Are Farmers Completely Rational Consumers and Do They Suffer from a Borrowing Constraint? The Dutch Case

There is some confusion in the literature on the consumption behaviour of farmers. We try to clear up some of the issues surrounding this confusion by elaborating and testing a model. Euler equations have been derived from a constant relative risk aversion utility function for total consumption expenditure, household expenditure and other expenditure, which includes durable goods. According to a test of Euler equations, farm households are not simply optimising lifetime utility. Rather, these households follow simple consumption rules, strongly influenced by habit formation. In line with most of the literature, we find that farm households are not borrowing constrained in their consumption expenditures.consumption, Euler equation, borrowing constraint, Dutch farm households, Farm Management,

CONTRIBUTION OF AFFORESTATION TO SUSTAINABLE LAND MANAGEMENT IN UKRAINE

This paper focuses on the establishment of forest plantations on bare lands and marginal agricultural lands: a multifunctional afforestation programme for Ukraine is elaborated. The multiple forest functions are limited in this research to wood production and erosion prevention. Ukraine is faced with erosion on 35% of its arable lands. Some 20 million ha of lands are experiencing various stages of erosion, and it is increasing with time. Erosion is especially harmful in the Carpathian Mountains where it causes windthrows and floods, and in the Steppe zone where it results in blowing up sands. Along with exploration of the expanded timber supply from the newly created forest plantations, soil protection forest functions therefore are examined. The proposition that forest cover affects the rates of soil erosion is tested empirically by means of regression analysis. The results of the estimations show a statistically significant negative relationship between soil erosion and forest cover in Ukraine and across the forestry zones. Using the results of the analysis, indicative estimates of the soil protection role of the forests are computed. Further discussion focuses on the proposed expansion of forest cover and on the potential positive effects for agriculture due to erosion prevention. Calculations have been made at different levels of detail. By using a simulation technique and cost-benefit analysis, in combination with LP modelling, it is revealed that for the discount rate of 4%, planting trees on bare lands, except in the Polissja and the Crimea, is an economically efficient means to address wood production and erosion prevention. Results are highly dependent on the relevant discount rate. For marginal agricultural lands mixed results are obtained. Moreover, there is a difference between estimated benefits for agriculture and benefits for the planter of the trees. It seems therefore necessary that e.g. the government balances costs and benefits to provide incentives for the planter of the trees. Finally, the research comes up with some practical suggestions for forest management decisions.

Investment Spikes in Dutch Horticulture: An Analysis at Firm and Aggregate Firm Level Over the Period 1975-1999

An intermittent and lumpy pattern of investments is observed in the Dutch horticulture sector: only 16.5% of firms experience of investment spike, but they account for 67.7% of total investment. The objective of this paper is to examine the impact of time-varying and time-invariant variables on the probability of observing an investment spieke. This paper investigates the spells between investment spikes in a discrete-time proportional hazard framework. Duration models were estimated on two data sets: on an unbalanced panel and on a grouped into 10 groups data of Dutch glasshouse firms over the period 1975-1999. Different specifications of the model were estimated. Theoretically based model can sufficiently explain the occurrence of investment spikes. Both models show a 6- year period of investment spikes that is also confirmed for the average firm which exhibits a higher hazard ratio in the 6th, 12-13th and 19-20th years of duration. The presence of investment cycle can demonstrate the long-run policy of firms in presence of non-convex adjustment costs. The panel-data models are augmented with a Gamma distribution to account for unobserved heterogeneity among firms.Investments, discrete-hazard duration model, Dutch greenhouse horticulture, gamma heterogeneity, Crop Production/Industries, Q12, D9,

AGRICULTURAL POLICY PREFERENCES: WHEAT IN THE UNITED STATES, 1981-1990

This paper outlines DEBET (Decision Based Economic Theory), a method for determining revealed preferences of governments. DEBET is applied to US wheat policy decisions in the 1980s. This method has a number of advantages over alternative approaches to the analysis of revealed preferences of government. It makes use of information contained in policy alternatives contemplated but not agreed upon, and it is suitable for modeling the discrete - continuous choice problem of policy makers in a multi-instrument context.Agricultural and Food Policy,

Entry and Exit of firms explained by trigger points: Dutch glasshouse horticulture

The entry and exit decisions, considered as investment decisions, are investigated in the paper. Taking into account the heterogeneity of entry and exit, the analysis is based on two types of entry-exit: real (related to the establishment or closing of a firm), or entry-exit in a new sector (indicating the diversification or changing specialisation). The theoretical model is based on Marshallian trigger points with Real Option trigger points as an alternative. The estimation exploited the negative binomial model to investigate the role of trigger points (thresholds) on the observed number of entry or exit firms in Dutch glasshouse horticulture over 25 years. Firms should overcome different thresholds depending on types of entry and exit. Marshallian trigger points function as good as the ones based on Real Option theory. The estimation of the model, which takes into account expected output prices, uncertainty and the interest rate, however, provides the best explanation of entry and exit. That model can be considered of a flexible variant of Real Option theory. The model provides plausible elasticities of entry and exit, either real or in changing specialisation.entry and exit, trigger points, glasshouse horticulture, Crop Production/Industries, Industrial Organization,

