European Review of Agricultural Economics - recent issues

The optimal amount and allocation of sampling effort for plant health inspection

Surkov, I. V., Oude Lansink, A. G.J.M., van der Werf, W. — Mon, 16 Nov 2009 13:53:17 PST

Plant import inspection can prevent the introduction of exotic pests and diseases, thereby averting economic losses. We explore the optimal allocation of a fixed budget, taking into account risk differentials, and the optimal-sized budget to minimise total pest costs. A partial-equilibrium market model is used to compute the economic consequences of pest invasion. An application to Dutch imports of chrysanthemum cuttings shows that the optimal allocation of a fixed inspection budget halves the cost of pest invasion compared to allocating the same budget equally over all imports. A budget increase that enables 42 per cent more inspection can reduce total societal costs by 81 per cent compared to smaller, constrained budget that ignores risk differentials.

Eco-labelled food products: what are consumers paying for?

Bougherara, D., Combris, P. — Mon, 16 Nov 2009 13:53:17 PST

The paper investigates whether the premium consumers are willing to pay for an eco-labelled product is driven by selfish or altruistic motives. Using an incentive-compatible experiment with both a within- and a between-subject design, we study the effect on this premium of information stating that eco-friendly products do not necessarily lead to higher private benefits. We find that this information does not affect buying prices in the within-subject experiment. This suggests that consumers’ willingness to pay for the eco-labelled product does not derive from perceived higher taste or safety attributes but from other motives. These results are confirmed in the between-subject design where we find that information affects buying prices for the eco-friendly product but also for the control product in the between-subject experiment.

Modelling farm production decisions under an expenditure constraint

Kumbhakar, S. C., Bokusheva, R. — Mon, 16 Nov 2009 13:53:17 PST

We use the indirect production function approach in the stochastic frontier framework to estimate separately the output losses due to the presence of a budget constraint and technical inefficiency. We develop a methodology for estimating the severity and testing the significance of the expenditure constraint at individual producer level. Our results, based on the farm data from three Russian regions from 1999 to 2003, show that the majority of the farms studied were expenditure-constrained during the study period. Expenditure constraints caused, on average, a potential output loss of 20 per cent. Output loss due to technical inefficiency, on average, is found to be around 13 per cent.

Cooperative liquidation under competitive stress

Cross, R. M., Buccola, S. T., Thomann, E. A. — Mon, 16 Nov 2009 13:53:17 PST

Competitive environments encourage cooperatives to liquidate by distributing equity to their members, often by raising the transfer prices paid for member raw product. We provide a method of detecting when such liquidation activity begins. In the process, we derive the arbitrage-free price bounds of a broad class of forward contracts typical of seasonal and speciality agricultural markets. The bounds are illustrated for the failed Tri-Valley Growers, once the largest fruit/vegetable cooperative in the USA. We show that Tri-Valley began liquidation years before it was detectable through conventional means. Implications are drawn for the expanding competitive pressures accompanying EU enlargement.

Modelling the impact of the CAP Single Farm Payment on farm investment and output

Sckokai, P., Moro, D. — Mon, 16 Nov 2009 13:53:17 PST

This paper analyses the impact of the Common Agricultural Policy arable crop regime on farm investment and output, introducing explicitly farmers’ risk attitudes into a dynamic dual model of farm decision-making. Estimation and simulation results are based on a Farm Accounting Data Network sample of Italian arable farms. The main finding is that an increase in intervention price would significantly affect farm investment, mainly through reduced price volatility, while policy changes not affecting price uncertainty, like an increase in the Single Farm Payment, would have a much smaller impact.

Demand elasticities for farmed salmon in world trade

Xie, J., Kinnucan, H. W., Myrland, O. — Mon, 16 Nov 2009 13:53:17 PST

The generalised demand specification of Barten and Eales et al. is used to estimate the world demand curves faced by major exporters of farmed salmon. Results suggest that the demand for farmed salmon has become less price elastic over time, fresh salmon from the UK faces the most competition in world markets and fresh salmon from Chile the least. Promotion programmes sponsored by the Norwegian Seafood Export Council appear to have increased the demand for fresh salmon at the expense of frozen salmon. Although the estimated promotion effects are small, the programme appears to have been remunerative from the Norwegian producer perspective.

Demand for on-farm permanent hired labour on family holdings: a comment

Kimhi, A. — Mon, 16 Nov 2009 13:53:17 PST

This comment discusses several aspects of the recent paper by Blanc et al. (2008), focussing on the link between the theoretical and empirical models. It argues that there is an inconsistency between the two models in the way households are segmented into different labour regimes. The econometric approach is also queried.

