direct payments stabilise farm income? Empirical evidences from a constant sample of Italian farms

Abstract: Common Agricultural Policy uses a large share of its budget to support and stabilise the income of EU farmers by means of direct payments (DP). This paper assesses how much and how DP reduce the variability of farm income over time. The analysis is developed on a constant sample of 2402 Italian farms during the decade 2003–2012. It considers both the whole sample and farms grouped according to: types of farming; economic size classes; relative importance of DP. Income variability is analysed by mean of variance decomposition by income components. Variability of farm income over time is high and most of it is coming from the revenue component. The DP stabilise farm income and this is mainly because DP are less variable than the remaining part of income. Indeed, DP are found to play a very limited countercyclical role against fluctuations of the remaining part of farm income. Finally, DP are not targeted to those farms facing the highest level of income variability. These latter two results suggest that, while DP stabilise farm income, there is a potentially large room of manoeuvre for increasing the efficiency of DP as income stabilising tool.

The social pillar of sustainability: a quantitative approach at the farm level

Abstract: The present research proposes a model for the assessment of the social pillar of sustainability at the farm scale. Contrary to what is available for the environmental and economic pillars, there is a considerable lack of exhaustive approaches able to evaluate the social dimension of sustainability in rural areas. Thus, the idea was to create a mean by which a quantitative evaluation of the social characteristics of farms could be made. The study involved farms of the South Milan Agricultural Park, located in northern Italy. Thirty sampled farms were selected in order to represent the different livestock systems, land areas, economic dimensions and levels of multifunctionality of the area. The framework is based on a set of 15 indicators able to evaluate five main social “components”: (i) quality of the products and the region, (ii) short supply chain and related activities, (iii) work, (iv) ethical and human development and (v) society, culture and ecology. The work was structured using the following steps: identification of the relevant variables for the social sustainability of farms, determination of the framework of indicators, assignment of their range scores, data collection, calculation of the score for each farm, data analysis and visualization. The method allows different types of analysis in relation to the objective of the research. Three main approaches were individuated: (1) the comparison among farms is the “farms’ ranking” and the “aggregate ranking”; (2) the evaluation of single themes of sustainability is the “single indicator evaluation” approach and (3) the temporal comparison of the farm’s result is the “score evolution” approach. The method showed a high sensitivity to the multifunctionality and the type of farm production, especially organic vs conventional, while other characteristics, such as the type of livestock and the land area, seem to differentiate the sample less or to characterize it in only a few social components. The work has underlined the importance and the advancement in the study of the social dimension that, however, needs further in-depth analysis through comparison with the other two pillars and among various social states in different rural areas.

The Common Agricultural Policy 2014–2020: scenarios for the European agricultural and rural systems

Abstract: The reform of Common Agricultural Policy for 2014–2020 aims at promoting greater competitiveness, efficient use of public goods, food security, preservation of the environment and specific action against climate change, social and territorial equilibrium, and a more inclusive rural development. The economic crisis of the last years, the globalization, the increasing pressure on natural resources, the increasing diversity of agriculture and rural areas in the new enlarged Europe, and citizens’ expectations regarding the environment, safety and food quality, health and welfare, preservation of the countryside, biodiversity and climate change, and the unequal distribution of resources are some of the major issues that this policy has faced, in a production context directed by principles of fairness and efficiency. The policy instruments to address these challenges and achieve specific objectives appear greatly transformed and made up of two complementary pillars (direct payments and market measures, the first, and rural development, the second). The perspectives that the new Common Agricultural Policy provides in order to reach a competitive repositioning of the European agricultural and rural systems have been the theme of the 51st SIDEA Conference aimed at promoting a scientific debate on implementation of this policy in Italy. The papers selected for this special issue focus on the new perspectives for European farms, agri-food supply chains, and rural territories of the new Common Agricultural Policy.

