1,839 research outputs found

    DEMAND FOR HERBICIDE IN CORN: AN ENTROPY APPROACH USING MICRO-LEVEL DATA

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    Price responsiveness of herbicide demand in corn for farmers in Indiana'Â’s White River Basin using cross-section data from individual farms is estimated. Particular attention is paid to appropriate treatment of binding nonnegativity constraints. Estimation was first attempted using an approach to demand systems estimation suggested by Lee and Pitt. However, analytical and computational difficulties effectively preclude estimation by the Lee and Pitt approach. As an alternative, a maximum entropy (ME) approach is presented and discussed. Results from the ME estimator tentatively indicate limited response of herbicide demand to changes in own prices. The maximum entropy approach to demand systems estimation appears to have merit and warrants further attention.Crop Production/Industries, Demand and Price Analysis,

    Estimating Disaggregate Production Functions: An Application to Northern Mexico

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    This paper demonstrates a robust method for achieving disaggregation in the estimation of flexible-form farm-level multi-input production functions using minimally-specified data sets. Since our ultimate goal is to address important questions related to the distributional effects of policy changes, we place emphasis on the ability of the model to reproduce the characteristics of the existing production system and to predict the outcomes of these changes at a high level of disaggregation. Achieving this requires the use of farm-level models that are estimated across a wide spectrum of sizes and types, which is often difficult to do with traditional econometric methods, due to limitations of data. The approach to estimating flexible-form production functions used in this paper overcomes these limitations, and also avoids the problems that frequently hinder the application of budget-based representative farm models to these type of analyses namely, that of poor calibration to observed behavior. In our estimation procedure, we use a two-stage approach that first generates a set of observation-specific shadow values for incompletely priced inputs, such as irrigation water or family labor, which are used in the second stage, along with the nominal input prices, to produce estimates of crop-specific production functions using Generalized Maximum Entropy (GME) methods. These functions are able to capture the individual heterogeneity of the local production environment, while still allowing the production function to replicate the input usage and outputs produced in the sample data. Since we are able to generate demand, supply, and substitution elasticities, a wide range of policy responses can be modeled. Our paper demonstrates this methodology through an empirical application to Mexico, drawing from a small set of cross-section data collected in the northern Rio Bravo regions. The estimates show that there is considerable heterogeneity in the behavioral response of farmer households of different sizes, both in terms of the returns to scale, as well as in the elasticities of substitution and derived demands for water. Compared to the aggregate-level estimation, we obtain much more accurate and informative policy response behavior, when shocks are imposed on the model.Research Methods/ Statistical Methods,

    Wheat Cleaning and its Effect on U.S. Wheat Exports

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    This analysis shows that there could be net gains to the U.S. wheat industry if all U.S. export wheat were to be cleaned to a dockage level between 0.35 to 0.40 percent. These results are based on survey results of major importers of U.S. wheat, and a model of world wheat trade. Larger benefits to the U.S. wheat industry would be possible from cleaning only wheat destined to countries that demand higher quality U.S. wheat. However, these gains in export revenue from selling cleaner wheat could be offset if other exporters, especially Canada, responded in ways that would maintain their market share.wheat, grain quality, trade model, Crop Production/Industries, International Relations/Trade,

    MEASUREMENT OF PRICE RISK IN REVENUE INSURANCE: IMPLICATIONS OF DISTRIBUTIONAL ASSUMPTIONS

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    A variety of crop revenue insurance programs have recently been introduced. A critical component of revenue insurance contracts is quantifying the risk associated with stochastic prices. Forward-looking, market-based measures of price risk which are often available in form of options premia are preferable. Because such measures are not available for every crop, some current revenue insurance programs alternatively utilize historical price data to construct measures of price risk. This study evaluates the distributional implications of alternative methods for estimating price risk and deriving insurance premium rates. A variety of specification tests are employed to evaluate distributional assumptions. Conditional heteroskedasticity models are used to determine the extent to which price distributions may be characterized by nonconstant variances. In addition, these models are used to identify variables which may be used for conditioning distributions for rating purposes. Discrete mixtures of normals provide flexible parametric specifications capable of recognizing the skewness and kurtosis present in commodity pricesRisk and Uncertainty,

    Trade Taxes Are Expensive

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    This paper examines the welfare implications of trade reforms in the presence of a government budget constraint. There is consensus about gains from opening up to trade. The less investigated question is, whether a coordinated tax reform, where the tariff revenue cuts are compensated with increases in distortionary domestic taxes, will still be welfare improving or not. Are trade taxes an expensive tool to raise the necessary revenue for governments? This paper uses a CGE model to generate “Marginal Cost of Funds” (MCF) figures for 32 countries to answer this question. The results suggest that there are significant welfare gains from further trade liberalization, especially for developing countries.Trade Liberalization, Tax Reform, Welfare Gain, Marginal Cost of Funds (MCF), Computable General Equilibrium Model (CGE)

