Spatial Price Linkages and Imperfect Competition in Regional Cattle Markets

This paper analyzes non-competitive market conduct in the U.S. cattle procurement markets. Rather than relying on estimation of conduct parameters or measures of market concentration the analysis is based on the dynamics of price adjustment across regional markets. A VAR model is estimated using a multiple co-integration technique as a test for spatial market integration. The results are then related with hypotheses about pricing conduct in spatial markets.

High value products or staple crops? A discussion on development strategies for Southern Africa

Unexploited agricultural potential and regional trade opportunities together with the presence of South Africa and other middle-income countries, offer Southern Africa the unique opportunity to foster agricultural growth through regional linkages. In this study a global general equilibrium model that focuses on Southern Africa is used to analyze the implications that these specific characteristics of the regional economy have on growth choices of low-income countries. Three groups of growth scenarios are define to analyze the role of South Africa as a possible engine of growth, the role of own growth engines in low-income countries, and growth linkages between middle- and low-income countries. Results of the simulation scenarios show that larger benefits to low-income countries can be expected from grain and livestock productivity growth as a result of high multiplier effects and the large share of these activities in GDP. Productivity growth in grain and livestock results in higher GDP growth, higher agricultural output and food consumption, and lower agricultural imports than with productivity growth in non-traditional export crops. Unlike other regions where growth in grain production is likely constrained by domestic demand, growing middle-income economies in Southern Africa can provide additional demand to grains and livestock, slowing down the decline in grain prices in the region.Community/Rural/Urban Development,

An updated look at the recovery of agricultural productivity in Sub-Saharan Africa:

"We analyze the evolution of Sub-Saharan Africa's agricultural total factor productivity (TFP) over the past 40 years, looking for evidence of recent changes in growth patterns using a nonparametric Malmquist index. Our TFP estimates show a remarkable recovery in the performance of Sub-Saharan Africa's agriculture during the 1984–2003 period after a long period of poor performance and decline. That recovery is the consequence of improved efficiency in production resulting from changes in the output structure and an adjustment in the use of inputs, including an overall net reduction in fertilizer use but increased fertilizer use in most of the best-performing countries. Policy changes African countries conducted between the mid-1980s and the second half of the 1990s together with technological innovations available at that time appear to have played an important role in improving agriculture's performance. As TFP growth in Sub-Saharan Africa is mainly a result of catching up to the frontier, we expect growth to slow in the coming years unless African countries accelerate the incorporation of innovations into the production process and increase the speed of technical change." from authors' abstractAgriculture, Efficiency, Malmquist index, Total factor productivity, Technical change, Development strategies,

Agricultural Productivity and Policies in Sub-Saharan Africa

We analyze the evolution of Sub-Saharan Africa’s agricultural total factor productivity (TFP) over the past 45 years, looking for evidence of recent changes in growth patterns using an improved nonparametric Malmquist index. Our TFP estimates show a remarkable recovery in the performance of Sub-Saharan Africa’s agriculture between 1984 and 2006 after a long period of poor performance and decline. That recovery is the consequence of improved efficiency in production resulting from changes in the output structure and an adjustment in the use of inputs. Policy interventions, including fiscal, trade and sector specific policies, appear to have played an important role in improving agriculture’s performance. Despite the improved agricultural performance, SSA economies face serious challenges to sustain growth. Among these are the small contribution of technical change to TFP growth in the past, the large tax burden imposed by remaining distortions, and the challenge of population growth.agriculture, efficiency, Malmquist index, total factor productivity, technical change, Sub-Saharan Africa, policy, Agricultural and Food Policy, International Development, Productivity Analysis,

Agricultural productivity and policies in Sub-Saharan Africa:

We analyze the evolution of Sub-Saharan Africa's (SSA's) agricultural total factor productivity (TFP) over the past 45 years, looking for evidence of recent changes in growth patterns using an improved nonparametric Malmquist index. Our TFP estimates show a remarkable recovery in the performance of SSA's agriculture between 1984 and 2006 after a long period of poor performance and decline. That recovery is the consequence of improved efficiency in production, resulting from changes in the output structure and an adjustment in the use of inputs. Policy interventions, including fiscal, trade, and sector-specific policies, appear to have played an important role in improving agricultural performance. Despite the improved agricultural performance, economies in SSA face serious challenges to sustain growth. Among these are the small contribution of technological change to TFP growth in the past, the large tax burden imposed by remaining distortions, and the challenge of population growth.Agriculture, Efficiency, Malmquist index, policy, Technical change, Total factor productivity,

How important is a regional free trade area for Southern Africa?: Potential impacts and structural constraints

"We develop a detailed trade analysis to assess the potential welfare impacts of a free trade agreement (FTA) on the agricultural sector of southern African countries and to determine opportunities and challenges faced by the region as a consequence of the agreement. Our approach combines an in-depth look at the current trading patterns of southern African countries with the application of a partial equilibrium analysis that uses bilateral trade data at the four-digit standard international trade classification (SITC) level for 193 agricultural industries in 14 southern African countries. Low diversification of agricultural exports in most southern African countries seems to be a major constraint for promoting regional trade. In most countries, overall welfare effects of an FTA would be positive but small. Inefficient agricultural producers with a regional comparative advantage for agriculture would benefit from trade creation with the rest of the world. Welfare results for regional importers would be negative because of increased imports from inefficient regional producers. These results suggest that the region should be looking at regional policies and interventions beyond trade arrangements, such as those targeting investment, agricultural productivity, and diversification, to enhance benefits of regional trade liberalization." from authors' abstractRegional trade agreement, Agricultural trade, Development strategies,

