Showing papers in "American Journal of Agricultural Economics in 2000"
TL;DR: In this article, the authors develop and estimate a model of supply response when transactions costs create a situation where some producers buy, others sell, and others do not participate in markets.
Abstract: We develop and estimate a model of supply response when transactions costs create a situation where some producers buy, others sell, and others do not participate in markets. We present two rationales for why producing households may have different relationships to the market: proportional and fixed transactions costs. Using data on Mexican corn producers, we estimate an empirical model that allows for separate tests of the significance of both types of transactions costs, revealing that both fixed and proportional transactions costs matter for the estimation. The results provide consistent estimates of supply elasticity and measures of the relative importance of factors determining both proportional and fixed transactions costs.
848 citations
TL;DR: In this paper, a simultaneous equation model was developed to estimate the direct and indirect effects of different types of government expenditure on rural poverty and productivity growth in India using state-level data for 1970-93.
Abstract: Using state-level data for 1970–93, a simultaneous equation model was developed to estimate the direct and indirect effects of different types of government expenditure on ruralpoverty and productivity growth in India. The results show that in order to reduce rural poverty, the Indian government shoul d give highest priority to additionalinvestments in ruralroads and agricul turalresearch. These types of investment not only have much larger poverty impacts per rupee spent than any other government investment, but also generate higher productivity growth. Apart from government spending on education, which has the third l argest marginalimpact on ruralpoverty and produc
818 citations
TL;DR: In this paper, the influence of land tenure on the adoption of conservation practices was analyzed by distinguishing renters according to lease type and by distinguishing practices according to the timing of costs and returns.
Abstract: We use a logit adoption model with data on 941 U.S. corn producers from the 1996 Agricultural Resource Management Study to analyze the influence of land tenure on the adoption of conservation practices. We extend previous analyses by distinguishing renters according to lease type and by distinguishing practices according to the timing of costs and returns. We find that cash-renters are less likely than owner-operators to use conservation tillage, but share-renters are not. Both cash-renters and share-renters are less likely than owner-operators to adopt practices that provide benefits only over the longer term (grassed waterways, stripcropping, and contour farming).
490 citations
TL;DR: For example, this article found that for those who conduct major grocery shopping trips only once per month (42% of all food stamp households), mean food energy intake drops significantly by the fourth week of the month.
Abstract: Mean food spending by food stamp households peaks sharply in the first three days after benefits are received. For those who conduct major grocery shopping trips only once per month (42% of all food stamp households), mean food energy intake drops significantly by the fourth week of the month. For the remaining households, intake remains steady over the course of the month. These patterns motivate an empirical model that simultaneously accounts for the shopping frequency and food intake decisions over time. Results have implications for policies that may affect the frequency of grocery shopping by food stamp households.
312 citations
TL;DR: This article examined the distribution of welfare from the introduction of Bt cotton in the United States in 1996 and calculated a total increase in world surplus of $240.3 million for 1996.
Abstract: We examine the distribution of welfare from the introduction of Bt cotton in the United States in 1996. The welfare framework explicitly recognizes that research protected by intellectual property rights generates monopoly profits, and makes it possible to partition these rents among consumers, farmers, and the innovating input firms. We calculate a total increase in world surplus of $240.3 million for 1996. Of this total, the largest share (59%) went to U.S. farmers. The gene developer, Monsanto, received the next largest share (21%), followed by U.S. consumers (9%), the rest of the world (6%), and the germplasm supplier, Delta and Pine Land Company (5%).
309 citations
TL;DR: The authors showed that for each one hundred acres of cropland retired under the Conservation Reserve Program (CRP) in the central United States, twenty acres of non-cropland were converted to croplands, offsetting 9% and 14% of CRP water and wind erosion reduction benefits, respectively.
