Showing papers in "Australian Journal of Agricultural and Resource Economics in 1997"
TL;DR: In this article, the macroeconomic assumptions, demand and supply parameters, and structures of the models used in projecting China's future food supply, demand, and trade are analyzed, and improvements needed in future work on modelling China's grain economy, which include accounting for the links between agriculture and other sectors, technical change in the livestock industry and infrastructure constraints on grain imports.
Abstract: This article analyses the macroeconomic assumptions, demand and supply parameters, and structures of the models used in projecting China's future food supply, demand and trade. Projections vary greatly, from China being self-sufficient in grain to being a net importer of 369 million metric tons of grain in 2030. The differences stem mainly from the approaches chosen to model China's grain production and, in particular, the combined effects of land decline and yield growth. The article also points out improvements needed in future work on modelling China's grain economy, which include accounting for the links between agriculture and other sectors, technical change in the livestock industry and infrastructure constraints on grain imports.
79 citations
TL;DR: In this article, the impact of implementing the Uruguay Round obligations to open textile and clothing markets in OECD countries would reduce East Asia's industrialization and thereby slow its net imports of food.
Abstract: Rapid industrialization in East Asia, particularly China, is raising questions about who will feed the region in the next century and how will Asia be able to pay for its food imports.
The paper addresses this question by first reviewing existing food sector projections and then taking an economy-wide perspective using projections to 2005, based on the global CGE model known as GTAP. After showing the impact of implementing the Uruguay Round, the paper explores several alternative scenarios. A slowdown in farm productivity growth is shown to be very costly to the world economy, as is slower economic growth in China. Failure to honour Uruguay Round obligations to open textile and clothing markets in OECD countries would reduce East Asia’s industrialization and thereby slow its net imports of food. On the other hand, the trade reform that is likely to accompany China’s (and hence Taiwan’s) membership of the World Trade Organization adds 30% to the estimated global gains from the Uruguay Round. Their WTO accession are projected to boost exports of manufactures and strengthen food import demand by not only China but also its densely populated neighbours with whom it trades intensively.
71 citations
TL;DR: In this paper, sustainable agriculture is prescribed as a policy approach that maximizes economic benefits while maintaining environmental quality, and it is argued that this approach is human capital intensive and encourages new scientific developments.
Abstract: Sustainable agriculture is prescribed as a policy approach that maximizes economic benefits while maintaining environmental quality. It is argued that this approach is human capital–intensive and encourages new scientific developments. To attain sustainability, economic incentives for the development and adoption of precision technologies (with minimal residues that cause environmental damage) have to be developed. Taxation and tradeable permits are desirable policies to attain first–best solutions; however, when heterogeneity and lack–of–information problems are significant, alternative institutions have to be developed. The paper presents and discusses such institutions.
53 citations
TL;DR: The use of genebanks for ex situ conservation of crop genetic resources has increased greatly since the 1970s, improving the access of crop breeders to landraces and wild and weedy relatives as discussed by the authors.
Abstract: The world-wide capacity of genebanks for ex situ conservation of crop genetic resources has increased greatly since the 1970s, improving the access of crop breeders to landraces and wild and weedy relatives. But utilization of genebank resources has not kept pace. The set of popular cultivars in major crops is typically rather small, and their ancestry encompasses only a fraction of the genetic diversity currently available in other cultivars. Discussions of farmers’ rights that focus on compensation for current incorporation of farmers’ varieties in new cultivars have diverted attention from the question of why so little of the newly accessible genetic diversity is currently being utilized by public and private breeders. To optimize the future provision of genebank services, research is needed on the costs of genebanks, the market for their services, the use of genetic resources by breeders, and the implications of recognition of farmers’ rights, evolving intellectual property rights, continued funding problems and developments in biotechnology.
51 citations
TL;DR: In this article, the authors examined the possible environmental and resource constraints to long-term food production growth and explored the implications of these possible constraints for food and resource policies, concluding that food production in the aggregate is likely to keep pace with growing populations and incomes, and that real food prices will be stable or slowly declining.
Abstract: Projections of global food supply and demand to the year 2020 indicate that food production in the aggregate is likely to keep pace with growing populations and incomes, and that real food prices will be stable or slowly declining. This article examines the possible environmental and resource constraints to long-term food production growth and explores the implications of these possible constraints for food and resource policies. The article reviews and synthesises the evidence on biophysical limits to crop productivity; plant genetic resources and biotechnology; the availability of plant nutrients; soil and land degradation; the increasing scarcity and declining quality of water; and the impact of global climate change on agriculture.
