Evidence of Scope Economies in the Australian Wheat-Sheep Zone

Scope economies can be used in studies of farming systems to provide a measure of synergies between different farm enterprises and between activities within farm enterprises. In this paper, they are reported for farms in a benchmarking group in the Wheat-Sheep Zone in New South Wales, Australia, by estimating a stochastic input distance function and calculating an ‘economies of scope parameter’. Evidence is presented of scope economies between sheep and beef enterprises, sheep and crop enterprises, and beef and crop enterprises.Australia, crops, livestock, scope economies,

Measuring Regional Productivity Differences in the Australian Wool Industry: A Metafrontier Approach

Using panel data, we estimate technology gaps for four distinct sheep-producing regions in Eastern Australia (Northern New South Wales, Central and South-Eastern New South Wales, South-Western New South Wales and South-West Victoria) that reflect spatial environmental and technological differences in wool production. A deterministic stochastic metafrontier production function model is estimated that envelops the stochastic frontiers of the four regions. This metafrontier approach enables us to estimate the environment-technology gap ratio that reflects these spatial differences in the environment and variations in production technologies in the wool enterprise for benchmarked farmers in each region. As a result, a more accurate estimation is possible of changes in total factor productivity on farms in the different regions. The major findings are that environment-technology gaps do exist between regions but they are relatively small. Greater variation is apparent within regions. Variation in technical efficiency seems to depend on the harshness of the production environment and whether consultancy advice is regularly received by the benchmarking group.Efficiency, Productivity, Metafrontier, Technology Gaps, Wool Production, Spatial, Livestock Production/Industries, Productivity Analysis, Research Methods/ Statistical Methods,

Structuring Exotic Options Contracts on Water to Improve the Efficiency of Resource Allocation in the Water Spot Market

With the current drought in South-Eastern Australia highlighting the scarcity and value of inland Australia’s water resources, focus turns to how these resources can be allocated more efficiently. The first major step was taken almost a decade ago with the separation of land and water property rights allowing openly traded water markets. This study assesses the potential economic benefits that options contracts bring to the water market in the Murray Valley water market. Exotic call options are estimated using both Black-Scholes and skewness-and-kurtosis-amended Black-Scholes financial option pricing methods that are based on three years of data on water prices. While the presence of options would result in significant economic benefits in the more efficient trade of water on the open market for lower-value crops, there were mixed results from the attempt to price such options.options, skewness-and-kurtosis-amended Black-Scholes model, water, Environmental Economics and Policy, Financial Economics, Research Methods/ Statistical Methods, Resource /Energy Economics and Policy,

Evidence of Scope Economies in Australian Agriculture

Scope economies can be used in studies of farming systems to provide a measure of synergies between different farm enterprises and between activities within farm enterprises. In this paper, they are reported for farms in three benchmarking groups in Australia by estimating stochastic input distance functions and calculating an 'economies of scope parameter'. Evidence of significant scope economies between sheep and crop enterprises, and between beef and crop enterprises, is presented and discussed. Similar evidence is reported between wool and lamb activities and wool and mature sheep trading activities within the sheep enterprise.Australia, Crops, Livestock, Sheep, Scope Economics, Crop Production/Industries, Livestock Production/Industries, Research Methods/ Statistical Methods, Industrial Organization,

An Assessment of the Impact of Strategic Alliances in Food Processing on the Technical Efficiency of Housewives Groups in Thailand

The cottage food processing industry in Thailand comprises mainly small-scale enterprises such as the ‘housewives groups’ that consist of a number of housewives who combine their food processing activities in a particular district or village. The effects of various factors on the performance of these housewives groups is assessed using survey data to estimate a stochastic input distance model. Our results show that membership of vertical strategic alliances at a high level is associated with higher levels of technical efficiency. Other factors positively influencing technical efficiency within these groups are the level of experience of group members, the ratio of workers to total members, government support, the community base of the group as opposed to private ownership, and the availability of funds to invest in business activities that have been derived from savings activities by group members. The ability of housewives groups to exploit cost complementarities by combining fruit and vegetable processing activities is tested by estimating scope and diversification economies for fruit and vegetable processed outputs. While diversification economies were found to exist, the more rigorous test for scope economies did not support their existence.Housewives group, scope economies, strategic alliance, Agribusiness,

Analysis of Technical Efficiency and Varietal Differences in Pistachio Production in Iran Using a Meta-Frontier Analysis

This paper reports on an analysis of technical efficiency and varietal differences in pistachio production in Iran. A random sample of 475 farmers was selected from the province of Kerman in 2003 and 2004. In this study, farmers are classified into three groups according to the variety of tree they planted. The three main varieties of pistachio trees planted are Kalleh- Ghuchi, Fandoghi and Akbari. The technical efficiency indices are computed using three approaches. First, a standard stochastic production frontier was employed using pooled data. Secondly, stochastic frontier production functions were estimated for each variety (separately). Lastly, the meta-frontier approach was used because production varieties and technologies are expected to differ between the three varieties. Use of this method enabled technical efficiency scores to be corrected by the coefficient of the variety-technology gap ratio (VTGR). Estimates of the frontier were obtained assuming a translog functional form. Results indicate that the mean values of technical efficiency in 2003 and 2004 for the pooled frontier, variety group frontiers and meta-frontier across all data are 54 per cent, 55 per cent and 62 per cent, respectively. The mean value of VTGR in 2003 and 2004 varies from 0.58 for the Kalleh-Ghuchi variety to 0.68 for the Fandoghi variety. These results show the importance of taking into account the differences in frontiers imposed by different tree varieties.pistachio, stochastic meta-frontier, production function, technical efficiency, Iranian agriculture, Productivity Analysis, C21, Q12, Q16, Q55, R58,

