Showing papers in "American Journal of Agricultural Economics in 1996"

Using Informational Labeling to Influence the Market for Quality in Food Products

Abstract: In the United States, the federal government is increasingly using requirements for informational labeling on food products to influence 1) consumers' knowledge and purchasing patterns and 2) manufacturers' product offerings and marketing practices. We discuss the economic rationale behind these regulations and issues related to judging their success or failure.

Modeling Economics and Ecology: The Importance of a Spatial Perspective

Abstract: Interdisciplinary work in environmental economics, and increasingly in certain areas of interest to agricultural economists, frequently involves us with essentially ecological problems. A few notable examples include nonpoint source pollution, water quality, biodiversity, and global climate change. As we take on these problems, we are being asked to look at the world through the lens of population (or community) and systems ecologists. Conflicts and frustration generally result and are usually put down to fundamental differences in philosophy, but may largely be due to differences in the modeling structure the two disciplines impose on the world.

Crop Insurance, Moral Hazard, and Agricultural Chemical Use

Abstract: This study examines the relationship between chemical input use and crop insurance purchase decisions for a sample of Kansas dryland wheat farmers. Recent research by Horowitz and Lichtenberg indicated that, contrary to conventional wisdom, farmers that purchased insurance tended to use relatively more chemical inputs than farmers who did not insure. In contrast, our results confirm the conventional view that moral hazard incentives lead insured farmers to use fewer chemical inputs. Implications for the joint determination of insurance and input use decisions and appropriate estimation techniques are discussed. Copyright 1996, Oxford University Press.

Evaluation of Factors Influencing Student Class Attendance and Performance

Abstract: This study quantifies the effects of student behavior, teacher attributes, and course characteristics on class attendance and performance. Several notable factors that influence attendance and grades are motivation, prior grade point average (GPA), self-financing by students, hours worked on jobs, quality of teaching, and nature of class lectures. This study provides strong empirical evidence of the positive influence of class attendance on student performance.

Input Demand under Yield and Revenue Insurance

Abstract: Previous studies disagree on the effects of insurance on fertilizer application rates. The effect of increased fertilizer on the probability of low yields primarily determines whether fertilizer and insurance are substitutes or complements. We estimate conditional distributions of corn yields to determine if the technical relationship between yields and fertilizer supports the hypothesis that insurance increases optimal application rates. Our results indicate no support for this hypothesis. At all nitrogen fertilizer rates and reasonable levels of risk aversion, nitrogen fertilizer and insurance are substitutes, suggesting that those who purchase insurance are likely to decrease nitrogen fertilizer applications.

Market Analysis Methods: Are Our Enriched Toolkits Well Suited to Enlivened Markets?

Abstract: The past fifteen years have brought historic reduction of government intervention in agricultural markets in the developing world. Most economists and policy makers believe these reforms enliven markets previously fettered by excessive government authority. Nonetheless, the impact of market-oriented reforms on the spatial and intertemporal extent and the competitiveness of markets remains an inherently empirical question. Meanwhile, there also have been major innovations in methods used to analyze markets and prices, due largely to the rapidly emerging time series econometric literature. Agricultural economists' toolkits have changed nearly as rapidly and dramatically as have developing economy markets. But can these enriched toolkits answer the

Land Tenure and Allocative Efficiency in Niger

Abstract: Using field-level data, the authors investigate whether traditional land tenure systems are an impediment to allocative efficiency in Niger. They find that yields are strongly influenced by the manpower available to farming households, an indication that marginal returns to labor and land are not equalized across households. The authors uncover no relationship between manuring and whether or not local customs allow land sales. But manuring is influenced by tenure security: farmers who cultivate both borrowed and owned fields divert manure toward the latter. The authors' findings do not imply that a change in land tenure system is called for.

A Decomposition of Total Factor Productivity Growth: The Case of Chinese Agricultural Growth before and after Reforms

Abstract: Our objective in this paper is to explain a method to decompose the sources of total factor productivity (TFP) growth into technological progress and changes in technical efficiency within the framework of the varying coefficients frontier production function. An empirical application is demonstrated using the Chinese provincial-level agricultural data covering the period 1970–87. The results indicate that TFP growth in the prereform period was negative in twenty out of twenty-eight provinces and that it was positive in almost all provinces during the reform periods, while negative in sixteen out of twenty-eight provinces in the postreform periods of 1984–87.

Farmers' Welfare and Changing Food Prices: Nonparametric Evidence from Rice in Madagascar

Abstract: This paper uses nonparametric density estimation and kernel smoothing techniques to examine the instantaneous distributional implications of rice price changes in Madagascar. While many farmers do not participate in product markets as either buyers or sellers, and net sales or marketable surplus are fairly small for many others, the roughly one-third of rice farmers who fall below the poverty line face significant negative first-order welfare effects from increases in the mean or variance of rice prices. Conversely, the first-order gains from rice price increases are highly concentrated among the largest rice farmers and particular regions in Madagascar.

