Showing papers in "American Journal of Agricultural Economics in 2012"
TL;DR: In this article, the authors show how the methodology can be used to decompose a new TFP index that satisfies all economically-relevant axioms from index theory and apply it to state-level data from 1960 to 2004.
Abstract: Recent theoretical advances in total factor productivity (TFP) measurement mean that TFP indexes can now be exhaustively decomposed into unambiguous measures of technical change and efficiency change. To date, all applications of this new methodology have involved decomposing indexes that have poor theoretical properties. This article shows how the methodology can be used to decompose a new TFP index that satisfies all economically-relevant axioms from index theory. The application is to state-level data from 1960 to 2004. In most states, the main drivers of agricultural TFP change are found to have been technical change and scale and mix efficiency change.
183 citations
TL;DR: In this paper, a meta-frontier approach and propensity score matching was used to estimate treatment effects among vegetable farmers in Kenya and found that participation in supermarket channels increases farm productivity in terms of meta-technology ratios by 45%.
Abstract: Supermarkets are gaining ground in agrifood systems of many developing countries. While recent research has analyzed income effects in the small farm sector, impacts on productivity and efficiency have hardly been studied. We use a meta-frontier approach and combine this with propensity score matching to estimate treatment effects among vegetable farmers in Kenya. Participation in supermarket channels increases farm productivity in terms of meta-technology ratios by 45%. We also find positive and significant impacts on technical efficiency and scale efficiency. Supermarket expansion therefore presents opportunities for agricultural growth in the small farm sector, which is crucial for poverty reduction in Africa. Copyright 2012, Oxford University Press.
151 citations
TL;DR: In this paper, the authors estimate the risk attitudes of a large sample of individuals from various fishing communities along the west coast of South Africa and find that female fishers and rights holders are more risk averse than their male counterparts.
Abstract: We estimate the risk attitudes of a large sample of individuals from various fishing communities along the west coast of South Africa. Female fishers and rights holders are found to be more risk averse than their male counterparts, while rights holders are found to be less risk averse relative to subjects without fishing rights. Risk attitudes are found to be correlated with compliance with fisheries regulations. In particular, a greater degree of risk aversion translates into a reduction in compliance. Furthermore, in the case of gender, female fishers and rights holders are more likely to comply with fisheries regulations.
134 citations
TL;DR: Woolsey et al. as discussed by the authors showed that dairy demand in urban China has shown remarkable growth in the past decade, driven by mutually reinforcing factors, including rising incomes, government promotion of dairy products, changing urban lifestyles, and the development of more sophisticated marketing channels.
Abstract: The diet of urban Chinese consumers has changed drastically over the past twenty years, due in part to rising incomes and changing lifestyles. Food consumption has shifted away from grains and toward higher-quality calories from animal proteins and aquaculture products. Dairy demand in urban China has shown remarkable growth in the past decade, driven by mutually reinforcing factors, including rising incomes, government promotion of dairy products, changing urban lifestyles, and the development of more sophisticated marketing channels (Fuller et al. 2006). China’s dairy production has surged from just over 10 million metric tons in 2001 to an expected production level of nearly 48 million metric tons by 2013 (Woolsey, Zhang, and Zhang 2010). Most notable has been the rise in demand for ultra-high temperature (UHT) pasteurized fluid milk among urban consumers in recent years, with a 50% sales increase in 2009 alone (Fuller et al. 2006; Wang, Mao, and Gale 2008; Woolsey, Zhang, and Zhang 2010).
132 citations
TL;DR: The economic forces that drive migratory beekeeping are analyzed and the determinants of pollination fees are analyzed in a larger and richer data set than has been studied before.
Abstract: The world’s most extensive markets for pollination services are those for honey bee pollination in the United States. These markets play important roles in coordinating the behavior of migratory beekeepers, who both produce honey and provide substitutes for ecosystem pollination services. We analyze the economic forces that drive migratory beekeeping and theoretically and empirically analyze the determinants of pollination fees in a larger and richer data set than has been studied before. Our empirical results expand our understanding of pollination markets and market-supporting institutions that internalize external effects.
129 citations
TL;DR: In this article, the strategic role that private quality standards play in food supply chains is highlighted and two asymmetric equilibria in the retailers' quality requirements are shown. But the use of private QS is detrimental to social welfare and a public minimum QS can remedy this unfavorable welfare outcome.