Abstract: Each year, billions of dollars of public funds are expended to purchase conservation easements on farmland. One unintended impact of these programs is that they may bring non-cropland into crop production. Such a slippage effect can be caused by increased output prices and by substitution effects. This article shows that for each one hundred acres of cropland retired under the Conservation Reserve Program (CRP) in the central United States, twenty acres of non-cropland were converted to cropland, offsetting 9% and 14% of CRP water and wind erosion reduction benefits, respectively. Implications of these results for the design of conservation programs are discussed. Copyright 2000, Oxford University Press.
271 citations
TL;DR: In this article, the authors consider what we have learned as a profession about the rapid consolidation in food processing and distribution and what are its implications for market power, economic efficiency, and the distribution of economic welfare among producers, consumers, and marketers.
Abstract: Good sources for information on recent developments in food-market structure include Barkema, Drabenstott, and Welch; U.S. Department of Agriculture (1996b), and Rogers. My objective is not to add to this literature, but, rather, to consider what we have learned as a profession about the rapid consolidation in food processing and distribution. What are its implications for market power, economic efficiency, and the distribution of economic welfare among producers, consumers, and marketers?
231 citations
TL;DR: In this article, the authors examined the potential demand for Bt cotton in the Southeast from information gathered in the first year of commercialization and found that reducing cotton insecticide applications by 40% would require a $21/acre subsidy, with total annual program costs between $53 million and $60 million.
Abstract: This article examines the potential demand for Bt cotton in the Southeast from information gathered in the first year of commercialization. We combine revealed preference (RP) data on adoption of Bt cotton varieties with stated preference (SP) data on willingness to adopt to estimate demand using a double-bounded maximum likelihood procedure. Using estimated demand equations, we simulate the costs of reducing conventional insecticide applications through subsidization of Bt cotton. Results indicate that reducing cotton insecticide applications by 40% in the Southeast would require a $21/acre subsidy, with total annual program costs between $53 million and $60 million.
217 citations
TL;DR: In this article, a nonparametric kernel density estimator was used to estimate conditional yield densities and derive the insurance rates for the U.S. crop insurance program, which is one of the only government-subsidized, income stabilizing mechanisms available to agricultural producers.
Abstract: With the crop insurance program becoming the cornerstone of U.S. agricultural policy, recovering accurate rates is of paramount interest. Lack of yield data presents, by far, the most fundamental obstacle to recovery of accurate rates . Thisarticle employsnew methodology to estimate conditional yield densities and derive the insurance rates. In our application, we find the nonparametric kernel density estimator requires an additional twenty-six years of yield data to estimate the shape of the conditional yield dens itiesasaccurately asthe recently developed empirical Bayesnonparametric kernel density estimator. Such methodological improvements can significantly aid in ameliorating the data problem. Recovering accurate premium ratesis paramount to the actuarial soundness of the crop insurance program, a program which hasgained prominence in the overall U.S. agricultural policy agenda. The 1996 Federal Agricultural Improvement and Reform (FAIR) Act signaled a new policy environment under which farmerswould be s to market forces. Under this policy regime, crop insurance remains, in some respects, one of the only government-subsidized, income stabilizing mechanisms available to agricultural producers. In addition, it appears that current political forcesare in the proces sof fashioning crop insurance as the cornerstone of U.S. agricultural policy. Consider the 1999 State of the Union Address in which the President stated:
195 citations
TL;DR: In this article, the relationship between farmers' behavioral attitudes and use of futures contracts is examined, taking into account non-directly observable variables and the heterogeneity of farmers, and the relationships are tested on a stratified data sample of 440 farmers.
Abstract: The relationship between farmers’ behavioral attitudes and use of futures contracts is examined, taking into account non-directly observable variables and the heterogeneity of farmers. The relationships are tested on a stratified data sample of 440 farmers. Cluster analysis and covariance structure equation models are used to validate the relationships. Farmers are found not to be homogenous regarding the factors influencing their use of futures. Heterogeneity at the segment level masked important effects at the aggregate level, notably risk attitude. Furthermore, several psychological constructs for farmers related to market orientation, risk exposure, market performance and entrepreneurial behavior play important roles in their use of futures contracts.