The Potential of Cacao Agribusiness for Poverty Alleviation in West Sumatra

The cacao industry has played an important role in terms of export earnings and employment opportunities in Indonesia since 1980s. It is the main source of income for more than one million smallholder farmers in Indonesia, who are considered poor. Most planted areas of cacao are in Eastern Indonesia; however, cacao production has developed in Western Indonesia recently, with West Sumatra designated as the area of central production. Due to the importance of cacao industry in the Indonesian economy, there is a big opportunity to explore the potential of the industry in poverty alleviation. The study uses the participatory impact pathway analysis (PIPA) method. It is a new approach to formulate a development strategy and policies proposed by the Institutional Learning and Change. This approach is used because it: (1) covers impact analysis in order to investigate the potential contribution of cacao agribusiness development to poverty alleviation, which is not covered by other participatory approaches; and (2) can be used to identify stakeholders‟ relationships for cacao agribusiness development. The use of PIPA in this study involves various tools: a participatory workshop, surveys and semi-structured interviews. Problems facing the cacao industry were identified through the workshop, including low yields and price and price instability. Lack of knowledge by farmers of agronomic practices and low quality of seedlings were considered to be the main causes of low yields by the participants. Low price of cacao beans was thought to be mainly caused by low quality of cacao beans while lack of cooperation between farmers and the village cooperative and lack of a farmers‟ association were considered to be the main factors affecting price instability. Farmer survey data results show slightly different priorities from the workshop. Most cacao farmers disagreed on the problem of low yields and low price of cacao beans but a high proportion agreed on the problem of price instability and confirmed that cacao farmers face a problem of low quality of cacao beans. Most farmers do not know the cause of price instability, while improper fermentation was agreed as the main factor causing the low quality of cacao beans.agribusiness economics and management, international development, farm management., Agribusiness, Farm Management, International Development,

An Investigation of Production Risk, Risk Preferences and Technical Efficiency: Evidence From Rainfed Lowland Rice Farms in the Philippines

Risk plays a vital role in farmers' decisions on input allocations and, therefore, output supply. This paper provides empirical evidence on the estimation of production risk, risk preferences and technical inefficiency. An eight-year panel data set is used for 46 rice farmers from a representative rainfed lowland environment in Central Luzon, Philippines. The heteroskedastic and stochastic frontier frameworks are reconciled and extended to accommodate the risk preferences of farmers in an analysis of production risk. Results show that technical inefficiency is overstated in risky production environments where farmers are risk-averse.production risk, risk preferences, technical efficiency, Productivity Analysis, Risk and Uncertainty,

Market Differentials for Meat Quality Improvement: Meat Standards Australia

Eating quality is one of the most important factors influencing demand for beef. Meat Standards Australia is a voluntary beef grading system aimed at improving consumer certainty about beef quality, improving overall beef quality and strengthening supply chain linkages. Since its inception in 1999/2000, substantial improvements in beef quality, as measured by the system, have been identified. An evaluation was undertaken to estimate the economic value of these improvements to the industry. It was found that MSA graded beef consistently attracted premiums above nongraded beef, with mean values of 29c/kg and 39c/kg (carcass equivalent) at the wholesale and retail levels respectively, while the food service sector received an average of 39c/kg (carcass equivalent). The total retail value of the program to date is estimated to be between $218 to 230 million and$171 million at the wholesale level (in terms of 2005 prices).Livestock Production/Industries,

Interrelationships amongst Critical Success Factors and Rural Social Enterprises’ Performance in a Developing Country Context

Rural social enterprises (RSEs) are an emerging actor that applies market-based approaches to implement a social mission: steering social and economic development. They thus contribute to addressing intractable challenges such as poverty and inequality disproportionately faced in rural areas. However, there is limited empirical evidence of their performance particularly regarding critical success factors (CSFs) and their interdependencies in influencing RSE performance in developing countries' rural contexts. Our study aims to contribute to closing this gap by examining the interrelationships between internal (e.g., business planning) and external (e.g., financial and training supports) critical success factors (CSFs), and the performance of RSEs. The study uses survey data from 521 rural Ugandan RSEs, which is analysed using structural equation modelling and importance performance map analysis. Results show business planning and training support as key influencing CSFs for improving RSE performance. These results offer guidance for improving RSE performance to Ugandan RSE practitioners, supporters and policymakers as well as those in related developing country rural context. The study also provides initial findings valuable to researchers interested in advancing RSE performance