Abstract: This paper highlights the strategic role that private quality standards play in food supply chains. Considering two symmetric retailers that are exclusively supplied by a …nite number of producers and endogenizing the producers’delivery choice, we show that there exist two asymmetric equilibria in the retailers’quality requirements. The asymmetry is driven by both the retailers’incentive to raise their buyer power and the retailers’competition for suppliers. We …nd that the use of private quality standards is detrimental to social welfare. A public minimum quality standard can remedy this unfavorable welfare outcome. JEL-Classi…cation: L15, L42, Q13
119 citations
TL;DR: An equilibrium displacement model is used to estimate and compare the economic welfare effects from a range of hypothetical farm commodity and retail food policies as alternative mechanisms for encouraging consumption of healthy food or discouraging consumption of unhealthy food, or both and finds that a tax on calories would be the most efficient obesity policy.
Abstract: Many commentators claim that farm subsidies have contributed significantly to the “obesity epidemic” by making fattening foods relatively cheap and abundant and, symmetrically, that taxing “unhealthy” commodities or subsidizing “healthy” commodities would contribute to reducing obesity rates. In this article we use an equilibrium displacement model to estimate and compare the economic welfare effects from a range of hypothetical farm commodity and retail food policies as alternative mechanisms for encouraging consumption of healthy food or discouraging consumption of unhealthy food, or both. We find that, compared with retail taxes on fat, sugar, or all food, or subsidies on fruits and vegetables at the farm or retail levels, a tax on calories would be the most efficient obesity policy. A tax on calories would have the lowest deadweight loss per pound of fat reduction in average adult weight, and would yield a net social gain once the impact on public health care expenditures is considered.
102 citations
TL;DR: In this article, the authors explore the behavior of real commodity prices over a 50-year period and find that the pattern in the timing of shifts is suggestive of the causal factors underlying the recent boom.
Abstract: This paper explores the behavior of real commodity prices over a 50–year period. Attention is given to how the shifting means for various commodity prices have changed with a special emphasis on behavior since the mid 2000s. To identify structural changes in commodity prices, we estimate shifting–mean autoregressions by using: the Bai and Perron (1998) procedure for determining structural breaks; low frequency Fourier functions; and a procedure that specifies shifts to be smooth logistic functions of time. We find that the pattern in the timing of shifts is suggestive of the causal factors underlying the recent boom.
92 citations
TL;DR: This article used a two-stage GLS model to quantify the World Agricultural Supply and Demand Estimates (WASDE) announcement effect for cotton, soybeans and hard winter wheat, controlling for important factors associated with commodity price volatility.
Abstract: This article uses a two‐stage GLS model to quantify the World Agricultural Supply and Demand Estimates (WASDE) announcement effect for cotton, soybeans and hard winter wheat, controlling for important factors associated with commodity price volatility. The information presented by the overlapping nature of futures contracts is exploited to estimate conditional effects by month, inventory conditions, and delivery horizon. Results in this article show that the WASDE announcement effect persists across contract positions, is not limited to months that include NASS crop survey data, is amplified during low carryover periods for soybeans and wheat,and is rapidly incorporated into futures prices.
86 citations
TL;DR: In this paper, the authors extend the historical crop mixes approach by generating additional synthetic crop mixes using supply response elasticities and systematically varied commodity prices, which provides flexibility when future supply responses can be vastly different from past responses.
Abstract: Mathematical programming models are widely used in agricultural sector analysis. However, the lack of micro-level data, as well as computational requirements, necessitate the aggregation of individual producers into representative units when working at the sectoral level. This usually leads to unrealistic extreme specialization in supply responses. In 1982, McCarl introduced the “historical crop mixes” approach to avoid extreme specialization. We extend this approach by generating additional synthetic crop mixes using supply response elasticities and systematically varied commodity prices. In addition to avoiding extreme specialization, this approach provides flexibility when future supply responses can be vastly different from past responses. An application to U.S. biofuel policy analysis is presented.
84 citations
TL;DR: In this article, the authors proposed the use of moment functions and maximum entropy techniques as a flexible approach for estimating conditional crop yield distributions, which is easily estimated using standard econometric estimators.