The Dragon and the Elephant: Agricultural and Rural Reforms in China and India

Rae, A. — Mon, 16 Nov 2009 13:53:17 PST

Fat Economics: Nutrition, Health, and Economic Policy

Nayga, R. M. — Mon, 16 Nov 2009 13:53:17 PST

The Economics of Production (Second Edition)

Hess, S. — Mon, 16 Nov 2009 13:53:17 PST

Frontiers in Resource and Rural Economics: Human-Nature, Rural-Urban Interdependencies

Roberts, D. — Mon, 16 Nov 2009 13:53:17 PST

An Introduction to the Structural Econometrics of Auction Data

Salant, D. — Mon, 16 Nov 2009 13:53:17 PST

Income Stabilization in European Agriculture: Design and Economic Impact of Risk Management Tools

Anton, J. — Mon, 16 Nov 2009 13:53:17 PST

Valuing product attributes in Vickrey auctions when market substitutes are available

Alfnes, F. — Thu, 30 Jul 2009 09:48:26 PDT

This article investigates the weakly dominant strategy in Vickrey auctions when substitutes are available in the market. We find that it is optimal for the consumers to shade their bids so that they obtain at least the same surplus from the auction as they would from the market. For products that would be bought in the market, the optimal bid is the market price. For other products, the optimal bid is below the market price. Furthermore, the full bidding approach is an incentive-compatible method for eliciting consumers' valuations of product attributes if the products in the auction have the same field substitutes.

Modelling attribute non-attendance in choice experiments for rural landscape valuation

Scarpa, R., Gilbride, T. J., Campbell, D., Hensher, D. A. — Thu, 30 Jul 2009 09:48:26 PDT

Non-market effects of agriculture are often estimated using discrete choice models from stated preference surveys. In this context we propose two ways of modelling attribute non-attendance. The first involves constraining coefficients to zero in a latent class framework, whereas the second is based on stochastic attribute selection and grounded in Bayesian estimation. Their implications are explored in the context of a stated preference survey designed to value landscapes in Ireland. Taking account of attribute non-attendance with these data improves fit and tends to involve two attributes one of which is likely to be cost, thereby leading to substantive changes in derived welfare estimates.

The CAP reform between targeting and equity: a structural policy analysis for Italy

Rocchi, B. — Thu, 30 Jul 2009 09:48:26 PDT

A model grounded on a social accounting matrix for Italy, adapted for an analysis of agriculture, is used to assess the distributive impacts of changes to the single payment scheme after the Common Agricultural Policy Health Check. The main goal of the analysis is to bring out how and to what extent the distributive outcomes of support are affected by the structural relations existing among production activity, factor ownership and the distribution of income from farming among households. A particular manipulation, the singular value decomposition, of the matrix of income multipliers is used to highlight the major trade-offs, implicit in the structure of the economy, between the support to different farm types and the impact on incomes of different households groups. The results outline the existence of a structural trade-off between targeting and equity in supporting Italian agriculture through payments to farms and suggest flexibility in the application of reformed payments according to different distributive features of agriculture in member countries.

The impact of market and policy instability on price transmission between wheat and flour in Ukraine

Brummer, B., von Cramon-Taubadel, S., Zorya, S. — Thu, 30 Jul 2009 09:48:26 PDT

Analysis of price transmission in transition countries is often complicated by unstable policy environments. We use a Markov-switching vector error-correction model (MSVECM) to model multiple regime shifts in the relationship between wheat and wheat flour prices in Ukraine from June 2000 to November 2004. Unlike common alternative error correction specifications, the MSVECM does not require an explicit transition variable but rather permits changes between regimes to depend on an unobserved state variable. The analysis reveals four regimes whose timing coincides with political and economic events in Ukraine. Strong coincidence between a ‘high-uncertainty’ regime and discretionary policy interventions suggests that policy responses to fluctuations in Ukrainian harvests may have amplified instability.

Critical masses in the decollectivisation of post-Soviet agriculture

Petrick, M., Carter, M. R. — Thu, 30 Jul 2009 09:48:26 PDT

Decollectivisation in post-Soviet agriculture has generally been slow except for islands of complete individualisation. Our model interlinks two types of critical mass phenomena that can explain these outcomes. First, positive network externalities reshape decollectivisation incentives after a sufficient number of reform pioneers shift to private farming. Second, workers have preferences for behaving in conformity with their social reference group. This allows collective farm managers interested in cementing their own power to manipulate reference groups by limiting workers' horizons. We provide empirical support with a threshold regression based on a unique data set of regional reform outcomes in Moldova.

Dynamically optimal strategies for managing the joint resistance of pests to Bt toxin and conventional pesticides in a developing country

Qiao, F., Wilen, J., Huang, J., Rozelle, S. — Thu, 30 Jul 2009 09:48:27 PDT

In this study we discuss why planting non-Bacillus thuringiensis (non-Bt) cotton as a refuge crop in China (and other developing countries) may not be economically optimal. To show this, we develop a bioeconomic model to run simulations that will help find the optimal strategies for managing the joint resistance of pests to the Bt toxin and conventional pesticides. We show that the approach of not requiring non-Bt cotton as a refuge is defensible given initial conditions and parameters calibrated to China's cotton production environment. Of special importance is the existence of natural refuge crops. The nature of transaction costs associated with implementing a refuge policy is also considered.

