Category Archives: Agricultural Economics

Is dirt cheap? The economic costs of failing to meet soil health requirements on smallholder farms

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Abstract

Agricultural productivity is hindered in smallholder farming systems due to several factors, including farmers’ inability to meet crop-specific soil requirements. This article focuses on soil suitability for maize production and creates multidimensional soil suitability profiles of smallholder maize plots in Uganda while quantifying forgone production due to cultivation on less-than-suitable land and identifying groups of farmers that are disproportionately impacted. The analysis leverages the unique socioeconomic data from a subnational survey conducted in Eastern Uganda, inclusive of plot-level, objective measures of maize yields and soil attributes. Stochastic frontier models of maize yields are estimated within each soil suitability class to understand differences in returns to inputs, technical efficiency, and potential yield. Farmers cultivating highly suitable soil have the potential to increase their observed yields by as much as 86%, while those at the opposite end of the suitability distribution (i.e., with marginally suitable land) operate closer to the production frontier and can only increase yields by up to 59%, given the current technology set. There is heterogeneity in potential gains across the wealth distribution, with poorer households facing more heavily constrained potential.

Gender gaps in land rights: Explaining different measures and why households differ in Myanmar

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Abstract

Measuring and understanding gender differences in property rights is key to informing policy decisions and guiding investments aimed at fostering gender equality. However, there are a myriad ways of assessing property rights. Firstly, we assess which indicators to use and why it matters, focusing on rural Myanmar. Myanmar provides an interesting setting, as a large part of the population customarily follows joint property rights in marriage and upon dissolution of marriage and inheritance. However, documented property rights are in the household head's name – usually a male household member. We find that capturing de facto transfer rights is essential, but understanding discrepancies between reported transfer rights and documented rights will be key to policymakers. Capturing agricultural decision-making should remain a priority for agricultural projects. Second, we perform household- and intra-household level analyses to explore why we find joint land rights in some, but not all, households; and why some household members have less land rights than others. A common property rights regime positively reinforces women's land rights, but incompletely so. Within households, a person's role in the household, age, and key life cycle events such as parenthood and marriage are key determinants of having land rights.

Labor elasticities, market failures, and misallocation: Evidence from Indian agriculture

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Abstract

This article presents evidence of misallocation across households in rural Indian agriculture. I show that household demographics predict own farm labor demand for smallholder farmers but not non-smallholder farmers. A simple model of labor allocation predicts a clear consequence of this duality: smallholder farmers will reallocate labor across plots less in response to price changes than non-smallholders. Detailed household panel data confirms this theoretical prediction. Three additional facts suggest that a lack of off-farm labor opportunities may be partly responsible for the behavior of smallholders, leading smallholders to over allocate labor to agricultural production. First, smallholders report fewer hours of involuntary unemployment when their own crop prices increase. Second, yield is substantially higher for smallholders on plots of the same size. Finally, estimated marginal revenue products of labor are consistently lower for smallholders.

The poor do not pay more: Evidence from Tanzanian consumer food expenditures controlling for the food environment

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Abstract

We revisit the question of whether the poor pay more for food using household food expenditure data from Tanzania. We control for spatial factors that could affect food prices, namely, whether a rural household is in a peri-urban, intermediate, or hinterland rural zone (distinguished by distance to urban areas) and whether an urban household is in a primary city, secondary city, or a town. Our results differ from conventional wisdom. First, we find that the rich and the poor pay about the same price per kilogram on average for certain key Tanzanian food products like rice, maize flour, and cooking oil. Second, we find that poor households do not buy meaningfully smaller quantities per transaction than do richer households. Third, the rich and the poor also make roughly the same number of purchases per month for most food products studied. Lastly, we find that bulk discounts (a decrease in price per kilogram with an increase in quantity purchased) do exist, but only up to a certain quantity (with exceptions in some animal proteins), below which few households purchase. Hence, our evidence suggests that poorer Tanzanian households do not pay significantly more for key food products.

Increasing the adoption of conservation agriculture: A framed field experiment in Northern Ghana

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Abstract

Conservation agriculture techniques have the potential to increase agricultural production while decreasing CO2 emissions, yet adoption in the developing world remains low—in part because many years of continuous adoption may be required to realize gains in production. We conduct a framed field experiment in northern Ghana to study how incentives and peer information may affect adoption. Incentives increase adoption, both while they are available and after withdrawal. There is no overall effect of peer information, but we do find evidence that information about long-term adoption increased adoption, particularly when that information shows that yield gains have been achieved.