Abstract: This article proposes the use of moment functions and maximum entropy techniques as a flexible approach for estimating conditional crop yield distributions. We present a moment‐based model that extends previous approaches, and is easily estimated using standard econometric estimators. Predicted moments under alternative regimes are used as constraints in a maximum entropy framework to analyze the distributional impacts of switching regimes. An empirical application for Arkansas, Mississippi, and Texas upland cotton demonstrates how climate and irrigation affect the shape of the yield distribution, and allows us to illustrate several advantages of our moment‐based maximum entropy approach.
TL;DR: Wang et al. as mentioned in this paper showed that if agriculture is highly responsive, policy-induced changes in farmers' behavior can be effective in increasing production and ensuring long-term food security in the country.
Abstract: During the dramatic economic transformation in the last few decades, food demand in China has expanded due to rapid urbanization, dietary change, and steady population growth. At the same time, a decline in available land for agriculture has made grain selfsufficiency,a major goal of Chinese agriculture policy, a considerable challenge. The governmenthasimplementedcomprehensivepolicies to encourage domestic agricultural production, including eliminating agricultural taxes and providing direct subsidies to farmers. It remains unclear whether these policies are effective in stimulating food production.There isanurgentneedforknowledgeonagricultural supply response to changes in prices, policies and rural infrastructure in China, which can guide policy formulation in the process of economic transformation. If agriculture is highly responsive,policy-induced changes in farmers’ behavior can be effective in increasing production and ensuring long-term food security in the country.
TL;DR: The authors used a large panel of agricultural and non-agricultural trade flows to investigate the effect of membership in the World Trade Organization (WTO) and its predecessor, the General Agreement on Tariffs and Trade (GATT).
Abstract: Recent empirical studies have estimated the trade flow effect of membership in the World Trade Organization (WTO) and its predecessor, the General Agreement on Tariffs and Trade (GATT). One important, although largely untested, conclusion from this literature is that the GATT/WTO works well if we ignore trade in agriculture - one of the institutions seemingly apparent failures. This article investigates this conclusion using a large panel of agricultural and non-agricultural trade flows. The results are impressive: the multilateral institution has delivered significant positive effects on members agricultural trade despite its sensitive nature and the reluctance of members to undertake serious reform. These findings are robust to various slices of the data and recent advances in the specification and estimation of the gravity equation to account for sample selection issues and the extensive margin of trade. Copyright 2012, Oxford University Press.
TL;DR: In this article, the authors exploit a provision of the 2002 Farm Act that departed from previous policy by making oilseeds eligible for direct payments, thus increasing payments to areas that historically produced more oilseeeds.
Abstract: How much decoupled payments, such as direct payments in the U.S., affect agricultural production remains an open empirical question with implications for policy. Using data from multiple years of the Census of Agriculture, we exploit a provision of the 2002 Farm Act that departed from previous policy by making oilseeds eligible for direct payments, thus increasing payments to areas that historically produced more oilseeds. Our instrumental variable estimates, in contrast to OLS estimates, suggest that changes in payments over the period 2002 to 2007 had little effect on aggregate production at the ZIP-code level. Copyright 2012, Oxford University Press.
TL;DR: In this paper, a structural econometric model of vertical relationships is adopted to identify pricing behavior in the supply chain for fluid milk in the United States, and the model consists of a system of equations that allows estimation of oligopoly power of dairy co-operatives and downstream firms, exploiting federal milk marketing order regulations.
Abstract: A structural econometric model of vertical relationships is adopted to identify pricing behavior in the supply chain for fluid milk in the United States. The model consists of a system of equations that allows estimation of oligopoly power of dairy co-operatives and downstream firms, exploiting federal milk marketing order regulations to identify co-operatives' marginal cost. A key finding is that co-operatives use their market power to raise the farm price of milk by almost 9% above marginal cost, resulting in an income transfer of more than $600 million per year in markets regulated by federal milk marketing orders. Copyright 2012, Oxford University Press.
TL;DR: This paper developed a framework for allowing multiple equilibria and multiple speeds of adjustment with regime separation depending on trade flows between regions, rather than the magnitude of price differentials between markets.