    Labor Pains: Valuing Seasonal versus Year-Round Labor on Organic Farms

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    Although organic farm activities seem to demand year-round employees, seasonal workers dominate the organic labor market. We use the elasticity of complementarity to assess input substitutability and predict adjustments. Farm size and farm workers are complementary inputs. Incentives that encourage farmers to expand employment of year-round and seasonal workers raise the marginal product and rates of return to organic acreage in relative wage payments. A commitment to local sales reduces organic farm incomes. A shift to local sales leads to decreased use of seasonal workers but at higher wages, with smaller adjustments in the wages of year-round workers.elasticity of complementarity, labor management, organic farming, returns to scale, seasonal workers, Labor and Human Capital,

    FACTOR AND PRODUCT MARKET TRADABILITY AND EQUILIBRIUM IN PACIFIC RIM PORK INDUSTRIES

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    This study uses a new market analysis methodology to examine price and trade relationships in eight Pacific Rim factor and product markets central to the Canadian and U.S. pork industries. The new method enables direct estimation of the frequencies with which a variety of market conditions occur, including competitive equilibrium, tradability, and segmented equilibrium. While extraordinary profit opportunities emerge episodically in a few niche markets, the vast majority of the markets studies are highly competitive- exhibiting zero estimated marginal profits to spatial arbitrage at monthly frequency- and internationally contestable. With a few notable exceptions due primarily to nontariff barriers, and despite significant remaining tariffs in some niches, the Pacific Rim is effectively a single market for pork producers and processors today.Demand and Price Analysis,

    Determinants of technical efficiency of freshwater prawn farming in southwestern Bangladesh

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    This paper estimates a translog stochastic production function to examine the determinants of technical efficiency of freshwater prawn farming in Bangladesh. Primary data has been collected using random sampling from 90 farmers of three villages in southwestern Bangladesh. Prawn farming displayed much variability in technical efficiency ranging from 9.50 to 99.94% with mean technical efficiency of 65%, which suggested a substantial 35% of potential output can be recovered by removing inefficiency. For a land scarce country like Bangladesh this gain could help increase income and ensure better livelihood for the farmers. Based on the translog production function specification, farmers could be made scale efficient by providing more input to produce more output. The results suggest that farmers’ education and non-farm income significantly improve efficiency whilst farmers’ training, farm distance from the water canal and involvement in fish farm associations reduces efficiency. Hence, the study proposes strategies such as less involvement in farming-related associations and raising the effective training facilities of the farmers as beneficial adjustments for reducing inefficiency. Moreover, the key policy implication of the analysis is that investment in primary education would greatly improve technical efficiency

    Empirical measurement of credit rationing in agriculture: a methodological survey