Modeling Multiple Adoption Decisions in a Joint Framework

Abstract: A multinomial probit (MNP) model is applied to the modeling of adoption decisions by farmers facing multiple technologies which can be adopted in various combinations. This model allows for full investigation of the interactions between decisions to adopt or not adopt several technologies. Estimation is carried out in a Bayesian framework employing Gibbs sampling to circumvent past difficulties encountered in maximum likelihood estimation of the MNP model. The model is estimated for a sample of U.S. apple growers with four possible sustainable production technology bundles. The results show that adoption decisions are most significantly influenced by off-farm labor supply.

Information Asymmetry as a Reason for Food Industry Vertical Integration

Abstract: Three trends that have been subject to recent discussion are a movement away from undifferentiated agricultural commodities toward more specialized products, reduced reliance on open markets for raw agricultural products, and a movement toward agricultural industrialization. Recent research suggests that demographic trends may be causing the first trend, while the other two are closely related phenomena. This research suggests that information externalities, arising from uncertainty concerning the nature of food quality and problems in detecting quality, may be reasons why vertical coordination is being used to circumvent the marketplace.

Explaining Irrigation Technology Choices: A Microparameter Approach

Abstract: Water price reforms are increasingly being used to encourage improvements in irrigation efficiency through technology adoption. A microparameter approach based on field-level data is used to assess the effect of economic variables, environmental characteristics, and institutional variables on irrigation technology choices. The results show that water price is not the most important factor governing irrigation technology adoption; physical and agronomic characteristics appear to matter more. The results demonstrate the importance of using micro-level data to determine the effects of asset heterogeneity and crop type on technology adoption. The continued growth of urban water demand, acted a measure (A.B. 3616) requiring irrigathe recent awareness of environmental and in- tion districts in the state to draft "best managestream water values, and the virtual halt of wa- merit practices" for the use of irrigation water, ter supply development have put increased de- including farm-level measures such as irrigamands on scarce water supplies in the western tion systems. Water price reforms are also inUnited States. Recent legislation has called for creasingly used to encourage improvements in increased in-stream water flows to enhance wa- irrigation efficiency through technology adopter quality and restore wildlife habitat in a hum- tion. The federal Central Valley Project Imber of states, especially California. Because ag- provement Act requires the U.S. Bureau of Recricultural water use accounts for the majority of lamation to adopt increasing block pricing for water consumption in the West, growers are water provided to irrigation districts. generally forced to bear the burden of reduced The literature on adoption of modern irrigadiversions necessary to enhance in-stream tion technology is well established both empiri

Contract Design for the Purchase of Environmental Goods from Agriculture

Abstract: An environmental stewardship program, whereby farmers are paid directly for the environmental goods they provide, is developed by combining the microparameter distribution model with mechanism design principles. The program overcomes the information asymmetry between farmers and governments and accounts for the deadweight losses from distortionary taxes. The characteristics of optimal input and payment schedules of the program are derived. These optimal schedules are determined by the tradeoffs between farming profits, environmental benefits, and deadweight losses from taxes, and are second-best except under restrictive conditions on deadweight losses from taxes and on the marginal product of inputs and marginal pollution costs.

Consumer Preferences for Fresh Food Items with Multiple Quality Attributes: Evidence from an Experimental Auction of Pork Chops

Abstract: This study illustrates an application of experimental auction methods, using both experimental economics and experimental design, to evaluate consumer perceptions and willingness to pay (WTP) for fresh pork chops. We test and reject hypotheses that (a) market prices and consumers' WTP are unaffected by the level of attributes embodied in the pork chops, (b) appearance (based on photographs or actual product) and actual taste are equally good sources of consumer information, and (c) consumers are consistent in their preferences for fresh pork attributes. A major conclusion is that predicting consumer demand for fresh pork (or any fresh food) based on appearance without tasting is unproductive.

A Demand Systems Analysis of Food Commodities by U.S. Households Segmented by Income

Abstract: Using the 1987-88 Nationwide Food Consumption Survey, twelve food commodity groups were analyzed according to household poverty status. Parameter estimates were used to obtain subsistence expenditures, own-price elasticities, expenditure elasticities, and income elasticities. Own-price elasticities were similar between the income groups for most commodities. However, income elasticities were consistently higher for the lower-income group. The use of average estimates of price and income elasticities for the population as a whole for the projection of individual commodity demands is not likely to be successful if notable changes are evident in income distribution.