47 citations
TL;DR: In this paper, nonparametric methods are used to measure the impact of public research expenditures on Australian broadacre agriculture over the 1953-94 period, using both unrestricted and 30-year lagged specifications of the research impacts on productivity.
Abstract: Nonparametric methods are used to measure the impact of public research expenditures on Australian broadacre agriculture over the 1953–94 period. Results using both unrestricted and 30-year lagged specifications of the research impacts on productivity suggest that while certain aspects of the nonparametric multi-input/output technologies are quite robust to alternative specifications (in particular, the associated Malmquist total factor productivity indexes), other aspects are less stable (in particular, the indexes on input and, to a lesser extent, output biased technical change). Internal rates of return to research expenditures on Australian broadacre agriculture are estimated to be in the 12 per cent to 20 per cent range.
38 citations
TL;DR: In this article, the long-run co-movements among vegetable oil prices are analyzed, based on a multivariate cointegration model, and the empirical finding is that most comovements are consistent with the predictions of market theory.
Abstract: In the international edible oil markets, there is believed to be high substitutability between vegetable oils and fats produced under different conditions. In light of this, we consider the question: what is the nature of the long-run relationships between vegetable oil prices? Long-run co-movements among oil prices are analysed, based on a multivariate cointegration model. The empirical finding is that most co-movements are consistent with the predictions of market theory. Prices of oils tend to be grouped according to their different end-uses. Some policy implications of a buffer stock scheme are discussed.
33 citations
TL;DR: In this paper, an empirical study of land degradation in the Australian state of New South Wales is presented, which suggests that there are incentives for farmers to coexist with certain forms of degradation, while there are also incentives to avoid some other forms.
Abstract: To understand land degradation and assess policy responses, knowledge is needed of the bio-physical causes, the economic effects on farms and the incentives farmers face to avoid or ameliorate the degradation. An empirical study of land degradation in the Australian state of New South Wales is presented in this article. The results suggest that there are incentives for farmers to co-exist with certain forms of degradation, while there are also incentives to avoid some other forms.
30 citations
TL;DR: In this paper, the authors consider the effect of research on the shape of the industry supply curve and show that the effect on the price decline from research will be overstated. But their analysis is restricted to short-run equilibrium behaviour.
Abstract: Differences among firms in a competitive industry can affect the shape of the industry supply curve. It is necessary to know how both production costs and rents are affected by research. Industry response to research will be different depending upon whether entry occurs. If the effect of entry is ignored, then the price decline from research will be overstated. Industry marginal returns can be positive with purely yield-increasing research, even when industry demand is inelastic. Standard formulas for calculating producer surplus based on linear industry supply and demand curves are strictly valid only if the analysis is restricted to short-run equilibrium behaviour.
26 citations
TL;DR: In this paper, the authors show that accounting for tactical adjustment is more important than accounting for risk attitude was supported with regard to identifying the optimal drainage recirculation strategy for an irrigated dairy farm.
Abstract: When assessing farming strategies, it is important to account for the opportunities provided for tactically adjusting to outcomes of risk. The hypothesis that accounting for tactical adjustment is more important than accounting for risk attitude was supported in this study with regard to identifying the optimal drainage recirculation strategy for an irrigated dairy farm. Failing to account for tactical adjustment would lead to a sub-optimal choice, costing the farmer about A$3 100 in present value terms. In contrast, failing to account for risk aversion would not affect the strategy chosen. The distribution method was found to be well suited to modelling tactical adjustment.
26 citations
TL;DR: In this article, the role of middlemen in determining the returns to generic advertising in a competitive industry where supply is uncontrolled, the price of marketing inputs is endogenous, and retail markets are interrelated through consumer preferences is investigated.
Abstract: This article focuses on the role of middlemen in determining the returns to generic advertising in a competitive industry where supply is uncontrolled, the price of marketing inputs is endogenous, and retail markets are interrelated through consumer preferences Theoretical analysis suggests farm-gate returns (quasi-rents) are overstated when input substitution at middlemen level is ignored, a result confirmed in the empirical application As for mark-up behaviour, represented by the farm-retail price transmission elasticity, a general result is that farm-gate returns to generic advertising always increase as the transmission elasticity decreases, provided retail demand is more elastic than input substitution Endogenising the price of marketing inputs has little effect on advertising rents
TL;DR: In this article, the authors consider the role of distortions as determinants of the factor biases of innovations, or to the in£uence of technical progress with or without distortions on the sectoral structure of production.