171 citations
TL;DR: In this article, the authors discuss policy and market determinants of changes in G&S, and highlight the importance of the emergence of privatized G &S, adding fuel to the forces of agrifood system concentration in the area.
Abstract: is among the most important in terms of trade volumes in the developing world. It contains global powerhouses of agroindustry and agriculture, such as Brazil, ranked fourth worldwide, and Argentina and Chile, among the global frontrunners in meat and cereals, and fruit, respectively. Income growth and rapid urbanization are changing diets, increasing the importance of processed foods and nonstaples as Bennett's law predicts. The most important nonstaples (dairy, vegetablesfruit, meat, and coffee) have stringent export requirements with respect to G&S in Organization for Economic Cooperation and Development (OECD) countries, and Mercosur domestic markets are themselves becoming more demanding in this regard. The paper proceeds as follows. Section 2 presents definitions and theoretical hypotheses. Section 3 discusses policy and market determinants of changes in G&S, and highlights the importance of the emergence of privatized G&S. Section 4 hypothesizes that the changes in G&S are adding fuel to the forces of agrifood system concentration in the area. Section 5 concludes.
TL;DR: In this paper, the authors developed theoretical and econometric cost function models for the meat industry to test the hypothesis of safety exogeneity, i.e., that product safety does not affect productive efficiency.
Abstract: This study develops theoretical and econometric cost function models for the meat industry to test the hypothesis of safety exogeneity, i.e., that product safety does not affect productive efficiency. Using plant-level data from the Census of Manufactures, this hypothesis is rejected. Estimates of the impacts of food safety regulation on variable cost of production in the beef, pork, and poultry industries show that the efficiency costs of food safety regulations could plausibly exceed benefits estimated by the U.S. Department of Agriculture. Costs of regulation per pound of meat are found to be size neutral for all but the smallest plants. Copyright 2000, Oxford University Press.
TL;DR: A multinomial selection model of averting behavior in response to water contamination risks is estimated for Georgia residents as mentioned in this paper, which examines the choice between bottled, filtered tap, and unfiltered tap water.
Abstract: A multinomial selection model of averting behavior in response to water contamination risks is estimated for Georgia residents. Measures of non-health related water quality (taste, odor, and appearance) are incorporated into the model to account for joint production of utility and health. The model examines the choice between bottled, filtered tap, and unfiltered tap water. Results of the estimation indicated that perceived risk from tap water, concern about water quality (taste, odor, and appearance of tap water), race, and age are the most important determinants of bottled water selection. Information regarding current or prior problems with tap water, perceived risk from tap water, and income are the most important determinants of water filter selection. Adjusting for quality differences between tap and bottled water, we show that averting costs estimates using bottled water expenditures would lead to an overstatement of avoidance costs by about 12%.
TL;DR: In this paper, the authors exploit a dataset on the auction price of tuna sold in Hawaii to estimate a hedonic model, which provides empirical estimates of price increments due to species, quality of the fish such as size or fat content, method of handling, and market conditions.
Abstract: Over the past two decades, the marketing of fish has recognized the importance of quality. Yet empirical analysis of market transactions could give us little insight into the value of different qualities of fish because market data are typically aggregated. We exploit a dataset on the auction price of tuna sold in Hawaii to estimate a hedonic model. The model provides empirical estimates of price increments due to species, quality of the fish such as size or fat content, method of handling, and market conditions. The empirical results are also used to estimate price flexibilities for landings in Hawaii.
TL;DR: In this article, an alternative econometric methodology was developed to estimate a system of censored demand equations using a large cross-section data from Colombian urban households. But the Tobit model was not considered.