The Demand for Multiple Peril Crop Insurance: Evidence from Montana Wheat Farms

Abstract: An econometric analysis of the demand for multiple peril crop insurance is carried out for a sample of 370 Montana wheat farms. The study is the first to model the farm's participation and coverage-level decisions separately through Heckman two-stage estimation procedures. These decisions are shown to be determined in different ways. In addition, farms with positive expected returns from insurance make coverage-level decisions in different ways from farms with negative expected returns. These differences indicate that adverse selection effects limit the efficacy of across-the-board premium rate increases as mechanisms for reducing loss ratios.

The Economics of a Public Fund for Environmental Amenities: A Study of CRP Contracts

Abstract: The problem of targeting CRP purchases to buy environmental amenities under productivity and environmental heterogeneity is considered. Gini coefficients and Lorenz curves are used to measure the effectiveness of spending under alternative targeting criteria. The environmental benefits considered are water erosion, wind erosion, surface water quality, and wildlife habitat. The three alternative targeting criteria examined include purchasing land according to (i) the benefit-to-cost ratio, (ii) the level of benefits, and (iii) the level of cost. Results indicate that the degree of variability and correlation determine the extent to which suboptimal targeting achieves a significant portion of available environmental benefits.

Modeling Farm-Level Crop Insurance Demand with Panel Data

Abstract: A random‐effects, binomial probit model is applied to data for a panel of Kansas wheat farms to examine Multiple Peril Crop Insurance demand. A theoretical model is developed which suggests inclusion of the moments of both market return and the return to insurance. Empirical results indicate that the first and second moments of both market return and the returns to insurance are significant. The price elasticity of demand is estimated to be −0.65. Preseason weather variables when included in the models were not found to be significant, failing to support the hypothesis of intertemporal adverse selection.

Incentive Payments to Encourage Farmer Adoption of Water Quality Protection Practices

Abstract: Farmers can be encouraged to voluntarily adopt environmentally sound management practices through the use of incentive payments. This paper uses both a bivariate probit with sample selection model and a double hurdle model on data from a survey of farmers to predict farmer adoption of the practices as a function of the payment offer. The five management practices addressed here are integrated pest management,legume crediting, manure testing, split applications of nitrogen, and soil moisture testing. Also estimated are models that predict the acreage on which these practices would be applied given the decision to accept the incentive payments estimated.

Analysis of Food-Away-from-Home Expenditure Patterns for U.S. Households, 1982–89

Abstract: The two-step decision process for food-away-from-home (FAFH) consumption is empirically estimated using a generalization of the Heien and Wessells approach. Household information gathered by the National Panel Diary Group is used for the analysis. Marginal effects are corrected by untangling the respective variable impacts on the inverse Mills ratio. Expenditure and participation probability elasticities are similar to previous studies. Income elasticities are about 0.20, suggesting that the FAFH commodity is a necessary good for U.S. society. Northeastern households are less likely to consume FAFH than other households, but their expenditures are higher on average.

The Effect of Agricultural Policies on Land Use and Environmental Quality

Abstract: In this paper I consider the environmental quality gains that may be achieved by reducing agricultural income supports. A new methodology is developed to estimate land use shares. In an application to Wisconsin, milk price support reductions result in shifts of marginal agricultural land to forest, reducing soil erosion and providing off-site water quality improvements. The environmental benefits are estimated to be at least as large as the decreased welfare burden on consumers and taxpayers, indicating a central role for environmental quality considerations in motivating policy reforms and a more efficient means of achieving the environmental quality goals of land retirement programs.

Mellor, John W. Agriculture on the Road to Industrialization. Baltimore MD: The Johns Hopkins University Press, 1995, 358 pp., price unavailable

Abstract: In Agriculture on the Road to Industrialisation, John Mellor brings together a distinguished group of contributors to examine the lessons drawn from those less developed countries whose success in agricultural development allowed for successful overall economic development. The framework for discussion includes three components: increased productivity resulting from technological change in the agricultural sector; the use of increased agricultural income; and consequent expansion of other sectors of the economy. The volume includes nine case studies. Thailand and Argentina serve as examples of successes due to the expansion in land area given over to agriculture, while Taiwan, Punjab (India), and the Philippines represent contrasting cases because they indicate little agricultural growth through expansion. Kenya, Costa Pica, and Colombia show how acceleration results from the changed composition of production and resulting growth in agricultural exports. Volume editor John Mellor provides an introduction and conclusion drawing out what can be learned from these cases.

Nutrient Elasticities in a Complete Food Demand System

Abstract: This study explores the linkage of the determinants of food choice with consumer nutrient availability by developing a procedure to measure changes in nutrient availability as the demand for food items change. It uses demand elasticities from traditional demand analysis to estimate elasticities of changes in the nutritional content of consumer diets. The procedure is applied to estimate nutrient elasticities for fifteen nutrients in response to changes in thirty-five food prices and per capita income.