Abstract: With few exceptions, induced innovation theories give little consideration either to the role of distortions as determinants of the factor biases of innovations, or to the in£uence of technical progress ^ with or without distortions ^ on the sectoral structure of production. This analysis identi¢es demand for innovations as a function of a speci¢c policy setting which both conditions and is conditioned by the structure of production. In this context, when some sectors contribute more than others to environmental externalities, private and social optima in the allocation of research resources may diverge. In some circumstances it may be optimal to use research budget allocations as second-best substitutes for Pigouvian taxes.
TL;DR: In this paper, the authors examined the 1996 Australian Quarantine Review with particular reference to the recommendations of the 1996 AQR with respect to the direct economic effect of any introduction of an exotic disease.
Abstract: Australia’s quarantine policy is based on the concept of manageable risk, which is underpinned by quarantine risk analysis, which this article examines with particular reference to recommendations of the 1996 Australian Quarantine Review. Quarantine risk assessment addresses disease concerns associated with any particular proposed import and may also require detailed examination of possible economic and environmental effects. The degree of quantification varies, and more quantitative approaches may be either deterministic or stochastic. Assessments consider both the probability of an event occurring and its consequences, including the direct economic effect of any introduction of an exotic disease.
TL;DR: The 1996 Federal Agriculture Improvement and Reform Act (FAIR) contained important breaks with a tradition of crop-by-crop subsidies dating back to the Agricultural Adjustment Act of 1933 as mentioned in this paper.
Abstract: The 1996 Federal Agriculture Improvement and Reform Act (FAIR) contained important breaks with a tradition of crop–by–crop subsidies dating back to the Agricultural Adjustment Act of 1933. Farmers with recorded base acres were given the opportunity (which nearly all accepted) to sign a seven–year ‘contract’ with the US Department of Agriculture (USDA), under which payments will be continued on the merged base acres on a declining schedule until the year 2002. FAIR is an unfinished agenda. First, the coverage of ‘freedom to farm’ is only partial, with numerous commodities left out of the decoupling programme. Second, the largest producers will augment their already significant receipts with generous lump sum transfers from USDA. This will further reinforce the concentration of roughly 90 per cent of receipts and payments in the hands of the 100 000 to 200 000 largest producers of field crops. An alternative would be to make payments in times of low marketing receipts which recede when prices are high.
TL;DR: In this paper, the authors investigated the impact of a protein premiums and discounts system on the income stream from growing wheat and showed that such a system reduces the expected level and variability of wheat income.
Abstract: This article investigates the impact of a protein premiums and discounts system on the income stream from growing wheat. Based on a biological relationship between protein and yield in uncertain seasonal conditions, it shows that such a system reduces the expected level and variability of wheat income. It is subsequently argued, using a numerical analysis, that protein payments affect both the attraction to wheat growers of forward contracts and the value of land used for wheat. The nature of both of these impacts is related to the level of seasonal variability affecting the land. Consequently, wheat growers in the more unreliable regions of the wheatbelt may have been particularly disadvantaged by the system.
TL;DR: The EU banana policy is manifestly bad and despite a healthy policy transparency process and comprehensive public criticisms of its extreme inefficiencies, its costs have been growing progressively worse and more disruptive of international commerce as discussed by the authors.
Abstract: The EU banana policy is manifestly bad. But despite a healthy policy transparency process and comprehensive public criticisms of its extreme inefficiencies, its costs have been growing progressively worse and more disruptive of international commerce. This raises serious doubts about the WTO process, and the policy transparency process itself. At the very least, the EU bananarama story told here means we should not be complacent about either.