Abstract: The article develops an alternative econometric methodology to estimate a system of censored demand equations using a large cross-section data from Colombian urban households. The approach preserves the behavioralinformation expressed by zero expenditures and conforms with the requirements imposed by consumer theory in a way consistent with the random utility hypothesis. We motivate the choice of the Tobit modelas a statistical representation of consumer behavior and introduce the methodology by specifying the AIDS model modified according to both a translating and scaling demographic transformation. We propose to estimate each demand equation in unrestricted form using the jackknife technique. We then recover the demand parameters imposing the cross-equations restrictions by using minimum distance estimation. The empirical results of the censored demand system for specific households of policy relevance are reported. Copyright 2000, Oxford University Press.
TL;DR: In this article, a multinomial logit model of work choices is estimated, including estimated transition probabilities among the explanatory variables, and the results indicate that a high objective probability of exit from farming within the next decade decreased the tendency to engage in off-farm work, especially in a full-time job.
Abstract: One of the most important questions regarding the phenomenon of part-time farming is whether it is a stable situation or just a step in the way out of agriculture. This article provides support for the first possibility in the context of Israeli family farms in the 1970s. A multinomial logit model of work choices is estimated, including estimated transition probabilities among the explanatory variables. The results indicate that a high objective probability of exit from farming within the next decade decreased the tendency to engage in off-farm work, especially in a full-time job, in 1971.
TL;DR: For example, Mistiaen and Strand as mentioned in this paper studied the location choice of commercial fishermen with heterogeneous risk preferences. But their work focused on the commercial fisherman population.
Abstract: Location Choice of Commercial Fishermen with Heterogeneous Risk Preferences Author(s): Johan A. Mistiaen and Ivar E. Strand Reviewed work(s): Source: American Journal of Agricultural Economics, Vol. 82, No. 5, Proceedings Issue (Dec., 2000), pp. 1184-1190 Published by: Oxford University Press on behalf of the Agricultural & Applied Economics Association Stable URL: http://www.jstor.org/stable/1244248 . Accessed: 25/01/2012 20:19
TL;DR: In this article, a spatial model of regional livestock production and three attendant environmental effects is developed, including spills from animal waste stores,nutrient runoff due to the application of manure to croplands, and direct ambient pollution, including odors, pests, and gases.
Abstract: This article develops a spatial model of regional livestock production and three attendant environmental effects: spills from animal waste stores;nutrient runoff due to the application of manure to croplands; and direct ambient pollution, including odors, pests, and gases. Assuming that neither environmental outcomes nor operators' manure-spreading practices can be monitored and regulated, constrained efficient production arrangements and waste-handling practices are described. The efficiency effects of several regulatory policies are then explored, including (a) scale regulations that limit animal inventories, (b) chemical fertilizer taxes, and (c) waste storage and handling standards that affect storm protections and manure transport.
TL;DR: In this paper, the authors find evidence of high returns from schooling in both crop and non-crop activities, and show that as schooling levels increase, the return from schooling shifts away from crop production.
Abstract: Controlling for the endogeneity of activity choice and considering both household-head and family schooling, we findevid ence of high returns from schooling in both crop andnoncrop activities. As schooling levels increase, the returns from schooling shift away from crop production. Failure to control for activity selection andfamily schooling is likely to result in biasedestimates of the returns from schooling in individual activities. Copyright 2000, Oxford University Press.
TL;DR: The authors examines the links from four U.S. agricultural programs to agricultural production and trade, including production flexibility contracts, crop insurance, marketing loans, and disaster assistance, and concludes that these payments raise farmers' wealth, which may subsequently impact agricultural investment decisions.
