http://ageconsearch.umn.edu The DSpace digital repository system captures, stores, indexes, preserves, and distributes digital research material. Search the Channel search http://ageconsearch.umn.edu/simple-search http://ageconsearch.umn.edu/handle/123456789/31123 Title: Contracting for Consistency: Hog Quality and the Use of Marketing Contracts <br/> <br/>Authors: Jang, Jonglck; Sykuta, Michael <br/> <br/>Abstract: Achieving consistency in hog quality has been one of the greatest challenges in the US pork industry. Packers, processors and retailers all ranked lack of uniformity in live hogs, carcasses, and retail cuts with regard to size and backfat as the most important quality issue facing the industry in the mid 1990s (NPPC, Pork Quality Audit, 1994), and quality consistency continues to be a leading industry concern (Martinez and Zering, 2004). The past 15 years have also witnessed dramatic changes in the organization of the US hog industry. In 1993, over 82% of hogs were sold through spot markets while 11% were sold under marketing contracts. By 2005, only 11% of hogs were sold through spot markets, with 67% sold under marketing contracts and over 20% owned by packers through formal integration or production contracts. This change in industry structure has not gone unnoticed by agricultural economists. A large body of literature examines the relations between hog quality and newly developed organization modes, particularly production contracting and vertical integration. A variety of theoretical frameworks and empirical approaches have been employed, whether using surveys (Kliebenstein and Lawrence, 1995), simulation techniques (Poray, 2002), contract document analysis (Martinez and Zering, 2004), and quality outcome analysis (Muth, et al., 2007). However, research focusing on production contracts and formal vertical integration fails to address the dominant institutional form, namely marketing contracts. Likewise, research focusing on market-based incentive mechanisms fails to provide a consistent explanation for the use and design of long-term hog marketing contracts. We propose a theoretical explanation for the use of long-term marketing contracts in the presence of buyer-specific quality attributes in an otherwise commoditized industry. This theoretical framework draws from and builds upon existing theories of contracting and organizational economics. In particular, the paper develops an analytical model that accounts for the use and structure of long-term marketing contracts to increase intertemporal quality consistency in hog procurement. The paper links the packer’s decision to move from spot-market transactions to long-term marketing contracts to the packer’s downstream product differentiation strategy. We provide empirical evidence to support the model and its explanatory power relative to existing theories. Mon, 29 Oct 2007 22:58:59 GMT http://ageconsearch.umn.edu/handle/123456789/31122 Title: Agricultural trade policy reform in South Africa <br/> <br/>Authors: Chitiga, M.; Kandiero, T.; Ngwenya, P. <br/> <br/>Abstract: This paper empirically investigates the impact of agricultural trade reform in South Africa. Using UNCTAD’s Agricultural Trade Policy Simulation Model (ATPSM), the study investigates two specific scenarios that capture the magnitude of (i) the economic impact of global agricultural trade reform in South Africa and (ii) the economic impact if the reform in South Africa is coupled with agricultural reforms in the European Union (EU). Trade reform focuses on substantial tariff reduction; although in the case of the EU, scenarios also include reduction in domestic support and export subsidies. The results show that a unilateral tariff reduction in a selected number of agricultural products amounts to welfare gains of US$21 million. These gains are three times higher when accompanied by extensive reforms in the EU. Wed, 27 Feb 2008 22:58:59 GMT http://ageconsearch.umn.edu/handle/123456789/31121 Title: The Pricing of Federally Guaranteed Agricultural Loans: What Does it Indicate About Market Competition? <br/> <br/>Authors: Koenig, Steven R.; Dodson, Charles B. <br/> <br/>Abstract: Past research on agricultural loan pricing is not extensive and has been hampered by a lack of suitable data. The Farm Service Agency (FSA) has guaranteed approximately 5 percent of farm debt of the Farm Credit System (FCS) and banks, the primary lenders to agriculture. As a requirement of the farm loan guarantee program, lenders must charge interest rates on these loans that are no different than their average or moderate risk farm loan customer. Therefore, rates on FSA guaranteed loans may be viewed as proxies for average farm loan interest rates. Using agency data bases, interest rates on nearly 100,000 farm loans guaranteed from fiscal 1999 to fiscal 2007 where compared with commercial farm loan rates and market-rate benchmarks. The study indicates that interest rates on FSA guaranteed loans are generally consistent with rates reported on various surveys of bank farm lending terms, but it also found that during certain periods guaranteed farm loan rates and non-guaranteed farm loan rates were less responsive to changes in market interest rates. In general, rates on guaranteed loans of the FCS were lower and more responsive to market rate conditions than guaranteed loans made by banks during the eight year study period. Mon, 29 Oct 