Abstract: Conventional threshold models of price transmission allow for different speeds of adjustment to equilibria depending on the magnitude of price differentials between markets. However, these models typically assume only one underlying long-run equilibrium price relationship. In this article we develop a framework for allowing multiple equilibria and multiple speeds of adjustment with regime separation depending on the magnitude of trade flows between regions, rather than the magnitude of price differentials. Applying this framework to maize price transmission between South Africa and Zambia shows no transmission during periods of high imports, when the government was heavily involved in maize importation, but stronger transmission during periods of low imports when the government was not importing. Copyright 2012, Oxford University Press.
TL;DR: In this paper, the authors consider changes to U.S. immigration law that would affect the market for hired farm labor, including mandatory use o f an Internet-based employment eligibility verification system and an expanded program for temporary non-foreign-born farmworkers.
Abstract: Policymakers are considering changes to U.S. immigration law that would affect the market fo r hired farm labor-including mandatory use o f an Internet-based employment eligibility verification system and an expanded program for temporary nonimmigrant fo reign-born farmworkers. Labor is an important input to U.S. agriculture--accounting for about 17 percent o f the sector's variable production expenses and roughly 40 percent o f such expenses for farms specializing in fruit, vegetables, or nursery products. PRINT PDF EMAIL
TL;DR: This article provided a comprehensive approach for analyzing the evolution of poverty using Mozambique as a case study, and developed a novel "backcasting" framework that links a dynamic computable general equilibrium model to a micro-simulation poverty module.
Abstract: We provide a comprehensive approach for analyzing the evolution of poverty using Mozambique as a case study. Bringing together data from disparate sources, we develop a novel "back-casting" framework that links a dynamic computable general equilibrium model to a micro-simulation poverty module. This framework provides a new approach to explaining and decomposing the evolution of poverty, as well as to examining rigorously the coherence between poverty, economic growth, and inequality outcomes. Finally, various simple but useful and rarely-applied approaches to considering regional changes in poverty rates are presented. Copyright 2012, Oxford University Press.
TL;DR: The authors conducted two experiments to determine how rationally subjects behave with and without price feedback in a second price auction and found that subjects exposed to price feedback are significantly more likely to commit preference reversals.
Abstract: It is generally thought that market outcomes are improved with the provision of market information. As a result, the use of repeated rounds with price feedback has become standard practice in the applied experimental auction valuation literature. We conducted two experiments to determine how rationally subjects behave with and without price feedback in a second price auction. Results from an auction for lotteries show that subjects exposed to price feedback are significantly more likely to commit preference reversals. However, this irrationality diminishes in later rounds. Results from an induced value auction indicate that price feedback caused greater deviations from the Nash equilibrium bidding strategy. Our results suggest that while bidding on the same item repeatedly improves auction outcomes, this improvement is not the result of price feedback.
TL;DR: In this article, the authors proposed a methodology for calculating rural-urban PPP in India based on item-specific PPP that exploits the analogy with an item specific equivalence scale, and the results underline the need to incorporate spatial differences in PPP calculations in countries with heterogeneous preferences.
Abstract: While purchasing power parity (PPP) between countries has received a great deal of attention, PPP calculations within countries have received less attention. The idea that one unit of currency has the same purchasing power in all regions in large countries is false. This paper addresses this limitation by proposing a methodology for calculating rural-urban PPP in India. The paper introduces a concept of item-specific PPP that exploits the analogy with an item-specific equivalence scale. The methodology relies on demographically-varying preferences to estimate PPP. The results underline the need to incorporate spatial differences in PPP calculations in countries with heterogeneous preferences. Copyright 2012, Oxford University Press.
TL;DR: In this article, the authors show that climate policy is regressive on the "uses side" (i.e., the fraction of income used on these goods that falls with income, measured either by annual income or by total annual expenditure) as a proxy for permanent income.
Abstract: Whether in the form of a carbon tax or cap-and-trade permit system, climate policy is likely to raise the price of all energy-intensive goods such as electricity, heating fuel, and gasoline. The fraction of income used on these goods falls with income, measured either by annual income or by total annual expenditure (as a proxy for permanent income). Thus, climate policy is found to be regressive on the “uses side” (e.g. Burtraw, Sweeney, and Walls 2009, and Hasset et al. 2009). For these reasons, the economics literature and actual legislation have focused on whether permit revenue can be used to offset regressive burdens.