Abstract: Organization (WTO) negotiations, it is useful to look at the direct and indirect impacts of U.S. farm programs on agricultural production and trade. U.S. agricultural support, as reported to the WTO, exceeded $58 billion in 1997. Most of the support was reported in the green box as "minimally trade distorting," while about $6.2 billion was reported in the amber box as potentially "trade distorting."' However, amber box program expenditures greatly expanded in 1998 and 1999 due in part to generally lower commodity prices. With increased farm program expenditures, the market impacts of major programs need to be evaluated relative to potential production and trade distortions as background for WTO negotiations. This paper examines the links from four U.S. agricultural programs to agricultural production and trade. Programs discussed are production flexibility contracts, crop insurance, marketing loans, and disaster assistance. To the extent that programs expand domestic production, the impacts can be partially transmitted to world markets through increased exports and lower prices. With the elimination of deficiency payments and the introduction of production flexibility contract payments in the 1996 Farm Act, commodity-specific links between income support payments and production were largely eliminated (Young and Westcott). Production flexibility contract payments are not related to current production and prices. Nonetheless, these payments raise farmers' wealth, which may subsequently impact agricultural investment decisions. The 1996 Act retained the non-
TL;DR: This article investigated the causes of lower agricultural productivity in the tropics and found that the disparity in agricultural productivity between the tropical and temperate zones is even greater than the disparity of income levels.
Abstract: The tropics,sadly,continues to be a belt of poverty. The countries of the tropics all have low or middling incomes,with a few tiny or natural-resource-rich exceptions,and few of the poorest countries are outside of the tropics. The causes of tropical poverty are surely complex,involving initial endowments (Diamond),history,especially colonization, and geographical isolation (Gallup and Sachs 1999a). Central to the tropical poverty trap, though,is the impact of climate on productivity through the channels of tropical disease ecology and agriculture. This paper investigates the last channel: the causes of lower agricultural productivity in the tropics. The disparity in agricultural productivity between the tropics and the temperate zones is even greater than the disparity in income levels (figure 1). Income per capita in nontropical countries was 3.3 times the level of income per capita in tropical countries in 1995,but agricultural output per worker in the non-tropical countries was 8.8 times the level in the tropics. 1
TL;DR: In this article, a nonzero probability of water supply shortfall is considered for municipal water systems, and the consistency of these measures is gauged using an expected utility model, which is used to evaluate consumer preferences pertaining to water supply reliability.
Abstract: Instead of creating water supply systems that fully insulate mankind from climate-imposed water deficiencies, it is possible that for municipal water systems a nonzero probability of water supply shortfall is efficient. Perfect water supply reliability, meaning no chance of future shortfall, is not optimal when water development costs are high. Designing an efficient strategy requires an assessment of consumer preferences pertaining to the reliability of water supply. Contingent valuations of both current and future shortfalls are reported. The consistency of these measures is gauged using an expected utility model. Copyright 2000, Oxford University Press.
TL;DR: In this paper, the authors estimate the short and long-run effects of Hurricane Hugo on the prices of timber stocks, and estimate an intervention model of the residuals of cointegration of South Carolina sawtimber and pulpwood stumpage prices with prices of similar products from other regions.
Abstract: Catastrophic shocks to existing stocks of a renewable resource can cause long-run price shifts. With timber, these long-run price shifts may be accompanied by a short-run price drop due to salvage. Hurricane Hugo damaged 20% of southern pine timber in the South Carolina Coastal Plain in 1989. To estimate the short- and long-run effects of the hurricane on the prices of timber stocks, we estimated an intervention model of the residuals of cointegration of South Carolina sawtimber and pulpwood stumpage prices with prices of similar products from other regions. Modeling revealed a 30% negative price spike due to salvage and a long-run enhancement effect, leading to prices that are 10% to 30% higher than they would have been had Hugo not occurred.
TL;DR: The case of Hawaii's Pelagic longliners was investigated in the American Journal of Agricultural Economics, Vol. 82, No. 5, Proceedings Issue (Dec., 2000), pp. 1191-1197.
Abstract: The Cost of Sea Turtle Preservation: The Case of Hawaii's Pelagic Longliners Author(s): Rita Curtis and Robert L. Hicks Reviewed work(s): Source: American Journal of Agricultural Economics, Vol. 82, No. 5, Proceedings Issue (Dec., 2000), pp. 1191-1197 Published by: Oxford University Press on behalf of the Agricultural & Applied Economics Association Stable URL: http://www.jstor.org/stable/1244249 . Accessed: 23/01/2012 17:27
TL;DR: In this article, the authors provide an agency theoretic framework that explains the broiler industry's response to grower heterogeneity and production risk and to growers risk aversion, by forcing agents to bear additional income risk through the use of an imprecise estimator.