2007 22:58:59 GMT http://ageconsearch.umn.edu/handle/123456789/31120 Title: Determinants of off-farm participation decision of farm households in Ethiopia <br/> <br/>Authors: Beyne, A.D. <br/> <br/>Abstract: This study analyses the determinants of off-farm work participation decisions of farm households in Ethiopia. A bivariate probit model is applied to account for the simultaneity of participation decisions of both male and female members of farm households. The results of the analysis show that human capital variables such as health and training on non-farm activities have a positive effect on the off-farm participation decisions of male members of farm households. The education status of the head has no significant impact on the participation decisions of the members of the family as most of the off-farm activities do not require formal education. The availability of credit and transfer income is the other factors that have a positive impact on the decisions of male members to participate in off-farm activities. The effects of family and farm characteristics are also analysed. Finally, policies that aim to increase the off-farm work participation decisions of family members should take into consideration the difference in responses to the various factors that affect the off-farm work decisions of male and female members of farm households. Wed, 27 Feb 2008 22:58:59 GMT http://ageconsearch.umn.edu/handle/123456789/31119 Title: Factors affecting the use of forward pricing methods in price risk management with special reference to the influence of risk aversion <br/> <br/>Authors: Jordaan, H.; Grove, B. <br/> <br/>Abstract: Risk aversion is the primary reason for farmers to use forward pricing methods to hedge against price risk. Previous international research on farmers’ forward pricing behaviour found inconsistent results with respect to the relationship between risk aversion and the use of forward pricing methods. Ordinary Least Squares (OLS) regression is used in this research to investigate the relationship between the proportion of maize Vaalharts maize producers are willing to forward price and risk aversion. The quantity decision is modelled conditional on the adoption decision to ensure that the modelling procedure does not force the same variables to influence the two decisions in the same way. Regression results showed that more risk averse farmers are forward pricing a larger proportion of their crop produce. The main conclusion from this research is that the relationship between farmers’ risk aversion and the quantity of maize forward priced is consistent with expected utility theory in spite of the fact that farmers needs to be less risk averse to adopt forward pricing. Future emphases should be placed on the factors affecting the adoption of forward pricing as risk management tool in order to promote risk management. Especially research that will change farmers’ perception about forward pricing is necessary. Wed, 27 Feb 2008 22:58:59 GMT http://ageconsearch.umn.edu/handle/123456789/31118 Title: Management decisions on commercial sugarcane farms in KwaZulu-Natal: a focus on choice bracketing behaviour for risk management <br/> <br/>Authors: MacNicol, R.; Ortmann, G.F.; Ferrer, S.R.D. <br/> <br/>Abstract: The sugar industry is an important contributor to the South African (SA) economy, with average annual production estimated at 2.5 million tons of sugar. This study aims to quantify actual use of management instruments by a sample of commercial sugarcane farmers in KwaZulu-Natal (KZN) that are commonly associated with risk management, and uses factor analysis to investigate the extent to which these farmers bracket their management decisions. Data were obtained in 2006 via personal interviews of a stratified random sample of 76 large-scale sugarcane farmers in two separate mill-supply areas of KZN. Respondents were asked questions regarding risk-related management strategies, including diversification of on-farm enterprises, investments and management time. Factor analysis identified six management choice brackets, collectively explaining 77% of the variance in all of the 12 risk-related management responses considered. Recommendations that stem from these findings include that policy makers create a more enabling business environment and that government make labour legislation more flexible. Farmers need to search for information more proactively and develop management strategies that reduce barriers to efficiency. Future research based on time series data could be important to identify how management portfolios and choice bracketing levels change over time. Wed, 27 Feb 2008 22:58:59 GMT http://ageconsearch.umn.edu/handle/123456789/31117 Title: Net Benefits from growing lucerne (Medicago sativa) on the Broken Plains of north eastern Victoria <br/> <br/>Authors: Trapnell, Lindsay; Malcolm, Bill <br/> <br/>Abstract: Clearing of trees and native vegetation over the past 160 years has led to increasing rates of dryland salinization in the Goulburn-Broken Catchment area. In its dryland section, within the Goulburn Highlands, South West Goulburn, and the Broken Highlands subcatchments, hydrologic balance exists. But in the Riverine Plains comprising the Goulburn and Broken Plains sub-catchments, where average annual rainfalls are less than 600 mm per annum, it will be many decades before hydrologic balance is achieved. This study