Lagging regions and development strategies: The case of Peru

"Despite the economic transformation of Peru's coastal economy, the country's inland region remains poor and underdeveloped. We herein examine the economic linkages between the two regions using a multi-regional computable general equilibrium model based on a regionalized social accounting matrix. The model results show that coastal growth undermines the inland economy by increasing import competition and internal migration. Peru, therefore, cannot rely solely on rapid national growth to generate broad-based poverty reduction. When we simulate policies aimed at curbing divergence, we find that reducing interregional transaction costs stimulates national economic growth, but widens divergence by shifting inland production towards agriculture and concentrating investment in coastal manufacturing. In contrast, conditional cash transfers reduce regional and rural-urban inequality, but do not stimulate national growth. Finally, investing in inland productivity (through extension services and improved rural roads) reduces regional divergence, but the resulting market constraints worsen rural-urban inequality. These findings suggest that isolated interventions may worsen inequality, and that complementarities exist between supply-side investments and policies aimed at stimulating demand and improving access to national markets." from authors' abstractRegional development, Public investments, economic growth, Development strategies,

Cereal production and technology adoption in Ethiopia:

The Ethiopian government has been promoting a package-driven extension that combines credit, fertilizers, improved seeds, and better management practices. This approach has reached almost all farming communities, representing about 2 percent of agricultural gross domestic product in recent years. This paper is the first to look at the extent and determinants of the adoption of the fertilizer-seed technology package promoted in Ethiopia using nationally representative data from the Central Statistical Agency of Ethiopia. We estimate a double hurdle model of fertilizer use for four major cereal crops: barley, maize, teff, and wheat. Since maize is the only crop that exhibits considerable adoption of improved seed, we estimate a similar model for the adoption of improved seed in maize production. We find that access to fertilizer and seed is related to access to extension services and that production specialization together with wealth play a major role in explaining crop area under fertilizer and improved seed. One of the most important factors behind the limited adoption of the technological package is the inefficiency in the use of inputs, which implies that changes are needed in the seed and fertilizer systems and in the priorities of the extension service to promote more efficient use of inputs and to accommodate risks associated with agricultural production, especially among small and poor households.Agriculture, cereals, double-hurdle model, maize, Technical change, Technology adoption, teff, Wheat,

An appropriate level of risk: Balancing the need for safe livestock products with fair market access for the poor

This paper examines the role of livestock products as commodities of trade, responding to the demand and higher prices that many external markets offer, and at the same time providing important contributions to the development process in poorer countries. It highlights that this opportunity is not without its threats: much of the Western world has, over the last half century in particular, invested substantial amounts of money in controlling and eradicating many infectious diseases of livestock, and in building up healthy and highly productive animals, the products derived from which earn them very large sums of money on world markets. Such countries are not willing to take risks that could threaten their livestock industries, and their domestic and export markets that maintain high animal health and food safety standards. The study builds on a number of 'success stories', examples where developing countries have succeeded in exporting livestock or livestock products to external markets. An analysis of the factors governing their success revealed some commonalities: all were driven by strong private sector partners who contributed capital, management expertise and entrepreneurial flair; most concerned livestock products, rather than live animals, which matched the market's requirements; many had developed strong brand identities which had become synonymous with quality, safety and dependability; and many were vertically integrated systems, incorporating small and medium scale out-grower producers. Often these successes have been achieved despite the absence of effective support from the public sector, such as national veterinary authorities. One of the key findings of this study is the disparity between the push for global harmonisation of animal health standards for trade, and the lack of capacity of developing countries, particularly LDCs, to meet these standards. The study considers how this might be rectified and concludes that building capacity of regional bodies to create regional centres of excellence with regard to SPS matters may be the most practical way forward.Livestock Production/Industries,

Mercosur: un camino a la apertura o la consolidación de un bloque cerrado?

The MERCOSUR is an imperfect custom union whose Common External Tariff (CET) is lower than the one that each member applied before 1991. From 1990 to 1994 regional trade grew, and the patterns of trade changed. The aim of this paper is to analyze if the countries welfare and productive efficiency will improve, or if the productive inefficiency of each member will be protected because of MERCOSUR. In order to analyze this issue we perfomed three differents experiments using the GTAP a multicountry Applied General Equilibrium Model. The first experiment simulates a unilateral tariff reduction resembling the trade liberalization results of the CET. The second experiment supposes that the MERCOSUR countries remove all the tariffs on regional trade without changing the external tariffs. Finally, in the third experiment both policies are implemented. In the three experiments, regional trade increases as a consequence of trade liberalization inside a "natural block", as a MERCOSUR. Welfare in MERCOSUR countries also increases in the three experiments. The best policy for Argentina is unilateral trade liberalization, represented by the first experiment. However, the best one for Brazil, is the unilateral liberalization plus regional liberalization (represented by the third experiment).