TL;DR: The Australian Quarantine report as mentioned in this paper proposes fundamental changes to Australia's approach to quarantine and recommends: the development of a partnership between industry, governments and the general public; the establishment of a statutory authority to develop Australia's quarantine policy and to ensure national delivery of quarantine services; acknowledgment of the importance of maintaining Australia’s unique natural environment; the need to redress the imbalance between the plant and animal sectors; developing of a more formally structured process for conducting risk analyses; and expanding the scope of quarantine beyond the "barrier" to cover pre-border, border and post-
Abstract: This article provides an overview of the report on Australia’s quarantine policies and procedures, Australian Quarantine. The Report proposes fundamental changes to Australia’s approach to quarantine and recommends: the development of a partnership between industry, governments and the general public; the establishment of a statutory authority to develop Australia’s quarantine policy and to ensure national delivery of quarantine services; acknowledgment of the importance of maintaining Australia’s unique natural environment; the need to redress the imbalance between the plant and animal sectors; development of a more formally structured process for conducting risk analyses; and expanding the scope of quarantine beyond the ‘barrier’ to cover pre-border, border and post-border activities.
TL;DR: In this article, the potential for hedging Australian wheat with the new Sydney Futures Exchange wheat contract was examined using a theoretical hedging model parametised from previous studies, and the optimal hedging ratio for an average wheat farmer was found to be zero under reasonable assumptions about transaction costs and based on previously published measures of risk aversion.
Abstract: The potential for hedging Australian wheat with the new Sydney Futures Exchange wheat contract is examined using a theoretical hedging model parametised from previous studies. The optimal hedging ratio for an ‘average’ wheat farmer was found to be zero under reasonable assumptions about transaction costs and based on previously published measures of risk aversion. The estimated optimal hedging ratios were found by simulation to be quite sensitive to assumptions about the degree of risk aversion. If farmers are significantly more risk averse than is currently believed, then there is likely to be an active interest in the new futures market.
TL;DR: In this paper, the authors examined the cost and demand structures of meat products industries in the US and Australia from 1970 to 1991 and found that the greatest technological impacts stem from large-scale economies, which are similar across countries.
Abstract: The cost and demand structures of meat products industries in the US and Australia from 1970 to 1991 are examined. Scale economies, technical change and trade impacts and output pricing behaviour are evaluated, using short- and longrun input cost and input and output demand elasticities. The greatest technological impacts stem from large-scale economies, which are similar across countries. Unit cost savings from output expansion involve capital investment and materials saving in the long run, although input-speci¢c patterns vary by country. Import competition appears to motivate capital expansion further. Finally, large mark-ups of price over marginal cost are found, which are consistent with low pro¢ts as a result of the underlying scale economies. An important issue that arises in any evaluation of the economic health of a sector or country is how technological and trade factors have motivated structural change and aiected economic performance. In many diierent contexts, economists have attempted to measure, evaluate and obtain policy implications of these factors and their impacts. Such questions may be particularly critical for analysis of the food system ^ including both the agricultural and food processing sectors. Although these issues may sound simple to motivate and address, the
TL;DR: The author discusses population and well-being since Malthus' first edition, the population growth rate as an unimportant factor in determining population well- being, negative population growth rates, recent world food developments, prospects for the future supply and demand of food, and implications for world trade.
Abstract: During the 1980s the European Union the US and Japan followed policies designed to limit the production of grain. In so doing the production and stock of grain declined during the decade in developed countries. However grain production increased in developing countries during the 1980s causing the overall world supply of grain to grow faster than demand. International market prices for grain have been falling since the 1970s. Despite claims to the contrary reputable studies of prospective food supply and demand indicate that there will be continued improvement in per capita food consumption especially in the developing countries. It is highly unlikely that the factors which affect world food supply and demand can either stop the decline in real market prices for grain or result in more than a modest increase in world grain trade. While China may become a major grain importer central and eastern Europe may become major net grain exporters who compete with traditional exporters. The likely future trend in real world grain prices is good news for urban consumers but farmers in developing countries will have to continually adjust to the eroding prices of their product. The author discusses population and well-being since Malthus first edition the population growth rate as an unimportant factor in determining population well-being negative population growth rates recent world food developments prospects for the future supply and demand of food and implications for world trade.
TL;DR: In this article, the role of farmer education in productivity gains in five Chinese provinces has been investigated, and the authors highlight the need for a cautious interpretation of the regression results of earlier studies, because they could be affected by problems of outliers, multicollinearity and omitted variable bias.
Abstract: Regression results for five Chinese provinces provide stronger empirical support than hitherto for the role of farmer education in productivity gains. However, these results are largely due to the inclusion of two small groups of outliers: one consists of very poor households whose heads have no education and the other, relatively well-off households whose heads have only three years of education. This article illustrates the need for a cautious interpretation of the regression results of earlier studies, because they could be affected by problems of outliers, multicollinearity and omitted variable bias.
