FERTILIZER USE, RISK, AND OFF-FARM LABOR MARKETS IN THE SEMI-ARID TROPICS OF INDIA

Crop Production/Industries, Labor and Human Capital,

U.S. agriculture at the crossroads in 1999

Markets for U.S. farm products took a sudden, unexpected turn for the worse in 1998, as supply and demand factors combined to produce a plunge in crop prices. Most parts of the nation had very favorable growing conditions in 1998, resulting in an abundant harvest of the major crops, and pushing prices lower. Likewise, the supply of red meat products in the marketplace soared, as both beef and pork producers boosted production, with pork production hitting a record high. But as supply soared, demand weakened. In particular, the economic crisis in Asia led to a drop in ag exports to many Asian countries. And problems in Asia also contributed to a slowdown in world economic growth more generally, and thus global demand for U.S. farm products slumped.> Lamb reviews the year just past for U.S. agriculture and suggests that, after the gyrations of 1998, the year ahead is one of particular uncertainty. The outlook for farm income depends critically on the role the government will play in the farm sector. If the government grants farmers another round of additional government subsidies, then farm income will likely hold steady. If government subsidies retreat from the high levels of 1998, however, farm income could fall sharply in 1999.Agriculture ; Agricultural prices ; Agricultural productivity

WEATHER RISK, CROP MIX, AND WEALTH IN THE SEMI-ARID TROPICS

Crop Production/Industries,

From the Plains to the plate : can the beef industry regain market share?

Over the past several decades, the beef industry has seen a sharp drop in its share of the retail meat market. While per capita meat consumption has grown, per capita beef consumption has plunged. Explaining the drop in beef's market share has become a favorite pastime of industry analysts. In fact, a family feud of sorts has broken out in the industry between those who think the decline largely reflects increases in beef's price relative to competing meats and those who stress nonprice factors such as lifestyle changes, health concerns, and so forth as causes of decline. Regardless of the cause, however, the solution to the problem is likely the same.> Whatever the cause of beef's declining market share, the pork and poultry industries have clearly benefited. Poultry, in particular, has seen its market share soar in recent years as per capita consumption boomed. Most analysts attribute the success of the poultry and pork industries to their ability to achieve a high degree of vertical coordination between different links in the production chain. In particular, vertical coordination has allowed them to become consumer-product driven industries while achieving significant cost reductions that have lowered retail prices.> Lamb and Beshear suggest that for the beef industry to recapture its lost market share it must become a consumer-driven industry. A critical step in the process is achieving a greater degree of vertical coordination across the production chain. Vertical coordination in beef production may take many different forms. In fact, three alternative forms of vertical coordination in the beef industry seem possible, from modest changes in how beef is priced, to marketing cooperatives and producer alliances, to the most radical change full vertical integration of beef production. Which path of change the industry will follow is unclear, but marketing cooperatives appear to offer the best chance for the industry to recapture market share.Animal industry

U.S. agriculture : another solid year in 1998?

U.S. agriculture had a very good year in 1997, with profits widely shared among the nation's farmers. While few producers could boast of bell-ringer profits, as they did in 1996, nearly all could claim a good year. The year was especially welcome to the nation's cattle producers, who had struggled through an extended period of losses. The cattle industry rebounded much faster and further than anyone expected. While Mother Nature did bring major flooding to the Northern Plains states in late spring, most parts of the nation had good growing conditions in 1997. The result was an abundant harvest of the major crops and a moderate slide in crop prices. All in all, farm income was strong, but not as strong as the year before, and agriculture's balance sheet was bolstered further by gains in farmland values.> Drabenstott and Lamb review the year just passed for U.S. agriculture and suggest the year ahead will be another solid one, although income will probably slip from 1997 levels. After a big harvest last year, U.S. grain bins are fuller than they have been in three years. Moreover, the turmoil in Asian financial markets is likely to trim export demand for U.S. food and agricultural products in the year ahead. Profits in the livestock industry should continue, but fall somewhat from last year's level. Pork prices, in particular, may be under some downward pressure due to a buildup in pork supplies and a tailing off in export demand. One major wild card in the 1998 outlook is El Nino. While current forecasts suggest little impact on 1998 crop production, much depends on when and how quickly El Nino weather conditions fade. World grain stocks are still small enough that any crop shortfall could send prices sharply higher. Barring a major weather disruption, however, U.S. agriculture appears headed toward a solid year in 1998.Agriculture ; Farm income ; Agricultural prices

Choice of Crops and Employment Uncertainty in the Off-farm Labor Market

Cultivator households in some developing areas use off-farm labor supply as an insurance against crop income shocks, whilst employment is uncertain in this off-farm labor market. This paper hypothesizes that, given limited opportunities for ex post consumption smoothing, employment uncertainty influences risk-averse households’ crop choice decisions-- they would opt for more conservative crop choices in case they expect unfavorable supply opportunities in the labor market. A two-period stochastic dynamic programming model is developed. A panel data set from the ICRISAT survey of the semi-arid tropics of India is examined. Estimation is based on random effects and fixed effects Tobit specifications. Estimation results indicate statistically significant impact of household expectation of harvesting period male unemployment rates on ex ante crop choices. Results also indicate strong influence of household irrigated land share on crop choices.Crop Choice; Off-farm Labor Market; Risk; Panel Data

Can U.S. oil production survive the 20th century?

The plunge in world oil prices has brought further difficulties to U.S. oil production, which has been declining in recent years. At the current low prices, most domestic oil wells are not profitable. This calls into question the long-run viability of oil production in the United States. Whether oil production remains a viable part of the U.S. economy in the next century will depend on how long oil prices remain at their current low levels.> Lamb and Wilkerson show how the recent low prices for oil on world markets reflect a combination of demand and supply effects, with both short-run and long-run forces at work. For example, sluggish demand growth reflects both milder weather in some parts of the world (a short-run phenomenon) and the impacts of the Asian financial crisis, which could persist for some time. Meanwhile, supply has mushroomed, in part due to the short-run effect of Iraq's return to higher levels of oil production. In the main, however, the increase in supply reflects sharp declines in the cost of discovering and extracting oil reserves. On balance, the current low prices appear to be mainly the result of longer run demand and supply forces, suggesting that prices are likely to remain low for some time to come. If world oil prices do remain low, U.S. oil is unlikely to be competitive in world markets. Therefore, the domestic oil sector is likely to continue to lose market share for the foreseeable future.Petroleum industry and trade ; Prices

INVERSE PRODUCTIVITY: LAND QUALITY, LABOR MARKETS, AND MEASUREMENT ERROR

Labor and Human Capital, Productivity Analysis,