Impact of supply chain coordination on honey farmers’ income in Tigray, Northern Ethiopia

Abstract: Most of the literature on vertical coordination and its impact on farm performance and farmer wellbeing deal with high-value or modern food supply chains, including export chains and chains dominated by large international supermarkets or other forms of foreign direct investment. The impact of vertical coordination mechanisms in local food supply chains in developing countries remains underexplored. This paper analyzes the impact of participation of honey producers in the Northern highlands of Tigray, Ethiopia in contracts and marketing cooperatives on their performance and wellbeing. The paper finds positive production and economic gains honey producers obtain from contract engagement. Honey producers under the contract scheme produce more white honey fulfilling the demand of processors, buyers and consumers. Contracting results in higher production due to the better access it causes to technology and skill transfers. Moreover, better conditions contracts offer motivates honey producers to produce more and supply larger to the market.

An analysis of price and volatility transmission in butter, palm oil and crude oil markets

Abstract: Recent changes to the common agricultural policy (CAP) saw a shift to greater market orientation for the EU dairy industry Given this reorientation, the volatility of EU dairy commodity prices has sharply increased, creating the need to develop proper risk management tools to protect farmers’ income and to ensure stable prices for processors and consumers In addition, there is a perceived threat that these commodities may be replaced by cheaper substitutes, such as palm oil, as dairy commodity prices become more volatile Global production of palm oil almost doubled over the last decade while butter production remained relatively flat Palm oil also serves as a feedstock for biodiesel production, thus establishing a new link between agricultural commodities and crude oil Price and volatility transmission effects between EU and World butter prices, as well as between butter, palm oil and crude oil prices, before and after the Luxembourg agreement, are analysed Vector autoregression (VAR) models are applied to capture price transmission effects between these markets These are combined with a multivariate GARCH model to account for potential volatility transmission Results indicate strong price and volatility transmission effects between EU and World butter prices EU butter shocks further spillover to palm oil volatility In addition, there is evidence that oil prices spillover to World butter prices and World butter volatility

Food prices, energy and climate shocks in Uganda

Abstract: The objective of this paper is to examine the importance of energy and climate shocks in Uganda’s food price processes. The unique features of this paper are threefold: first, we identify climate shocks computed as the deviations of monthly temperature and rainfall realisations from their respective long term means. Second, controlling for external and domestic shocks, we examine the possible role of energy prices in food price processes. Third, we examine these issues in a single equation model exploiting cointegration techniques and general-to-specific methods. Results indicate that energy prices have a long run cointegrating relationship with food prices. In addition, temperature shocks are more important than rainfall shocks in explaining food price variability.

The land grabbing in the international scenario: the role of the EU in land grabbing

Abstract: The worldwide increase in population and consumption has produced a growing demand for food and energy in the rich and developing Countries. The resulting intensification of land investments, to cope with this need, has in many cases produced investments without transparency rules and it hasn’t created real development for local people. The aim of this paper is to identify, through a cluster analysis, homogeneous groups of investor Countries in order to understand the role of the EU Member States in the context of land grabbing. The results show that the strategies adopted by the investors are driven by the need to achieve energy security and reduce CO2 emissions in order to cope with the problems of food security and to adopt the proposals and the objectives of the European Union Policy for Sustainability. In particular, the acquisitions of EU Member States are driven by the need to provide enough food for the exponential growth of the population and to reduce the energy deficit in view of the achievement of the objectives set out in the “Europe 2020”.

Farmgate versus market centre sales: a multi-crop approach

Abstract: Smallholder farmers have two basic decisions to make regarding selling their surplus produce: selling at farmgate at low prices or travelling to a market centre where higher prices are offered while incurring some transaction costs. Whichever decision is made has implications for poverty alleviation efforts. Previous studies have ignored modelling participation and market choice simultaneously. Taking a multi-crop approach, this paper fills the gap by investigating the key determinants of market participation decisions of smallholder farmers in Ghana using the sample selectivity probit model in order to account for potential endogeneity and selectivity bias and thus obtain unbiased estimates. Household survey data in the Upper West region of Ghana for the 2011 production season are used to achieve the goal of the study. The results reveal that yields of maize and groundnut and market information are the simultaneous determinants of market participation decisions while age of the farmer, yields of the two crops, membership of farmer organisation and prices of the two crops simultaneously determine the choice of market. These imply that policies that enhance productivity of these smallholders and market information are vital in the drive for a commercially oriented agriculture. Also, the incentives to incur transaction costs to market centres to benefit from remunerative prices lie in measures to increase yields.