Urban Fuel Demand in Ethiopia: An Almost-Ideal Demand System Approach

This paper investigates the opportunities for reducing the pressure of urban centers on rural forest areas, using a dataset of 350 urban households in Tigrai in northern Ethiopia. We applied an almost-ideal demand system to fuels. Because the same fuels were not always used by households, the analysis started with a probit model of fuel use. The inverse Mills ratios derived from it were inserted into the estimation of the fuel demand system to obtain a full set of price and income elasticities. The results suggest that reducing the pressure of urban centers on local forests cannot be seen in isolation from broader development policies aimed at raising the level of education and income of the population. Higher income also stimulates the demand for fuel.price elasticities, income elasticities, almost-ideal fuel demand system, reducing deforestation, Ethiopia

CONTRIBUTION OF AFFORESTATION TO SUSTAINABLE LAND MANAGEMENT IN UKRAINE

This paper focuses on the establishment of forest plantations on bare lands and marginal agricultural lands: a multifunctional afforestation programme for Ukraine is elaborated. The multiple forest functions are limited in this research to wood production and erosion prevention. Ukraine is faced with erosion on 35% of its arable lands. Some 20 million ha of lands are experiencing various stages of erosion, and it is increasing with time. Erosion is especially harmful in the Carpathian Mountains where it causes windthrows and floods, and in the Steppe zone where it results in blowing up sands. Along with exploration of the expanded timber supply from the newly created forest plantations, soil protection forest functions therefore are examined. The proposition that forest cover affects the rates of soil erosion is tested empirically by means of regression analysis. The results of the estimations show a statistically significant negative relationship between soil erosion and forest cover in Ukraine and across the forestry zones. Using the results of the analysis, indicative estimates of the soil protection role of the forests are computed. Further discussion focuses on the proposed expansion of forest cover and on the potential positive effects for agriculture due to erosion prevention. Calculations have been made at different levels of detail. By using a simulation technique and cost-benefit analysis, in combination with LP modelling, it is revealed that for the discount rate of 4%, planting trees on bare lands, except in the Polissja and the Crimea, is an economically efficient means to address wood production and erosion prevention. Results are highly dependent on the relevant discount rate. For marginal agricultural lands mixed results are obtained. Moreover, there is a difference between estimated benefits for agriculture and benefits for the planter of the trees. It seems therefore necessary that e.g. the government balances costs and benefits to provide incentives for the planter of the trees. Finally, the research comes up with some practical suggestions for forest management decisions

FARM FIRM MICRO-ECONOMETRIC MODELLING:EMPIRICAL EVIDENCE FROM RUSSIAN DAIRY FARMING

This study develops a micro econometric model of specialised dairy farms in Moscow Region using panel data over the period 1995-1998. The model is used to analyse the role of input and output subsidies in the on-farm decision making. Theoretical conditions for short term profit maximization and the fixed effect specification are not rejected by the data. Estimates of the parameters related to input and output subsidies are found to be highly significant. The effect of output subsidies on milk output supply is larger then the price effect. Output subsidies are allocated efficiently in the period 1996-1998 and inefficiently in 1995; input subsidies are allocated efficiently in 1995 and inefficiently in 1996-1998.Livestock Production/Industries,

Changes in Food, Alcohol and Cigarettes Consumption during Transition: Evidence from Russia

This paper examines the changes in nutritional behavior of Russian adults over the ten-year transition period, between 1994 and 2004. We present evidence on the impact of individual as well as regional characteristics on changes in fat, protein, alcohol and cigarette consumption, and on diversity of diet. The results from a dynamic empirical model suggest that among microeconomic determinants, initial levels of consumption, gender, holding a university degree, and having access to a garden plot have a significant impact on the changes in consumption behavior in Russia. Regarding the macroeconomic variables, economic growth has a significant impact on changes in fat and protein consumption and on alcohol use, while unemployment changes significantly impact protein intake, alcohol consumption and the diversity of diet.consumption, smoking, alcohol, economic transition, Russia, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety,

Analysing Variation in Russian Dairy Farms, 1990-2001

Russian dairy enterprises underwent dramatic changes during 1990-2001. Not much is known about the position of these enterprises under the new conditions. This study examined a sample group of dairy enterprises in the Moscow region to try to identify similarities and divergences in historical background, performance, managerial and structural characteristics. A unique farm-level data set from 1990-2001 was used. Assessment of historical characteristics revealed that the currently most successful enterprises were those which in pre-reform years had already shown better economic performance. These farms also had, for the period studied, smaller percentages of reduced resources, no severe debt problems, and better overall management.Livestock Production/Industries,