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    Empirical analysis of rural credit market failure has been of key scientific and political interest in recent years. The aim of this paper is to give an overview of various methods for measuring credit rationing of farms employed in the literature. Furthermore, based on a common analytical framework entailing a formal model of a credit rationed farm household, the methods are subjected to a comparative evaluation of their specific strengths or shortcomings. Six approaches are distinguished: measurement of loan transaction costs, analysis of qualitative information collected in interviews, analysis of quantitative information collected in interviews by using the credit limit concept, analysis of spill-over effects with regard to secondary credit sources, econometric household modelling, and the econometric analysis of dynamic investment decisions. The first approach defines credit rationing as the impossibility to take a loan due to prohibitively high, measurable transaction costs on loan markets, which is a price rationing mechanism. All other approaches at least implicitly define credit rationing as a persistent private excess demand in terms of a quantity restriction. The six approaches are more or less closely linked to the neo-classical efficiency concept. An explicit comparison with a first-best solution is impossible in the first three approaches, since they essentially rely on a subjective assessment of borrowers access to credit, based on qualitative or quantitative indicators. The fifth and sixth approach allow a rigorous interpretation in the framework of neo-classical equilibrium theory. The fourth approach takes an intermediate position, since spill-over on segmented loan markets reveals a willingness to pay with regard to the supposedly less expensive but rationed primary source. Approaches are fairly data demanding in general, usually requiring specific data on loan transactions. Even so, most approaches are applicable to cross-sectional household data. Only dynamic modelling of investment decisions necessitates the availability of panel data, therefore restricting the applicability in low-income and transition countries. With the exception of the first, all methods surveyed might plausibly be used to empirically detect credit rationing. -- G E R M A N V E R S I O N: Die empirische Analyse von Marktversagen auf lĂ€ndlichen KreditmĂ€rkten ist in den vergangenen Jahren von hohem wissenschaftlichen und politischen Interesse gewesen. Ziel dieses Beitrags ist es, einen Überblick ĂŒber verschiedene in der Literatur angewandte Methoden zur Messung von Kreditrationierung zu geben. Auf der Grundlage eines gemeinsamen analytischen Bezugsrahmens werden die Methoden darĂŒber hinaus einer vergleichenden Bewertung im Hinblick auf ihre StĂ€rken und SchwĂ€chen unterzogen. Es werden sechs Vorgehensweisen unterschieden: die Messung von Kredittransaktionskosten, die Analyse von in Interviews gewonnenen qualitativen Informationen, die Analyse von in Interviews erhobenen quantitativen Information unter RĂŒckgriff auf das Konzept des credit limits, die Analyse von Überschusseffekten im Hinblick auf sekundĂ€re Kreditquellen, ökonometrische Haushaltsmodellierung sowie die ökonometrische Analyse von dynamischen Investitionsentscheidungen. Die erste Vorgehensweise versteht unter Kreditrationierung die Unmöglichkeit, einen Kredit zu erhalten aufgrund von prohibitiv hohen, messbaren Transaktionskosten auf KreditmĂ€rkten. Es handelt sich hierbei um einen Mechanismus der Preisrationierung. Alle anderen Vorgehensweisen definieren Kreditrationierung zumindest implizit als andauernde Überschussnachfrage, folglich eine MengenbeschrĂ€nkung. Die sechs Vorgehensweisen sind mehr oder weniger eng mit dem neoklassischen Effizienzkonzept verbunden. Ein expliziter Vergleich mit einer first-best Lösung ist in den ersten drei Vorgehensweisen jedoch unmöglich, da sie auf einer subjektiven EinschĂ€tzung des Kreditzugangs beruhen. Die fĂŒnfte und sechste Methode erlauben hingegen eine strikte Interpretation im Rahmen der neoklassischen Gleichgewichtstheorie. Die vierte Vorgehensweise nimmt eine Zwischenstellung ein, da Überschusseffekte auf segmentierten KreditmĂ€rkten eine Zahlungsbereitschaft im Hinblick auf die primĂ€re, rationierte Kreditquelle implizieren. Die Methoden erfordern die VerfĂŒgbarkeit von geeigneten DatensĂ€tzen ĂŒber Kredittransaktionen. Die meisten AnsĂ€tze können allerdings auf Querschnittsdaten angewendet werden. Lediglich die dynamische Modellierung von Investitionsentscheidungen erfordert Paneldaten und beschrĂ€nkt daher die Einsatzmöglichkeit in Entwicklungs- und TransformationslĂ€ndern. Mit Ausnahme des ersten können alle AnsĂ€tze auf plausible Weise fĂŒr die empirische Untersuchung von Kreditrationierung eingesetzt werden.agricultural finance,credit rationing,quantitative analysis,micro-econometrics,Agrarfinanzierung,Kreditrationierung,quantitative Analyse,Mikroökonometrie

    Price efficency of marketing boards : the case of grain sorghum

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    Typescript (photocopy).Concern that the market-oriented grain network in the U.S. may not serve the best interests of producers and consumers has resulted in close scrutiny of the system and proposals for a more market-managed system. The move toward tighter control of U.S. grain exports raises questions about the resultant impact on world grain pricing. This study focuses on comparative pricing efficiency of countries with a marketing board for sorghum relative to a market-oriented system. The study examines the efficiency with which price signals are passed from sorghum users in the major importing country (Japan) to port and inland level pricing points in Argentina, South Africa, Australia, and Texas. A partial adjustment distributed lag model was used to determine the rate at which farm and port level sorghum prices adjusted to other prices and factors in each country. Seemingly unrelated regression (SUR) was employed to derive estimates of the coefficient of adjustment for each system. The adjustment coefficient was compared across countries to determine if prices in one country adjusted significantly faster to other factors than prices in the other countries. Port level prices in Argentina and Australia were analyzed, using analysis of covariance, to determine if the marketing boards in either country had significantly affected price level and stability. A distributed lag analysis of monthly average sorghum prices suggests that from 1973-76, Texas farm prices adjusted at a greater rate than farm prices in Argentina and Australia. Texas prices adjusted 68 percent during the first month, while Argentine and Australian prices adjusted 25 and 37 percent, respectively. Between 1977 and 1980, Texas farm prices adjusted by 44 percent during the first month, a significantly greater rate than the 21 percent and 14 percent for respective Argentine and Australian farm prices. Results of the port prices analysis indicate that Texas prices responded by 54 pecent during the first month, compared to 49 percent for Argentina and 22 percent for Australia and South Africa. Results of the price level and stability analysis indicated that the Argentine marketing board (NGB) effectively raised and stabilized port prices fom 1973-76. The New South Wales Sorghum Board, however, did not raise sorghum prices a significant amount, but did significantly reduce price variability, thereby providing some insulation against price uncertainty for producers
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