Consumers’ valuation of a biofortified crop: Evidence from a laboratory experiment

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Abstract

Malnutrition among women of reproductive age and children remains one of the major issues in developing countries, particularly zinc deficiency. Zinc deficiency hinders cognitive and physical development in children as well as adults. This study utilized a non-hypothetical laboratory valuation experiment to analyze whether positive information about biofortified rice affects consumers’ valuations of biofortified as well as non-biofortified rice. Specifically, we designed a within-subject experiment based on Becker-DeGroot-Marschak (BDM) auction mechanism to compare consumers’ valuations of zinc-biofortified and popular non-biofortified rice varieties before and after exposure to information about the health benefits of zinc-biofortified rice. We conducted our experiments in randomly selected four districts of Bangladesh, and a total of 134 consumers participated in our study. Results reveal that consumers assign a significant premium to zinc-biofortified rice when they receive information about zinc-biofortified rice and its health benefits. Intriguingly, positive information about zinc-biofortified rice negatively affects the valuation of non-biofortified rice varieties, suggesting negative spillover effects. Moreover, our results also identify that both the information provision and labeling are important to increase consumer demand for zinc-biofortified rice.

Extreme weather and agricultural management decisions among smallholder farmers in rural Thailand and Vietnam

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In this article, we explore whether and to what extent smallholder farmers in Northeastern Thailand and Central Vietnam adjust their farm-level management strategies in response to droughts. We hereby consider adjustments in flexible adaptive strategies including water management, fertilizer and pesticide application, labor, and machine use in response to a contemporaneous drought, and adjustments in crop diversification and investments in response to a previous year drought. To that end, we combine longitudinal household data from the two regions from 2007 to 2017 with monthly high-resolution rainfall and temperature data to characterize droughts at the subdistrict level. We find that Thai farmers scale down input costs in terms of fertilizer and hired labor and outsource tasks to service providers with equipment such as a combine, especially when exposed to extreme droughts. Their diversification and investment response seems, however, muted. While Vietnamese farmers are also reducing fertilizer use, they are expanding both the number of hired laborers and rented machinery services. They are also diversifying their cropping portfolio and investing in agricultural equipment.

Examining spatial market efficiency under different marketing regulations: The case of Turkish lemon markets

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This study evaluates spatial market and storage efficiency in Turkish lemon markets using switching regime (SR) and threshold autoregression models. Our sample period includes a crucial regulatory reform aimed at improving the performance of fresh fruit and vegetable markets, shortening the production-consumption chain, and reducing retail prices. Using an extended SR model that allows for a gradual transition from the old to the new marketing regime, we test the hypothesis of no structural change in market efficiency and transaction costs in regional markets, including major consumption regions Istanbul, Ankara, and Izmir. Results indicate that the probability of efficient arbitrage regime is relatively higher in the post-reform period, albeit there is still room for improvement. Extended SR models show no significant change in average transaction costs, while threshold autoregression models suggest a slight increase. Furthermore, spatial prices adjust more quickly in the post-reform period, supporting relatively more efficient market functioning. While the regional markets seem to function more efficiently following the marketing reform, it has not led to permanent reductions in retail prices. Finally, our results from storage threshold autoregression models suggest that markets function reasonably efficiently, with no remarkable difference in storage behavior between the pre-reform and post-reform periods.

Aspirations and investments in livestock: Evidence of aspiration failure in Kenya

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Abstract

Aspirations influence future-oriented behavior and ensuing outcomes but they may also fail to do so when the aspired-to-status is far away from the current one. Theoretical predictions suggest an inverted U-shaped relationship between this aspiration gap and the effort to achieve what is aspired to. Aspirations that are ahead but not too far ahead of the current status serve as the best incentives for investments. We examine the income aspiration gap of smallholder households and relate it to livestock in a pastoral setting in Northern Kenya. Our focus on livestock is guided by the burgeoning recognition of livestock as an investment and saving conduit for many households in pastoral communities in developing nations. Employing different empirical strategies including parametric and semi-parametric techniques, we find livestock to be increasing with aspirations up to a threshold, from which it then declines to lead to an aspiration failure. Delving into livestock heterogeneity, we uncover evidence that cattle and poultry respond more to the aspiration gap than small ruminants such as sheep and goats. Different U-shaped tests confirm this relationship, bolstering the evidence of an aspiration failure. These findings are robust to the inclusion of relevant controls, truncations at zero, and different variable transformations. We also show that the findings are unlikely to be driven by unobserved heterogeneity. Additionally, we find that internal locus of control, that is the degree to which individuals believe they control outcomes in their lives is associated with livestock investments.