Demand Response to Advertising in the Australian Meat Industry

Abstract: Stable URL:http://links.jstor.org/sici?sici=0002-9092%28199605%2978%3A2%3C268%3ADRTAIT%3E2.0.CO%3B2-OAmerican Journal of Agricultural Economics is currently published by American Agricultural Economics Association.Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available athttp://www.jstor.org/about/terms.html. JSTOR's Terms and Conditions of Use provides, in part, that unless you have obtainedprior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content inthe JSTOR archive only for your personal, non-commercial use.Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained athttp://www.jstor.org/journals/aaea.html.Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printedpage of such transmission.The JSTOR Archive is a trusted digital repository providing for long-term preservation and access to leading academicjournals and scholarly literature from around the world. The Archive is supported by libraries, scholarly societies, publishers,and foundations. It is an initiative of JSTOR, a not-for-profit organization with a mission to help the scholarly community takeadvantage of advances in technology. For more information regarding JSTOR, please contact support@jstor.org.http://www.jstor.orgFri Feb 22 18:04:31 2008

Foldvary, Fred. Public Goods and Private Communities: The Market Provision of Social Services. Brookfield VT: Ashgate Publishing, 1994, 288 pp., $59.95

Abstract: Do public goods and services, such as streets, parks and dams have to be provided by government? In Public Goods and Private Communities, Fred Foldvary's innovative application of public choice and social choice theory to questions of urban economics shows how collective goods can be provided by agents in a market process. Rejecting the market-failure hypothesis, Dr Foldvary argues that an entrepreneur can provide collective goods by consensual community agreements. Instead of studying particular services, as previous studies have done, this book concerns itself with entire private communities. A series of case studies demonstrate how real world communities, such as Walt Disney World, the Reston Association in Virginia and the private neighbourhoods of Saint Louis, are in fact financing their own public goods and services in accordance with this theory. For such communities to rise and prosper, the author contends, government must eliminate zoning and many other restrictions, as well as the taxation of private services. After considering the implications of his work for urban economies - at a time when many of America's cities are plagued by decay, violence and poverty - Dr Foldvary argues that prosperity can be restored to cities if private communities are allowed to develop. As an original response to an urgent, contemporary problem this well-written book will be welcomed by social scientists, policy makers and business leaders seeking solutions to problems of urban decay.

The Implications of Model Specification for Welfare Estimation in Nested Logit Models

Abstract: Nested logit models are increasingly being used to value environmental amenities. The implications of nesting structure, choice of estimator (FIML or sequential), and restrictions on parameters across nested groups on welfare estimates are examined. These issues have received little previous attention. Model selection criteria that can be used to distinguish among the models are extended and applied. Additionally, a simulation procedure is implemented to construct standard errors for the welfare measures.

Agrarian Structure and Agricultural Practice: Typology and Application to Western Sudan

Abstract: A typology of models that explain patterns of variation in farm endowments and farm practices and yields shows that insecurity in renting land, financing constraints, and the absence of insurance generate patterns of factor use quite different from the famous “inverse relationship” caused by labor supervision problems. One might expect to observe positive relationships between wealth and yields. Village-level data from western Sudan confirm that such positive relationships are not a theoretical curiosity. Wealthy farmers have higher levels of output per hectare because they use more labor per hectare. Insurance and financing constraints appear to be the crucial market failures.

Second-Best Tax Policies to Reduce Nonpoint Source Pollution

Abstract: Control of nonpoint source pollution often requires regulation of inputs, but first-best solutions are unattainable. Because inputs are monitored by different agencies and regulatory coordination can be costly, it may be more practical to regulate single inputs. A cost-effectiveness approach to determining the best single-input tax policy is developed and applied to the question of reducing nitrate leaching from lettuce production in California. Water is the best single input to regulate, and efficiency losses from this second-best approach appear not to be great. Conditions for the welfare ranking of policies to be invariant to heterogeneity in production or leaching are identified.

A Shadow-Price Frontier Measurement of Profit Efficiency in Chinese Agriculture

Abstract: A shadow-price profit frontier model is developed to examine production efficiency of Chinese farm households. The model incorporates price distortions but retains the advantages of stochastic frontier properties. The shadow prices and shadow profit are derived through a behavioral profit function. Empirical results using household survey data show that the conventional assumption of profit maximization based on market prices is inappropriate. Farmers' resource endowment and education influence their allocative efficiency. Family size, per capita net income, and family members operating as village leaders are positively related to households' production efficiency. Reducing market distortions should increase farm households' production efficiency.