Abstract: The broiler industry presents two puzzles regarding production contracts: why do processors control growers' inputs, and why do they use a statistically insufficient estimator to calculate growers' compensation? This paper provides an agency theoretic framework that explains these puzzles in terms of processors' response to grower heterogeneity and production risk and to grower risk aversion. Processors control inputs to reduce the information rents paid to agents. By forcing agents to bear additional income risk through the use of an imprecise estimator, processors can increase profits, due to the combined moral hazard-adverse selection nature of the informational problem.
TL;DR: This article explored the origins of the strikingly high price premia paid for new food products in lab valuation exercises and found that preference learning is the main source of the high premia, and that novelty of the experimental experience does not in itself artificially inflate valuations.
Abstract: This paper explores the origins of the strikingly high price premia paid for new food products in lab valuation exercises. Our experimental design distinguishes between two explanations of this phenomenon: novelty of the experimental experience versus the novelty of the good, i.e., preference learning-bids reflect a person's desire to learn how an unfamiliar good fits into their preference set. Subjects bid in four consecutive experimental auctions for three goods that vary in familiarity, candy bars, mangos, and irradiated meat. Our results suggest that preference learning is the main source of the high premia, and that novelty of the experimental experience does not in itself artificially inflate valuations.
TL;DR: In this article, the applicability of the pecking order and partial adjustment theories of financial structure to farm businesses was tested by fitting a set of simultaneous financial equations with farm panel data from Illinois.
Abstract: Recent finance studies have considered whether gaps between a firm's costs of internal and external sources of investment funds, arising from capital market imperfections, influence its investment behavior and funding preferences. This study tests the applicability of the pecking order and partial adjustment theories of financial structure to farm businesses by fitting a set of simultaneous financial equations with farm panel data from Illinois. Model results indicate that Illinois farms adjust to long-run financial targets for equity, debt, and leasing, but that additional financing needs follow a pecking order that is stronger for farms with greater asymmetric information problems Copyright 2000, Oxford University Press.
TL;DR: In this article, a theoretical model is developed for a trader exposed to several types of risk, and the hedge ratio estimation is compared to the SUR and the multivariate GARCH methodologies.
Abstract: Commodity and freight futures contracts are analyzed for their effectiveness in reducing uncertainty for international traders. A theoretical model is developed for a trader exposed to several types of risk. OLS hedge ratio estimation is compared to the SUR and the multivariate GARCH methodologies. Explicit modeling of the time-variation in hedge ratios via the multivariate GARCH methodology, using all derivatives, and taking into account dependencies between prices, results in reductions in risk, even after accounting for transaction costs. Results confirm that while the commodity futures contracts are important for hedging risk, freight futures are a useful mechanism for reducing risk. Copyright 2000, Oxford University Press.
TL;DR: In this article, the authors examined state crop, livestock, and aggregate agricultural total factor productivity (TFP) data, 1950-82, for evidence of convergence to a single TFP level (σ-convergence) or to a steady state rate of growth (β- or conditional convergence) and concluded that independent state planning of agricultural research is inefficient and cooperation across states boundaries including establishment of new political jurisdictions for financing public agricultural research can enhance efficiency.
Abstract: State crop, livestock,and aggregate agricultural total factor productivity (TFP) data, 1950–82, are examined for evidence of convergence to a single TFP level (σ‐convergence) or to a steady state rate of growth (β‐ or conditional convergence). Our empirical results do not support σ‐convergence but do support β‐convergence. The rate of β ‐convergence is variable and depends on research and development (R…D) spillins from other states,private R…D, and farmers' schooling. The finding of strong positive interstate spillover effects implies that independent state planning of agricultural research is inefficient and cooperation across states boundaries including establishment of new political jurisdictions for financing public agricultural research can enhance efficiency.