Category Archives: ORIGINAL ARTICLE

How do price (risk) changes influence farmers’ preferences to reduce fertilizer application?

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Abstract

The decision of farmers to reduce fertilizer applications and, thus, the achievement of agri-environmental policy goals interacts with market price developments. In this study, we analyze how changes in price levels and volatility over time (i.e., 1991–2006 vs. 2007–2022) affected farmers’ preferences to reduce fertilizer application using statistical inferences of stochastic dominances. The analysis considers two cropping systems and fertilizer reduction measures: (i) grassland-based milk production and the use of legumes and (ii) wheat production and the use of variable rate application. We show that the economic value of reducing fertilizer increased over time in both grassland-based milk and wheat production. However, only in the case of wheat production was the reduction in fertilizer application observed as more risk-reducing over time. In contrast, in grassland-based milk production, the co-movement of fertilizer and milk prices canceled out the increase in risk reduction. We conclude that changes in market price, along with agri-environmental subsidies, can increasingly incentivize the reduction of fertilizer use.

Impact of farm subsidies on global agricultural productivity

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Abstract

The agriculture sector receives substantial fiscal subsidies in various forms, including through programs that are linked to production and others that are decoupled. As the sector has reached the technology frontier in production over the last three decades or so, particularly in high- and middle-income countries, it is intriguing to investigate the impact of subsidies on productivity at aggregate level. This study examines the impact of subsidies on productivity growth in agriculture globally using a long time series on the nominal rate of assistance for 42 countries that covers over 80% of agricultural production. The econometric results show heterogenous effects from various subsidy instruments depending on the choice of productivity measure. Regression results suggest a strong positive effect of input subsidies on both output growth and labor productivity. A positive but relatively small impact of output subsidies is found on output growth only.

Estimating perennial crop supply response: A methodology literature review

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Abstract

Perennial crops are important both economically and as a component of a healthy and nutritious diet (e.g., many fruits and nuts). However, the study of perennial crop production and farmer response to output price changes (i.e., supply response) is complex thanks to the dynamic nature of investment and decision making in these industries. The body of literature relevant to perennial crop supply response is also small relative to that of annual commodity crops. In this article, we contribute the first literature review on perennial crop supply response modeling in more than 30 years. We catalog advancements in estimating perennial crop supply response and discuss the application of these methods and trade-offs economists should be aware of when using them. In addition, we highlight future modeling developments that may be valuable to the field, with the hope this research will encourage additional economic research on this interesting and important topic and in turn provide new insights for perennial crop producers and policymakers.

Group‐based and citizen science on‐farm variety selection approaches for bean growers in Central America

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Abstract

Participatory approaches for crop variety testing can help breeding teams to incorporate traditional knowledge and consider site-specific sociocultural complexities. However, traditional participatory approaches have drawbacks and are seldom streamlined or scaled. Decentralized on-farm testing supported by citizen science addresses some of these challenges. In this study, we compare a citizen science on-farm testing approach — triadic comparisons of technology options (tricot-PVS) — with the benchmark state-of-the-art group-based participatory variety testing approach (group-PVS) over a set of socioeconomic outcomes. We focus on on-farm testing of common bean (Phaseolus vulgaris L.) in the Trifinio area of Central America. We measure the impact of these two approaches on bean growers in terms of on-farm diversification and food security. We use data from 1978 smallholder farmers from 140 villages, which were randomly assigned to tricot-PVS, group-PVS or control. Utilizing a difference-in-difference model with inverse probability weighting and an instrumental variable approach, we observe that farmers involved in group-PVS, and tricot-PVS had comparable levels of on-farm varietal diversification with respect to control farmers. Nonetheless, group-PVS appears to be significantly more effective in boosting household food security, which can be attributed to improved agronomic management of the crops. This study contributes to the next generation of innovations in exploring trait preferences to produce more inclusive, demand-driven varietal design that democratize participatory varietal selection programs.

The hedonic price model for the wine market: A systematic and comparative review of the literature

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Abstract

This paper carries out a thorough review of the literature on the estimation of hedonic price functions in the wine market, compiling and carefully documenting all research work on the subject. The review analyses the main methodological decisions taken by the different authors, as well as the typology of the available databases: identification of the relevant market, specification of the price function, sources and types of prices, econometric methodology, and type of publication. The variance decomposition analysis of the Adjusted-R-squared values from the estimated hedonic price functions suggests that attribute selection, the definition of the product market, the characteristics of information sources, and the implemented econometric procedures are the most relevant factors in explaining the models’ explanatory power.