Social farming: a proposal to explore the effects of structural and relational variables on social farm results

Abstract: Social farming is gaining increasing attention from multiple stakeholders in Europe because it can generate several socioeconomic benefits, for farming households too. The research—which is part of a project carried out by a healthcare authority in the Friuli Venezia Giulia region in order to investigate social farming in the local area—is a first attempt to analyse social farm results and to what extent they are affected by farm assets, as well as by the environment in which farms are embedded. The proposed model is based on the investigation of the causal relationships between “structural”, “relational” and “social farm result” constructs (latent variables), and on the identification of their measurement scales (observed variables). The causal relationships between these three constructs have been tested via a structural equation model calculated with the linear structural relationship method. The findings show that social farm results are mainly influenced by the relational variables (e.g., social and economic relations). On the contrary, the structural variables (e.g., size) do not directly affect the results, but they do have a negative indirect effect on them which is mediated by the relational variables. The findings suggests that alongside structural investment support, it is also important to strengthen relations and networks at local level in order to reinforce social farm results. Overall the findings contribute to the further understanding of the driving forces affecting social farm performance and provide policy makers and practitioners with information for scaling-up social farming.

The impact of wheat market liberalization on the seed industry’s innovative capacity: an assessment of Brazil’s experience

Abstract: Market liberalization has a profound impact on the structure of economies as well as changes the roles of the public and private sectors and affects innovative capacity of countries. This paper explores the Brazilian experience with wheat market liberalization and the impact on the seed sector. The analysis presented in this paper is based on interviews with 12 experts intimately involved in wheat research and breeding in Brazil. The analysis reveals liberalization boosted private investment in wheat R&D, which translated into increased research output. However, Brazil faced many challenges in establishing wheat innovation system and important lessons can be drawn from its experience.

The dark and the bright side of power: implications for the management of business-to-business relationships

Abstract: The importance of power is underlined by many scientists who view it as a key behavioral construct. Power distinguishes itself as an effective tool in coordinating and promoting harmonious relationships, solving conflicts, and enhancing performance. An important challenge is to determine what role power plays in managing business-to-business relationships with specific attention to coordination and cooperation. The aim of our work is to investigate the role of power in business-to-business relationships to work out a strategy that enables managers to select an effective mix of power mechanisms. We work out and test a theoretical model of the effects of power on cooperation and coordination in business-to-business relationships and discuss possible managerial implications. To verify our research hypotheses, we conduct expert interviews via telephone about relationships of international food processing companies with their suppliers in Russia.

Economic and Environmental Impact of National Food Security Act of India

Abstract: The Government of India has enacted the National Food Security Act (NFSA) on September 12, 2013. The NFSA aims to provide subsidized food grains to approximately two thirds of India’s population. The legislation is a landmark, and perhaps the largest food security program in the world. The ambitious programme of the Government, besides offering several opportunities, throws many challenges in its implementation. In this background, the current paper evaluates the widespread impact of implementing NFSA on the Indian economy. The study applied a modified Leontief and Ghosh model under Input–output framework. The study also assessed the environmental impact of this act focusing on various environmental indicators. Further, the additional land requirement, labour generation and GDP growth that NFSA entails have also been computed. The impacts on sectoral prices have also been calculated. The result shows that the food grain sector has to grow by 3.75 % annually to match provision of food grains according to the norm set by the act. Apart from the targeted food grains sector, we noticed some indirect impact on other sectors such as Chemicals and Chemical Products, Mineral Fuels, Live stock products and Other Oilseeds and Crops. Overall the country needs to gear up in terms of food grain productivity, otherwise, NFSA must be supplemented by import, which would entail huge burden to country’s exchequer. On the other hand, the additional GDP and labour growth is expected to generate 1.51 % and 6.21 % respectively due to NFSA compared to 2016–17. But the impact on the environment is also not favourable. The economy is likely to generate additional GHG emissions of 10.39 million metric tonne of CO2 equivalent due to this act. A significant generation of water pollution is also expected. The overall land requirement on account of NFSA has been found to be sizeable whose availability remains as a big constraint. The study also throws some insight on the achievements of The Millennium Development Goals in the context of NFSA. In the context of Indian sub-continent, we find a perfect synergy between the basic objective of National Food Security Act and Millennium Development Goal. Overall, NFSA impact will enhance the growth of the economy. However, additional pressure on environment and land cannot be ignored. For sustainable food grains production in the economy, the nation should consider the improvement of agriculture productivity as well as to minimize the environmental effect by introducing more sustainable farming practice.