is set in the Broken Plains sub-catchment where over the next 100 years, it is expected that deep drainage of annual rainfall will cause watertables to rise to within two metres of the ground surface. Such rises of groundwater will lead to marked land degradation, initially in the form of induced waterlogging and ultimately increased dryland salinity. There is therefore a critical need to redress this increasing problem. One main way of doing so is by introducing deeprooted perennial species such as lucerne into the landscape. Lucerne has a higher level of water extraction than annual crops and pasture. However, one of the barriers to farmers changing from annual subterranean clover pasture to lucerne is uncertainty about the effects of such a change and the chance of reduced average profit or its volatility. This study seeks to reduce that uncertainty by investigating changes in profitability and cash flow across the Broken Plains sub-catchment where farming with lucerne replaces cropping with subterranean clover pasture. Mon, 29 Oct 2007 22:58:59 GMT http://ageconsearch.umn.edu/handle/123456789/31116 Title: Barriers to and Opportunities for Increasing Participation in Conservation Auctions <br/> <br/>Authors: Whitten, Stuart; Reeson, Andrew; Windle, Jill; Rolfe, John <br/> <br/>Abstract: Participation is a relative concept. Too much implies high costs of administration and many losers in a competitive process. Too little implies relatively few gains from trade are accessed. Thus the aim is to optimise rather than maximise participation. In this paper we outline some rules of thumb for setting participation targets and develop a framework for identifying barriers to achieving targets. We use the framework to evaluate six case study tenders covering a variety of land management objectives. These case studies provided pragmatic on-ground lessons in managing participation in real tender applications and resulted in several further lessons for participation management in tender design. Mon, 29 Oct 2007 22:58:59 GMT http://ageconsearch.umn.edu/handle/123456789/31115 Title: Estimating Impacts of Climate Change on Lower Murray Irrigation, Australia <br/> <br/>Authors: Connor, Jeffery; Kirby, Mac; Schwabe, Kurt; Lukasiewicz, Anna; Kaczan, David <br/> <br/>Abstract: This article evaluates irrigated agriculture sector response and resultant economic impacts of climate change for a part of the Murray Darling Basin in Australia. A water balance model is used to predict reduced basin inflows for mild, moderate and severe climate change scenarios involving 10, 20, 40 Celcius warming, and predict 13%, 38% and 63% reduced inflows. Impact on irrigated agricultural production and profitability are estimated with a mathematical programming model using a two-stage approach that simulanteously estimates short and long-run adjustments. The model accounts for a range of adaptive responses including: deficit irrigation, temporarily fallowing some areas, and permanently reducing irrigated area and changing the mix of crops. The results suggest that relatively low cost adaptation strategies are available for moderate reduction in water availability and thus costs of such reduction are likely to be relatively small. In more severe climate change scenarios greater costs are estimated, adaptations predicted include a reduction in total area irrigated, investments in efficient irrigation, and a shift away from perennial to annual crops as the latter can be managed more profitably when water allocations in some years are very low. Mon, 29 Oct 2007 22:58:59 GMT http://ageconsearch.umn.edu/handle/123456789/31114 Title: Economic evaluation of the Happy Seeder for rice-wheat systems in Punjab, India <br/> <br/>Authors: Singh, R.P.; Dhaliwal, H.S.; Humphreys, E.; Sidhu, H.S.; Manpreet-Singh; Yadvinder-Singh; Blackwell, John <br/> <br/>Abstract: Burning of rice stubbles is widely practised in Punjab, India, due to a lack of suitable machinery to direct drill wheat into combine-harvested rice residues. Although burning is a rapid and cheap option, and allows quick turn around between crops, it has serious effects on human and animal health due to air pollution, reduced soil fertility due to loss of nutrients and organic matter, and green house gas (GHG) emissions. The recently developed Happy Seeder (HS) overcomes the technical problems associated with direct drilling into rice residues. The primary aim of the present study was to conduct a preliminary evaluation of the direct financial benefits and costs to farmers of use of the HS in comparison with the current practices of straw burning followed by direct drilling or conventional tillage prior to sowing. The results of the evaluation suggest that the HS technology is more profitable than conventional cultivation or direct drilling after burning, and that it is viable for farmers from a financial perspective. The net present value (NPV) of the benefits is highly sensitive to yield; a 5% increase in yield with the HS doubles the increase in NPV of the HS over conventional tillage. The NPV is also quite sensitive to changes in herbicide use, and less sensitive to changes in irrigation water saving and discount rate. Furthermore, there are significant economic, community and environmental benefits through adoption of the technology. For widespread adoption of the technology, a range of potential mechanical, technical, social, institutional