Institutional Economics and Economic Organisation Theory: An Integrated Approach

Bromley, D. W. — Thu, 30 Jul 2009 09:48:27 PDT

Food Security Indicators, Measurement, and the Impact of Trade Openness

Revoredo-Giha, C. L. — Thu, 30 Jul 2009 09:48:27 PDT

Food, Economics, and Health

Irz, X. — Thu, 30 Jul 2009 09:48:27 PDT

A Handbook of Primary Commodities in the Global Economy

Labys, W. C. — Thu, 30 Jul 2009 09:48:27 PDT

Debt, Risk and Liquidity in Futures Markets

White, B. — Thu, 30 Jul 2009 09:48:27 PDT

Trade liberalisation, agricultural productivity and poverty in the Mediterranean region

Hassine, N. B., Kandil, M. — Mon, 20 Apr 2009 06:10:11 PDT

A widely held view in the economic literature is that productivity growth is an important pathway through which trade liberalisation may alleviate poverty. This paper explores the link between trade openness, agricultural productivity growth and poverty reduction in a panel of Mediterranean countries. Technical efficiency scores and total factor productivity indexes are computed using the latent class stochastic frontier model to account for cross-country heterogeneity in farming production technologies. The relevance of agricultural productivity gains for poverty reduction is investigated through joint estimation of real per capita GDP growth and inequality changes in a dynamic panel setting. The findings illustrate the positive effects of openness on farming efficiency and productivity and give strong support to the view that agricultural productivity growth is a channel for poverty alleviation.

Measuring market power in the French Comte cheese market

Merel, P. R. — Mon, 20 Apr 2009 06:10:11 PDT

A new empirical industrial organisation approach is used to measure seller market power in the French Comté cheese market, characterised by government-approved supply control. The estimation is performed on quarterly data at the wholesale stage over the period 1985–2005. Three different elasticity shifters are included in the demand specification, and the supply equation accounts for the existence of the European dairy quota policy. The market power estimate is small and statistically insignificant. Monopoly is clearly rejected. Results appear to be robust to the choice of functional form and suggest little effect of the supply control scheme on consumer prices.

The effects of EU agricultural policy changes on farmers' risk attitudes

Koundouri, P., Laukkanen, M., Myyra, S., Nauges, C. — Mon, 20 Apr 2009 06:10:12 PDT

This analysis utilises a model of production under risk estimated on Finnish farm-level data to measure farmers' risk attitudes in a changing policy environment. We find evidence of heterogeneous risk preferences among farmers, as well as notable changes over time in farmers' degree of risk aversion. This result is due to the increase in the non-random part of farm income generated by the policy change after Finland's European Union accession. The analysis confirms the assertion that agricultural policies that are decoupled from production do affect input use and crop mix through their effect on farmers' risk attitudes.

Evaluating the effects of farm programmes: results from propensity score matching

Pufahl, A., Weiss, C. R. — Mon, 20 Apr 2009 06:10:12 PDT

The paper applies a semi-parametric propensity score matching approach to evaluate the effects of agri-environment (AE) programmes on input use and farm output of individual farms in Germany. The analysis reveals a positive and significant treatment effect of AE programmes on the area under cultivation, in particular grassland, resulting in a decrease of cattle livestock densities. Furthermore, participation significantly reduced the purchase of farm chemicals (fertiliser, pesticide). We also find differences in the treatment effect among individual farms (heterogeneous treatment effects). Farms that can generate the largest benefit from the programme are most likely to participate.

Investment rigidity and policy measures

Serra, T., Stefanou, S., Gil, J. M., Featherstone, A. — Mon, 20 Apr 2009 06:10:12 PDT

This paper assesses the impacts of decoupled government transfers on production decisions of a sample of Kansas farms. Our empirical analysis is based on a reduced-form application of the dual model of investment under uncertainty developed by Sckokai, which is extended to a consideration of irregularities in the capital stock adjustment cost function. To do so we adopt the threshold regression methods proposed by Hansen. The econometric results support the existence of three regimes characterised by different economic behaviour. Our analysis suggests that in a dynamic setting that allows for irregularities in the capital adjustment cost function, decoupled transfers can have a powerful influence on production decisions. The dynamics of the stock of capital cause this influence to grow over time.

Organic Farming: An International History

Henning, J. C. — Mon, 20 Apr 2009 06:10:12 PDT

The European Union and Developing Countries: Trade, Aid and Growth in an Integrating World

Matthews, A. — Mon, 20 Apr 2009 06:10:12 PDT

An Introduction to Sustainable Development

Stage, J. — Mon, 20 Apr 2009 06:10:12 PDT

The Softwood Lumber War: Politics, Economics and the Long U.S.-Canada Trade Dispute

Sarker, R. — Mon, 20 Apr 2009 06:10:12 PDT

Landwirtschaftliche Betriebslehre. Grundwissen Bachelor

Sumelius, J. — Mon, 20 Apr 2009 06:10:12 PDT