TL;DR: The rapid phase of growth in food consumption is over for most of the world's population because of increased incomes and, besides, population growth rates continue to slow as mentioned in this paper, thus, the rate of growth of food production needed in the future is much lower than it has been for the past 40 years.
Abstract: Recent concerns about future global food production seem poorly based. The rapid phase of growth in food consumption is over for most of the world's population because of increased incomes and, besides, population growth rates continue to slow. Thus, the rate of growth of food production needed in the future is much lower than it has been for the past 40 years. Production and price instability will continue, perhaps with lessened intensity because of reduced government intervention. With private agricultural interests now facing greater exposure to price and production risks, especially in developing countries, there needs to be greater emphasis on financial market instruments for managing these risks.
TL;DR: In this paper, a mean-Gini stochastic efficiency analysis for agricultural decision making is presented. And the mean-gini efficient set of decisions is characterized rigorously in terms of its corresponding absolute risk aversion.
Abstract: This article adds to the information base concerning the applicability of mean–Gini stochastic efficiency analysis in agriculture. The mean–Gini efficient set of decisions is characterized rigorously in terms of its corresponding absolute risk aversion. In an empirical analysis, the mean–Gini efficient set of decisions is derived for four studies from the literature and compared to the second degree stochastic dominance efficient set. An alternative quantitative measure of risk aversion is used to gain insight in a visceral sense to the risk preferences associated with mean–Gini efficient decisions.
TL;DR: In this article, an alternative specification for the trend component of crop yield growth is developed and applied to maize yield data for Zimbabwe's large-scale farming sector, which accounts for permanent regime shifts as new technologies are discovered but allows gradual absorption as adoption follows a diffusion path.
Abstract: An alternative specification for the trend component of crop yield growth is developed and applied to maize yield data for Zimbabwe’s large-scale farming sector. This accounts for permanent regime shifts as new technologies are discovered but allows gradual absorption as adoption follows a diffusion path. Econometric methods are used to estimate the timing and importance of innovations, as well as the length of the diffusion path. Results from an application to Zimbabwe commercial maize yields indicate two major regime shifts that can be associated with the introduction of hybrid seed varieties, and a diffusion path that extends over a decade.
TL;DR: The diversity of players in the field of agricultural (and, more generally, rural) policy and management research is sketched in a global overview of relevant research resources, and the small but important part played by the CGIAR Centres in this is explored, particularly where it has maximum value in terms of international public goods, and for strategic links to other parts of the CFA portfolio as mentioned in this paper.
Abstract: The diversity of players in the field of agricultural (and, more generally, rural) policy and management research is sketched in a global overview of relevant research resources, and the small but important part played by the CGIAR Centres in this is explored, particularly where it has maximum value in terms of international public goods, and for strategic links to other parts of the CGIAR portfolio. The patchy and often slender (and perhaps diminishing in specific cases) capacity of national agricultural policy research and analysis units in the less-developed world to deliver the needed research products is examined.
TL;DR: This article argued that the European Union banana policies do not make economic sense and hence criticism of these policies is justified, and pointed out that the WTO's role is not to judge the economic merits of these banana policies, but their legal justification.
Abstract: European Union banana policies do not make economic sense, and hence criticism of these policies is justified. Some facts should, though, be remembered. If the EU had chosen free trade in bananas when the Single Market was established, certain producers both inside and outside the EU would have lost income, and it proved politically impossible to choose direct financial compensation. Also, the quantitative implications of the new EU banana regime may be less than sometimes assumed, as trade has not been reduced very much. The WTO's role is not to judge the economic merits of these policies, but their legal justification.
TL;DR: The authors examined the relationship between risk premia and Australia's foreign debt and current account deficits and found no evidence that a small country risk premium may have emerged during the early 1990s and no evidence was found of such a premium during the 1980s.
Abstract: The level of and movements in interest rates and the exchange rate can have a substantial impact on the economic performance of Australia's primary industries. Whether a country and/or exchange risk premium has resulted in higher interest rates and increased volatility in the exchange rate is therefore important to these industries. There is some evidence that a small country risk premium may have emerged during the early 1990s. In line with earlier studies, however, no evidence was found of such a premium during the 1980s. A further finding is that any exchange risk premium may have declined over the last decade or so. Possible links between risk premia and Australia's foreign debt and current account deficits are also examined.