and policy constraints need to be considered and addressed in conjunction with a detailed economic assessment of the HS technology. Mon, 29 Oct 2007 22:58:59 GMT http://ageconsearch.umn.edu/handle/123456789/31113 Title: Measuring Retail Food Price Variation: Does the Data Source Matter? <br/> <br/>Authors: Leibtag, Ephraim <br/> <br/>Abstract: The main area of focus in this paper is variation across regions and over time in the U.S. as estimated by different food price data sets. There are a variety of potential sources for food price data,but it is important to compare the relative strengths and weaknesses of the data sources in order to estimate the magnitude of the variation in average prices from the different sources. No one data source can account for all potential measurement problems,but by estimating average food prices for similar,or even identical products,one can test for whether there are significant differences in average food prices based on the data source. Mon, 29 Oct 2007 22:58:59 GMT http://ageconsearch.umn.edu/handle/123456789/31112 Title: Institutions and Demographic Responses to Shocks: Wuttemberg, 1634-1870 <br/> <br/>Authors: Guinnane, Timothy; Ogilvie, Sheilagh <br/> <br/>Abstract: Simple Malthusian models remain an important tool for understanding pre-modern demographic systems and their connection to the economy. But most recent literature has lost sight of the institutional context for demographic behavior that lay at the heart of Malthus’s own analysis. This paper estimates a short-run version of a Malthusian model for two Württemberg communities from 1646 to 1870. Württemberg differed institutionally from the northwest European societies analyzed in previous studies. The impact of institutional differences shows clearly in differing demographic reactions to economic shocks. Mortality was less sensitive to shocks than one would expect, while nuptiality was especially sensitive. Mon, 29 Oct 2007 22:58:59 GMT http://ageconsearch.umn.edu/handle/123456789/31111 Title: Assessing the marginal dollar value losses to an estuarine ecosystem from an aggressive alien invasive crab <br/> <br/>Authors: Bell, Brian; Menzies, Sharon; Yap, Michael; Kerr, Geoff <br/> <br/>Abstract: This paper reports on a case study to establish dollar values for loss of biodiversity in the New Zealand coastal marine environment. The study uses the European Shore Crab (Carcinas maenas) as the example alien invasive species and the Pauatahanui Inlet, Wellington, New Zealand, as the ecosystem representative of the coastal marine environment. Choice modelling is the stated preference tool used to elicit marginal dollar values for these various attributes of the inlet. Reallocation of existing government expenditure is used as the payment mechanism. Results indicate a wide range of dollar values for the marginal losses to the environment, with no clear trend on a distance-decay relationship. The probability distributions of the dollar values of the environmental attributes tended to have a concentration around the median with very wide tails, especially on the high side. This indicates that most people generally agreed on a dollar value, but a very few individuals expressed extremely high values. The study concludes that the dollar values for loss of biodiversity and other environmental attributes do provide useful information to decision makers, but considerable caution needs to be exercised when applying these values in benefit cost studies. Marginal rate of substitution estimates between environmental attributes will be useful for estimating money values for attributes identified given future work estimates a statistically significant money value for one. Mon, 29 Oct 2007 22:58:59 GMT http://ageconsearch.umn.edu/handle/123456789/31110 Title: When should biodiversity tenders contract on outcomes? <br/> <br/>Authors: Gorddard, Russell; Whitten, Stuart; Reeson, Andrew <br/> <br/>Abstract: Making conservation program payments conditional on outcomes offers potential efficiency and innovation improvements over input based contracts. This paper explores the trade-offs involved in choosing the payment criteria for biodiversity tenders. A model where the budget for a conservation tender can be allocated to input, outcome or mixed payments is used to explore the impacts of hidden actions, adverse selection, and landholder risk aversion on the optimal policy design. We discuss the implications of these results for the design of the ‘Nest Egg’ tender. This tender is targeting habitat and breeding of ground-nesting birds in the New South Wales Murray Catchment. Mon, 29 Oct 2007 22:58:59 GMT http://ageconsearch.umn.edu/handle/123456789/31109 Title: Beyond Credence: Emerging Consumer Trends in International Market <br/> <br/>Authors: Cuthbertson, Bron; Marks, Nicki <br/> <br/>Abstract: This paper presents the findings of research on emerging global trends in consumer food preferences with credence attributes. Credence qualities cannot be evaluated in normal use. Instead the assessment of their value requires information sought through the search and experience of a product (Darbi & Karni, 1973). Key trends identified were Health and wellness foods, environmentally sustainable and ethical food production. Key drivers for these trends are corporate social responsibility, media, obesity, technology, an aging population and consumers' environmental