Do combined sustainable agricultural intensification practices improve smallholder farmers welfare? Evidence from eastern and western Kenya

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Abstract

Smallholder farmers often bundle different sustainable agricultural intensification (SAI) practices to boost crop yield and address soil fertility challenges. However, there is a dearth of empirical studies that investigate farmers’ adoption of SAI bundles and their subsequent impacts. Using data from a three-wave panel survey of smallholder maize-legume producers in Kenya, we examine the adoption and payoffs from 10 SAI practices clustered into five dominant groups. We use a random effects multinomial logit model to determine the choice of SAI cluster at the plot level while controlling for unobserved individual heterogeneity. The results show that the number of extension contacts, farm labor availability, household wealth, and education of household heads positively and significantly affect the adoption of SAI clusters while renting plots and poor soil quality have negative effects. The multinomial endogenous treatment effects model results reveal significant variability in crop yield, total variable cost, revenue, and net income across the five SAI clusters. The benefits vary by crop system, region, and cropping year, indicating that a one-size-fits-all extension design is unsuitable for farmers. The study suggests the promotion of participatory extension policies that would allow locally adaptable and highly profitable bundles of SAI practices to be identified, refined, and disseminated.

Agriculture and AfCFTA: NTM reductions increase intra‐Africa trade

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Abstract

The African Continental Free Trade Area (AfCFTA) is expected to provide trade gains for Africa, especially from reducing non-tariff measures (NTM). Unfortunately, data on NTMs is scarce, both by country and sector. Using three underlying NTM data sets and other data sources, we provide a range of estimates to fill the missing gaps in the existing estimates. Focusing on agriculture, we then use a computable general equilibrium model to estimate the effects of the AfCFTA. Results from all three data sets indicate that NTM reduction leads to much greater intra-Africa trade gains than tariff reduction alone.

Armed conflicts and household food insecurity: Effects and mechanisms

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Abstract

Despite extensive studies on the effects of armed conflict on household dietary diversity, food security, and nutritional outcomes, the underlying pathways remain underexplored. A better understanding of these mechanisms could unpack the subsequent effects of conflict-induced food insecurity and oft-reported nutritional shortcoming, as well as identify which policy interventions hold promise. We study the effects of terrorist violence in Burkina Faso on household dietary diversity, as proxied by food consumption scores (FCS), and investigate the underlying mechanisms. For this purpose, we combine nationally representative 5-years panel data on households with spatial conflict data. We find negative and significant effects of conflict intensity on household food consumption scores. The decline in household FCS is a result of significant decreased dietary diversity in both food production and purchases. Although households in rural areas partially offset these reductions by food assistance, those reliant solely on farming as livelihoods remain the most affected. Further investigations show evidence that per-capita farm income and food expenditure are pathways linking the intensity of armed conflict to reduced FCS in food purchases, whereas reduced dietary diversity in food production results from decline in crop production. Additional specification tests support our main findings, offering insights that can help policymakers faced with similar scaled-armed conflicts. For instance, conflict-sensitive interventions aimed at supporting crop production and farm income for affected households could effectively improve their dietary diversity and overall food security in a post-conflict environment.

The impact of deviations from soybean product crushing estimates on return and risk

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Abstract

This study explores how differences in market yields of soymeal and soyoil, as derived from market prices compared to those obtained through the physical process of crushing soybeans, impact the returns and volatilities of these commodities. Positive (negative) deviations are associated with negative (positive) changes in return. Additionally, these deviations positively correlate with return volatility, suggesting that variations from the expected yields lead to price shifts and heightened return volatility. In summary, deviations from the crushing estimates significantly shape the modeling of soybean commodity returns and volatilities, with implications for understanding returns, hedging ratios, and portfolio return variance.

Machinery structure, machinery subsidies, and agricultural productivity: Evidence from China

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Although agricultural machinery is indispensable for modern agriculture, the effect of machinery structure on food production is rarely scrutinized. Machinery structure, referring to the proportion of high-capacity machines which are represented by tractors with relatively high horsepower, is used to measure the scale of agricultural machinery. In response, this article investigates how agricultural machinery structurally impacts grain production theoretically and empirically, with particular emphasis on the effects of capacity structure and subsidy policy. The article estimates a Translog production function with a panel dataset covering 126 counties across Xinjiang and Hubei provinces in China from 2002 to 2012. Though we find the general elasticity of output with respect to machinery inputs is .03, the capacity structure of agricultural machines could impact agricultural production by inducing the reallocation of other input factors. Along with the upsizing of farming machines, we observe the complementarity between machinery horsepower and land inputs in production increases, while the joint effect of machinery and fertilizer decreases. The positive land channel is found in areas with fewer high-capacity machines, while the negative fertilizer channel occurs when there are more large machines.