Analysis of a Re-Focused Agricultural Policy within a Farm-Household Framework Some Data Requirements

Agricultural and Food Policy, Consumer/Household Economics,

CONTROL IN A DYNAMIC ECONOMY: MODELING THE BEHAVIOR OF THE CHINESE VILLAGE LEADER

Village leaders in the Chinese reform economy are assumed to maximize a multiple-attribute utility function; their behavior is modeled in a dynamic control framework. Using village data, structural and control equations for industrial output, grain yields, capital, non-farm employment and hybrid rice are estimated. Results confirm hypotheses that village leaders are preoccupied with rural industrialization but are also concerned about maintaining high agricultural productivity to meet grain obligations.Institutional and Behavioral Economics, Productivity Analysis,

U.S. Policy for Agricultural Adjustment

Domestic and international factors may combine to stimulate change in US agricultural policies and reductions in the costs of support. This would create additional pressures for economic adjustment in the sector. Current U.S. agricultural policies are not oriented to facilitating such adjustment. A trade adjustment program for agriculture, recently included as part of U.S. trade legislation, continues the traditional focus on income support. We discuss the reorientation of existing agricultural policies to facilitate economic adjustment resulting from the reform of domestic agricultural and trade policies. We focus on measures to address three key areas: 1. asset value reductions; 2. human capital issues; and 3. persistent poverty. Estimates of costs suggest that after an initial period, during which compensation for reductions in asset values would be made, the ongoing costs of an active adjustment policy for agriculture would be substantially lower than existing programs.adjustment assistance, international trade policy, U.S. agricultural policy, Agricultural and Food Policy, International Relations/Trade,

Multifunctional Agriculture and Domestic/International Policy Choice

The concept of multifunctionality, in which agriculture is viewed as a source of both commodity and non-commodity outputs, has stimulated debate on the desirability of further trade liberalization. We explore the economics of multifunctionality and its policy implications. We argue for a new policy approach in which land and natural resource managers are remunerated for positive non-commodity outputs and penalized for negative outputs. This would require devolution in policy implementation from the centre to the local level. Such an approach would permit countries to achieve broader social objectives, while at the same time continuing to pursue trade liberalization.agriculture, domestic policy, multifunctionality, trade policy, WTO, Agricultural and Food Policy,

NON-TRADE CONCERNS AND DOMESTIC/INTERNATIONAL POLICY CHOICE

In recent years increased emphasis has been placed on a range of "non-trade" concerns and their implications for the move towards freer trade. We review the basis of several of these concerns, focusing particularly on multifunctionality. The simple view of a fixed proportions relationship between agricultural production and non-commodity outputs, such as landscape amenities, is shown to be untenable. Nevertheless, policies to internalize the effects of multiple externalities and public goods must be selected jointly to account for any interrelationships among them, and/or the market goods from agricultural production. We argue that this requires a shift away from traditional agricultural policies with their commodity orientation, towards a new policy paradigm that has a natural resource focus. We also suggest that this will require a shift in the location of where policy is formed and implemented from the center to the community level. We believe that this change in policy focus would be consistent with the move to freer trade, although some expansion would be needed in the range of policies that are considered permissible under the green box category of the WTO Agreement on Agriculture. We argue that major non-trade concerns can be satisfied in a way that is not inconsistent with freer trade, and that freer trade would not undermine important domestic objectives.agricultural trade, non-trade concerns, multifunctionality, agricultural policy, International Relations/Trade, Q17,

Does Participation in the Conservation Reserve Program and/or Off-Farm Work Affect the Level and Distribution of Farm Household Income?

Since both release resources from agricultural production, it is not surprising that decisions to work off the farm and to participate in the U. S. Conservation Reserve Program (CRP) are correlated. By incorporating these decisions into a heteroskedastic specification of a farm household income function, we identify their effects on mean income, as well as on the variability in income for groups of farm households participating in combinations of these activities. Our results indicate participation in CRP and off-farm work by the operator and the spouse increase farm household income, but these choices also decrease the variability in household income among participant households relative to that of other farm households with otherwise similar characteristics.Conservation Reserve Program, farm household income, income distribution, off-farm work, Agribusiness, Agricultural Finance, Farm Management,

The Conservation Reserve Program, Off-Farm Work, and Farm Household Technical Efficiencies

Using data from a national survey of farm households in the United States, this paper examines the effects of farm households’ decisions to participate in the Conservation Reserve Program (CRP) and to work off the farm on the technical efficiency of farm household production. After controlling for the self selection bias in estimating the multiple output-oriented distance functions, results show that operators’ decisions to work off the farm (both separately and combined with participation in CRP) lead to higher technical efficiencies for farm household production— implying improvements in the resource allocation between farm and other productive activities by farm households. The technical efficiencies of household production of those farm households participating only in the CRP are lower.Conservation Reserve Program, off-farm work, household technical efficiency, Agribusiness, Agricultural Finance, Farm Management,

FACTORS AFFECTING PARTICIPATION IN THE MILK DIVERSION PROGRAM IN THE U.S. AND NEW YORK

Participation in the 1984-85 Milk Diversion Program (MDP) is examined through the analysis of aggregate state level data for the U.S. and county level data from New York. Linear probability, logit and probit models of participation are estimated. The empirical results are highly similar across models and identify the important determinants of farmer participation in the MDP. Models explaining contracted diversion levels are also estimated but do not have the explanatory power of the participation models. The implications of the results for the analysis of U.S. dairy policy alternatives are discussed.Agricultural and Food Policy, Livestock Production/Industries,

TRADEOFF BETWEEN ECONOMIES OF SIZE IN TREATMENT AND DISECONOMIES OF DISTRIBUTION FOR RURAL WATER SYSTEMS

This paper outlines a method to determine the tradeoff between economies of size in water treatment and diseconomies of distribution. Cost equations are estimated for several treatment technologies and distribution extensions. Empirical results are used to identify optimal system size where average total costs are minimized. Regardless of treatment, most costs are due to distribution. As water systems expand service territories, only in the most densely populated areas would remaining economies of size in treatment outweigh the diseconomies in distribution.Resource /Energy Economics and Policy,

CONTROL OF NONPOINT SOURCE POLLUTION THROUGH VOLUNTARY INCENTIVE-BASED POLICIES: AN APPLICATION TO NITRATE CONTAMINATION IN NEW YORK

A voluntary program is developed to achieve environmental goals through the self-interested choices of farmers under environmental risk and asymmetric information. Farmers behave to maximize expected net returns, and environmental quality standards are formulated through chance constraints. Because the government may not know each farmer's soil type, policy options must be self-selecting. The model is applied empirically to nitrate leaching and runoff from corn production in three New York regions. Asymmetric information between producers and the government would impose additional cost burdens on society, but these costs are modest in the context of other farm programs.Environmental Economics and Policy,