TL;DR: A scanned version of a published article can be found at: http://www.aaea.org/publications/ajae.html as mentioned in this paper, where the authors were federal employees when contributing to this work.
Abstract: This is a scanned version of a published article. © The Author (2012). Published by Oxford University Press on behalf of the Agricultural and Applied Economics Association.The original can be found at: http://www.aaea.org/publications/ajae. To the best of our knowledge, one or more authors of this paper were federal employees when contributing to this work.
TL;DR: This article used laboratory experiments to examine how hydrogeologic properties of groundwater models influence decision making and found that pumping rates are highest when the underlying model is such that the future costs of groundwater use are broadcast evenly to all users.
Abstract: This research uses laboratory experiments to examine how hydrogeologic properties of groundwater models influence decision making. The results reveal that pumping rates are highest when the underlying model is such that the future costs of groundwater use are broadcast evenly to all users, as a majority of participants behave myopically. There is less myopic behavior when the groundwater dynamics are governed by spatially explicit models, where the private cost of groundwater use is high relative to external costs. These results suggest that models used to simulate common‐pool resource dynamics play an important role in determining both economic predictions and behavioral outcomes.
TL;DR: This paper used a large, rich dataset compiled from results of university extension trials to estimate the contribution of genetic modification (GM) to changes in corn yield in the United States from timeA to timeB.
Abstract: We use a large, rich dataset compiled from results of university extension trials to estimate the contribution of genetic modification (GM) to changes in corn yield in the United States from timeA to timeB. Through repeated experimental trials, we obtain consistent estimates of the effect of these traits by using both the Hausman‐Taylor estimator and a comparison of fixed effects estimates analogous to the agronomic practice of comparing near‐isolines. Our results suggest that GM traits had a positive impact on yield, but that gains associated with combining several GM traits in one hybrid are not necessarily additive.
TL;DR: This article analyzed the impact of border carbon adjustment on alternative producer responses using a stylized energy-economic model and found that if firms are able to produce a low-emissions variety for regions imposing BCAs, results are similar to when firms regard BCAs as an output tax.
Abstract: Border carbon adjustments (BCAs) have been proposed to address leakage and competitiveness concerns. In traditional assessments, firms regard BCAs as output taxes rather than implicit emissions taxes. Using a stylized energy-economic model, we analyze the impact of BCAs for alternative producer responses. When firms view BCAs as an implicit emissions tax, the outcome depends on whether or not firms can differentiate production across destination markets. If firms are able to produce a lowemissions variety for regions imposing BCAs, results are similar to when firms regard BCAs as an output tax. If firms produce a single variety for all markets, BCAs result in larger leakage reductions than in standard approaches. We also find that BCAs are less effective at addressing competitive concerns in scenarios that result in larger leakage reductions. JEL codes: F18, Q54.
TL;DR: The authors theoretically investigates the problems implied by farm heterogeneity in input allocation equations and multicrop econometric models, proposes an empirically tractable solution for overcoming these problems, and assesses the empirical relevance of the theoretically identified problems.
Abstract: This article aims to show that if the farm sample under consideration is characterized by significant heterogeneity, recovering output-specific input uses or modeling farm-level input uses may be more complicated than previously recognized. The article theoretically investigates the problems implied by farm heterogeneity in input allocation equations and multicrop econometric models, proposes an empirically tractable solution for overcoming these problems, and assesses the empirical relevance of the theoretically identified problems. The results demonstrate that heterogeneity matters, but that the revealed heterogeneity bias has a limited impact on the empirical results. Copyright 2012, Oxford University Press.
TL;DR: The authors estimate the shadow value of non-market crop stubble using household data from Morocco and find that stubble accounts for around one-quarter of the value of cereal production in a normal rainfall year and three quarters in a drought year.
Abstract: Diversified agricultural households often use byproducts of one activity as inputs for another. For crop‐livestock farmers, cereal production provides grain and crop residue, where the latter can be used as livestock feed. To properly assess the cost of introducing new technologies into such systems, one must value the implicit cost of byproducts, which is made difficult by missing byproduct markets. We estimate the shadow value of non‐market crop stubble using household data from Morocco and find that stubble accounts for around one‐quarter of the value of cereal production in a normal rainfall year and three quarters in a drought year.