Market structure and coherence of international cooperation: the case of the dairy sector in Malawi

Abstract: A supply chain in disarray can be identified as a barrier not only to growth for the agricultural sector but also to achieving food security in a country because it may lead to either a deficiency in food production and/or too high prices. Using the dairy sector of Malawi as an example, the purpose of this paper is to discuss the coherence between market structure and the development strategy pursued by international donors. Within Malawi the dairy sector may be characterised as a segmented market: with both formal and informal milk markets, with smallholder producers serving both markets. The formal market includes few processing firms operating with idle capacity and selling dairy products to an affluent segment of the urban population, whilst the informal market comprises the sale of unprocessed milk products to the less affluent urban population and also rural areas. In this context, cooperative international action, conducted through agencies from a range of countries, is targeted at improving the efficiency of the formal supply chain and also the creation of local supply chains that sell processed products directly to poor consumers. The paper discusses reasons why these two cooperation strategies, given the structure of the sector, may potentially conflict with each other, the need to address the degree of market imperfection of the formal sector and the desirability of ex-ante coordination of plans amongst donors.

Consumer ratings and the pricing of experience goods: hedonic regression analysis of beer prices

Abstract: This study fills a void in the literature by providing the first evaluation of the impact of consumer ratings on beer prices using hedonic methods. Our work is based on a dataset consisting of over 400 beers and includes information on calorie content, alcohol content, user rating, and style for each beer. Our results indicate that a 10-point increase in consumer rating is associated with about a $0.50 increase in the price of beer per unit.

Short-term acreage forecasting and supply elasticities for staple food commodities in major producer countries

Abstract: Forecasting food production is important to identify possible shortages in supply and, thus, food security risks. Such forecasts may improve input allocation decisions that affect agribusiness and the input supply industry. This paper explains methods and data used to forecast acreage of four crops that are particularly important staple commodities in the world, namely wheat, corn, rice, and soybeans for major global producer countries. It focuses on forecasting acreage—one of the two major determinants of grain production—3 months before planting starts with publicly available data. To this end, we use data from the period 1991 to 2013 and perform an out-of-sample forecast for the year 2014. A particular characteristic of this study is that the respective acreage determinants for each country and each crop are identified and used for forecasting separately. This allows accounting for the heterogeneity in the countries’ agricultural, political, and economic systems through a country-specific model specification. The performance of the resulting forecasting tool is validated with ex-post prediction of acreage against historical data.

Agricultural contracts, adverse selection, and multiple inputs

Abstract: A significant and growing share of US agricultural output is produced under a production or marketing contract. An important controversy regarding agricultural production contracts is the control of non-labor inputs. Over time, contracts have tended to place more inputs under the buyer’s control and fewer under the farmer’s. This analysis examines the welfare effects of this trend. In the framework considered here, returns are reduced for some farmers and left unaffected for others. Returns to the buyer increase. The net effect on total surplus has two components. Output is higher when the buyer controls the input, due to lower information rents accruing to more productive farmers. However, this reduction distorts input use away from the production cost-minimizing level, which is costly. The net effect on total surplus depends primarily on the elasticity of substitution between inputs. Given the limited substitutability between labor and non-labor inputs in many agricultural activities, the analysis suggests that greater control of non-labor inputs by the buyer increases total surplus. The increase in returns to the buyer is consistent with the growing share of output produced under vertical coordination and the tendency to specify a greater number of production activities rather than allowing farmers to make their own decisions. The reduction in the returns obtained by some farmers is consistent with farmers’ opposition to such requirements.

