Grain-supply response in Ethiopia: An error-correction approach

This paper quantifies the responsiveness of producers of teff, wheat, maize and sorghum to incentives using an error-correction model (ECM). It is found that planned supply of these crops is positively affected by own price, negatively by prices of substitute crops and variously by structural breaks related to policy changes and the occurrence of natural calamities. It has found significant long-run price elasticities for all crop types and insignificant short-run price elasticities for all crops but maize. Higher and significant long-run price elasticities as compared to lower and insignificant short-run price elasticities are attributable to various factors, namely structural constraints, the theory of supply and the conviction that farmers respond when they are certain that price changes are permanent. The paper concludes that farmers do respond to incentive changes. Thus attempts, which directly or indirectly tax agriculture with the belief that the sector is non-responsive to incentives, harm its growth and its contribution to growth in other sectors of the economy.Crop Production/Industries,

IS INCREASED INSTABILITY IN CEREAL PRODUCTION IN ETHIOPIA CAUSED BY POLICY CHANGES?

In Ethiopia, growth in cereal production is accompanied by a more than proportionate increase in the standard deviation of production. This study applies descriptive and variance decomposition procedures to determine the sources of increased instability in cereal production in order to show whether they are caused by policy changes. It was found that production instability was caused more by increased yield instability. Considering the fact that use of high-powered inputs is limited to a small number of farmers, production is at subsistence level and that farmers' responsiveness to policy changes is constrained by infrastructural and institutional constraints and by the existing land policy, instability in yield is predominantly attributed to weather variability.Cereals, detrending, differencing, production instability, variance decomposition, Ethiopia., Agricultural and Food Policy, Crop Production/Industries,

THE EFFECT AND PERSISTENCE OF MAJOR CHANGES IN ECONOMIC POLICIES ON THE LONG-TERM PERFORMANCE (TREND) OF ETHIOPIAN AGRICULTURE

Agriculture in the Ethiopian economy has survived three major structural breaks, namely the 1974 change of policy in favour of a command-based economic system, the 1984 famine and the 1992 change of policy that introduced a market economy. A regression procedure was applied to analyze the effect of these breaks on the slope and intercept of agricultural GDP. In addition, statistical properties were studied to measure the degree of persistence of shocks in agricultural GDP. In the regression equation, only the 1984 famine was found to be significant. The non-significance of policy parameters in the regression equation could be associated with a lack of infrastructural facilities and the subsistence nature of Ethiopian agriculture. The study of the statistical property of agricultural GDP revealed that agricultural GDP is a trend stationary process, which implies that fluctuations on agricultural GDP series, which mostly occur due to good or bad weather conditions, are temporary and dissipate in a short period of time.Political Economy, Productivity Analysis,

The demand for meat in South Africa: An almost ideal estimation

A Linear Approximated Almost Ideal Demand System (LA/AIDS), estimated in first differences, was used to anticipate the demand relations for meat (beef, chicken, pork and mutton) in South Africa from 1970 – 2000. Two tests for weak separability, including an F and Likelihood ratio version, failed to reject the null hypothesis of weak separability, confirming that the four meat products are separable, and should be modelled together. According to the Hausman exogeneity test, the expenditure term in the South African meat demand model is exogenous. As a result, a Restricted Seemingly Unrelated Regression (RSUR) was used to estimate the model, whereafter the parameters were used as to calculate compensated, uncompensated and expenditure elasticities.Demand and Price Analysis,

Choosing between the AIDS and Rotterdam models: A meat demand analysis case study

Due to the inability of economic theory to choose ex ante between the Almost Ideal Demand System (AIDS) and the Rotterdam model, a non-nested test was used. The results of the non-nested test points to the Linearized-AIDS model applied to 31 years of meat consumption data in South Africa. When comparing the estimated demand relations of the two models, the LA/AIDS model also proved to be better fit for South African meat demand.Food Consumption/Nutrition/Food Safety,

A Linearized Almost Ideal Demand System (LA/AIDS) Estimation of the Demand for Meat in South Africa

A linear approximated Almost Ideal Demand System (LA/AIDS), estimated in first differences, were used to estimate the demand relations for meat (beef, chicken, pork and mutton) in South Africa from 1970 2000. Two tests for weak separability, including an F and Likelihood ratio version, failed to reject the null hypothesis of weak seperability, confirming that the four meat products are separable, and should be modelled together. According to the Hausman exogeneity test, the expenditure term in the South African meat demand model is exogenous. As a result, a Restricted Seemingly Unrelated Regression (RSUR) was used to estimate the model, whereafter the estimated parameters were used to estimate compensated, uncompensated and expenditure elasticities.Consumer/Household Economics,

Producer price and price transmission in a deregulated Ethiopian coffee market

Coffee producers in Ethiopia have historically received a very small share of the export price of green coffee. Reasons that are often mentioned are heavy government intervention and high marketing and processing costs. Prior to 1992, government regulation of the domestic coffee market in the form of fixed producer prices and the monopoly power of the Ethiopian Coffee Marketing Corporation put a substantial wedge between the producer price and the world price of coffee by imposing an implicit tax on producers. The domestic coffee marketing system in Ethiopia was liberalised after 1992, which was envisaged to have a positive effect on producer prices and price transmission signals from world markets to producers. This paper, with the help of Cointegration and Error-Correction Model (ECM), attempts to analyse its impact. As findings indicate, the reforms induced stronger long-run relationships among grower, wholesaler and exporter prices. The estimation of the ECM shows that the short-run transmission of price signals from world to domestic markets has improved, but has remained weak in both auction-to-world and producer-to-auction markets. This might be explained by the weak institutional arrangement coordinating the domestic coffee system and contract enforcement. In general, the domestic price adjusts more rapidly to world price changes today than it did prior to the reforms. However, there is an indication that negative price changes transmit much faster than positive ones.market deregulation, producer price, price transmission, price asymmetry,

A GC-MS Based Analytical Method for Detection of Smoke Taint Associated Phenols in Smoke Affected Wines

Guaiacol and 4-methylguaiacol are routinely used as markers to determine extent of smoke impact on winegrapes and wines. However, smoke contains a complex group of compounds that may contribute to smoke taint in winegrapes and wine. In this study, a gas chromatography-mass spectrometry (GC-MS) based analytical method was developed and validated for the profiling of various smoke taint compounds in wines made from smoke affected fruit. A total of 22 analytes were separated and identified in the GC-MS chromatogram, all of which were selected to evaluate the samples and precision of the method. The GC-MS method showed good repeatability/reproducibility with intra- and inter-day relative standard deviation (RSD) of ±14%. The method was used to demonstrate that the smoked grapes and resultant wines, compared to unsmoked wines, contained significantly enhanced levels of guaiacol and 4-methylguaiacol along with other lignin derived phenols such as cresols and syringol. In smoke affected grapes and young wines, volatile phenols exist as glyco-conjugates (potential taint), which hydrolyse slowly leading to unacceptable levels of taint accumulation in wine during storage. The GC-MS method reported here, in conjunction with the optimised acid hydrolysis of phenol glycoconjugates, was successfully used to determine potential levels of smoke taint compounds in wines. Thus, the method can be used for screening smoke exposed grapes for potential taint levels prior to wine making. The results presented here highlight the need to include an array of smoke derived phenols to develop a complete picture of smoke taint and associated aroma in affected grapes and wines