attitudes. Conditions to operate in this market are traceability, food safety, trust, accreditation, labeling and branding. Mon, 29 Oct 2007 22:58:59 GMT http://ageconsearch.umn.edu/handle/123456789/31108 Title: Migration and Farm Efficiency: Evidence from Northern Thailand <br/> <br/>Authors: Nonthakot, Phanin; Villano, Renato <br/> <br/>Abstract: This paper investigates the relationship between labour migration and agricultural productivity in the Northern Province of Thailand. Drawing on maize production data from a household survey, we estimate a stochastic production function to evaluate the effects of migration, remittances and salient characteristics of migrants on the mean maize output and levels of technical efficiency. Evidence shows that remittances and number of migrant workers facilitate maize production. It was also found that remittances, duration of migration, gender and education of migrants enhance the productive capacity of maize farmers. Mon, 29 Oct 2007 22:58:59 GMT http://ageconsearch.umn.edu/handle/123456789/31107 Title: Agricultural Supply Response in Fiji <br/> <br/>Authors: Hone, Philip; Haszler, Henry; Natasiwai, Tevita <br/> <br/>Abstract: The agricultural sector is a central part of the Fiji Islands economy. Policies to alleviate poverty and stimulate economic growth need to be based on a sound understanding of the local agricultural systems involved. This understanding needs to extend to the responsiveness of production to price changes. To date there have been no published quantitative estimates of the responsiveness of agricultural supply in Fiji to output price changes. In this paper we present a set of highly disaggregated supply elasticities covering many of the major food crops produced and consumed in Fiji. These results have been derived from a stated intention survey of rural households. The results appear consistent with the dual nature of Fijifs agricultural sector and show that agricultural supply response in Fiji is own-price elastic for the ten commodities analysed. Mon, 29 Oct 2007 22:58:59 GMT http://ageconsearch.umn.edu/handle/123456789/31106 Title: Designing an effective evaluation model for the South African Department of Agriculture <br/> <br/>Authors: Madzivhandila, Percy; Griffith, Garry; Fleming, Euan <br/> <br/>Abstract: Governments are under increasing pressure to deliver results. Therefore, it is important to evaluate the effectiveness, efficiency and relevance of the public service in implementing policies and programmes for social betterment. Without such evaluations, it is difficult to ensure that evidence is integrated into policy and used in practice due to lack of generalizability and learning. This paper focuses on (1) the knowledge that is relevant to understand evaluation influence, (2) the possible conceptual frameworks that enable understanding of the evaluation implementation process, (3) possible models of the process of organizational evaluation, and (4) the main ways of intervening to increase influence. The context for analysis is the South African Department of Agriculture. Mon, 29 Oct 2007 22:58:59 GMT http://ageconsearch.umn.edu/handle/123456789/31105 Title: Determinants of Participation in a Catastrophe Insurance Programme: Empirical Evidence from a Developing Country <br/> <br/>Authors: Akter, Sonia; Brouwer, Roy; Chowdhury, Saria; Aziz, Salina <br/> <br/>Abstract: The paper presents empirical evidence of the determinants of catastrophe insurance participation in one of the poorest and most disaster prone countries in the world. In a large-scale household survey carried out in 2006 we ask 3,000 residents in six different districts in Bangladesh facing various environmental risk exposure levels about their willingness to participate in a catastrophe insurance programme. Combining factors put forward in risk theory and economics, we estimate a model of insurance participation. We show that the household decision to participate in the insurance programme differs depending on both exogenous and endogenous risk exposure levels. As predicted by micro-economic theory, ability to pay, measured in terms of household income and access to credit, significantly affects insurance participation. Furthermore, among the sociodemographic factors investigated in this case study, respondent education and occupation are found to significantly influence household decision making. Our study suggests that low participation rates for catastrophe insurance in a developing country can be explained by high rates of illiteracy and limited access to credit. Mon, 29 Oct 2007 22:58:59 GMT http://ageconsearch.umn.edu/handle/123456789/31103 Title: The economic cost of wetland destruction <br/> <br/>Authors: Schmidt, Carmel Elizabeth <br/> <br/>Abstract: Wetlands are often refereed to as the ‘kidney of the river’, but what is the value of the water filtration they provide, and what is the cost of wetland destruction? This paper determines the economic value of wetlands for water filtration. It demonstrates that wetlands are of considerable economic value, even where the volume of water filtered is in excess of that required for domestic consumption. It argues that if legislation required those who destroy natural wetlands to replace the water filtration process the wetlands once provided, it would be necessary to construct water filtration plants at significant cost. Mon, 29 Oct 2007 22:58:59 GMT