Lending credence: motivation, trust, and organic certification

Abstract: The information asymmetries inherent in credence goods have typically led economists to conclude these markets require well-defined quality standards and third-party verification that producers are meeting those standards. Nonetheless, many producers of credence goods appear to be opting out of certification. Why? This paper builds in previous research and develops a theoretical framework to think about how producers’ motivation and relationships with consumers affect the necessity and effectiveness of certification. I find the degree to which a consumer trusts the producer of a credence good and the certification standard that governs it and the degree to which the producer is motivated to produce a good of a certain quality both have important effects on certification-based regulation.

Demand relationships in orange exports to Russia: a differential demand system approach focusing on Egypt

Abstract: Recent years have witnessed closer diplomatic relations between Egypt and Russia, which have led to significant growth in the countries’ bilateral agricultural trade As a world-leading producer and exporter of oranges, these developments represent an opportunity for Egypt to promote its orange exports to Russia Another emerging opportunity for Egypt to increase its share in the Russian market for imported oranges has been provided by import embargos imposed by Russia in recent years on agricultural and food commodities from several countries, creating a supply gap of around 25 % in the Russian orange market To assess the competitiveness of Egyptian oranges and explore the potential export opportunities presented by the Russian market, this paper uses a Rotterdam import allocation model to analyse demand relationships among major orange suppliers to Russia during the period 1996–2014 The results show that in comparison with other orange suppliers, Egypt enjoys a strong comparative advantage in the export of oranges to Russia The econometric results suggest that both Morocco and Egypt would benefit the most if Russia were to allocate a larger budget to the import of oranges The expenditure elasticity estimates indicate that an increase in Russia’s demand for imported oranges would lead to increases in the quantity of Egypt’s orange exports, as well as in its share of the Russian orange market Furthermore, cross-price elasticity estimates reveal that Egyptian oranges are substitutes for Turkish and South African oranges, implying that Russia has a tendency to switch to these two suppliers when Egyptian oranges become relatively expensive In light of these results, the adoption of strategies to produce oranges sustainably and cost-effectively, upgrade the orange value chain, acquire processing technologies and enhance the technical and organisational capacity of farmers and exporters could be useful means for promoting exports and boosting the competitiveness of Egyptian oranges on the Russian market

Examining the control of bird flu risks among Nigerian poultry producers: implication for effectiveness of biosecurity knowledge, attitude, and practices (EBKAP)

Abstract: This study examined socio-economic and behavioral factors affecting Nigerian poultry producers’ biosecurity practices in terms of knowledge about bird flu symptoms, beliefs about safe practices, and handling products as well as perception on disease risk transmission. The study is a result of incidence of bird flu in Nigeria, which affected the livelihood of poultry producers. The study used a survey design. The choice of location and population of study (Kano, Lagos, and Anambra states) was based on bird flu disease risk map and population of small-scale poultry farmers in Nigeria. The study used both descriptive and causal analytical tools to achieve the specific objectives of the study. The major findings were that producers with higher knowledge were able to make more informed and rational assessment of true disease spread risks, KAP indices are not important in explaining the actual biosecurity decisions of the Nigerian producers. The study also found that adoption of biosecurity actions depends on flock size (which related to income), educational level of farmers, and incidence of bird flu previously in the area. In addition, smaller and poorer producers adopt fewer biosecurity actions, thus they are considered to be riskier in terms of disease transmission. The study therefore, recommended among other things a well-planned education programs to improve knowledge of bird flu symptoms, nature of disease, how to prevent and control them especially the small-scale poultry producers. This is likely to improve overall good practices of handling poultry and reduce the risk of disease spread of a variety of poultry diseases as well as the health consequences it poses to both animals and humans.