31 research outputs found
The Role of Small Farms in Structural Change
This paper explains regionally differentiated patterns of structural change based on a theoretical framework dealing with strategic interaction of farms on the land market. The main research question focuses on the causes of regionally persistent structures. An empirical Markov chain model is defined for the West German agricultural sector. Thereby it is possible to explain the probabilities of farm growth, decline or exit in terms of the current and former regional farm size structure. Further, the impact of variables describing the regional farm structure, thereby indicating market power of the large, the potential of high competition for land within a region and possibly high rents of the status quo in combination with sunk costs, is quantified. The results confirm the relevance of strategic interaction as a crucial determinant of regionally different structural change and persistent regional differences in the farm size structure over time.structural change, strategic competition, land market, Markov chain, Land Economics/Use,
The Role of Small Farms in Structural Change
This paper explains regionally differentiated patterns of structural change based on a theoretical framework dealing with strategic interaction of farms on the land market. The main research question focuses on the causes of regionally persistent structures. An empirical Markov chain model is defined for the West German agricultural sector. Thereby it is possible to explain the probabilities of farm growth, decline or exit in terms of the current and former regional farm size structure. Further, the impact of variables describing the regional farm structure, thereby indicating market power of the large, the potential of high competition for land within a region and possibly high rents of the status quo in combination with sunk costs, is quantified. The results confirm the relevance of strategic interaction as a crucial determinant of regionally different structural change and persistent regional differences in the farm size structure over time.structural change, strategic competition, land market, Markov chain, Agribusiness, Agricultural and Food Policy, Community/Rural/Urban Development, Institutional and Behavioral Economics, Risk and Uncertainty,
Structural Change in the Dairy Sectors of Germany and The Netherlands - A Markov Chain Analysis
With the milk quota announced to be abolished in the future, the dairy sector is going to face a significant policy regime shift. This paper sets out to analyze the impact of milk quotas on the dairy farm structure of two important milk producing member states: Germany and the Netherlands. Based on proper behavioral assumptions, non stationary Markov chain models are specified and estimated using a generalized cross entropy procedure, which takes into account both sample and prior information. Moreover four mobility indicators characterizing structural change are developed and calculated. Structural change in the dairy sector as measured by the mobility measures is faster in West Germany than in the Netherlands. However, in the transition region East Germany structural change outpaces that of the traditional German and Dutch dairy sectors by a factor two or more. The introduction of milk quotas as of April 1, 1984 reduced overall farm mobility for the Netherlands, but increased mobility in West Germany. However, in both cases the milk quotas lead to an increase in upward mobility.Markov Chain, Milk Quota, Structural Change, Livestock Production/Industries,
Financial constraints in economic transition: Empirical evidence from Ukrainian large farms
This paper addresses the question of financial constraints in Ukrainian agriculture in transition. The main objective is to reveal the evidence of the both phenomena, soft budget constraints and credit rationing, investigating investment behaviour of large farms in Ukraine. Our empirical analysis is based on unbalanced panel data containing 529 agricultural enterprises from three Ukrainian regions between 2001 and 2005. Estimates of the Euler investment equation for several sub-samples reveal a dissimilar level of financial constraints. We confirm the presence of the soft financial environment (soft budget constraints) for the Ukrainian large farms being in an unconstrained financial regime. The farms belong to this regime if they receive credits after being unprofitable in two consecutive years. The other farms defined a priori as being in an constrained financial regime face evidence of credit rationing. With regard to the empirical results, we derive macroeconomic implications of financial constraints in the agriculture of Ukraine.transition agriculture, investment, soft budget constraints, credit rationing, Ukraine, Agricultural Finance,
Impacts of Decoupling and Milk Quota Trade on the French and German Dairy Sectors
This paper analyses the impacts of the 2003 CAP reform and of milk quota trade at the national level. To this end, a mathematical programming model has been further developed for Germany and extended to other main milk-producing EU member states like France. Homogeneous farm groups are built on the basis of EU Farm Accountancy Data Network. The results show that quotas will be fully used in both countries if quota trade is possible. A clear tendency in the reallocation of production from small towards large farms can be seen in all regions for France. In Germany, the redistribution of direct payments induced by the implementation of the regional scheme of decoupled payments leads to higher reductions of income in dairy & beef farms than in France.2003 CAP reform, milk quota trade, model, mathematical programming, International Relations/Trade,
Investment Reluctance: Irreversibility or Imperfect Capital Markets? Evidence from German Farm Panel Data
Investment behavior at the firm level is characterized by lumpy adjustments and frequent periods of inactivity. Low investment rates are particularly puzzling in transition economies where an urgent need of modernization exists. The literature offers two explanations for. Firstly, neo-institutional finance theory focuses on the impacts of imperfect capital markets on investment decisions showing that the limited availability of financial funds may confine firms investments. Secondly, real options theory asserts that the interaction of irreversibility, uncertainty and flexibility may also result in investment reluctance. In this paper we suggest a generalized model that combines imperfect capital markets and real options effects. We also offer an econometric implementation that has the structure of a generalized tobit model. This model is applied to German farm panel data. We demonstrate that ignoring real options effects may lead to erroneous results when estimating the impact of imperfect capital markets on investment decisions.investment decision, irreversibility, uncertainty, q-model, capital market imperfections, generalized tobit model, transition, Financial Economics, D81, D92, O12,
Regional asymmetries in farm size
This paper explores how the initial farm size structure affects the exit decision of farms inducing free land capacities, and the allocation of the newly available land resources to the remaining farms in a particular region. We model an agricultural market where large and small firms first decide whether to leave the market or not; in case of continuing in production the farms compete for getting access to additional land resources in a Vickrey auction. We find that larger farms allocate more additional quantity than small farms; the latter are more likely to leave the market. An empirical illustration gives further support and reveals the relation between farm size structure, farm exits and growth of the large.asymmetries, land market, capacity allocation, Vickrey auction, Agricultural and Food Policy, Farm Management, Land Economics/Use, L11, L12, Q12,
The Role of Small Farms in Structural Change
This paper explains regionally differentiated patterns of structural change based on a theoretical framework dealing with strategic interaction of farms on the land market. The main research question
focuses on the causes of regionally persistent structures. An empirical Markov chain model is defined for the West German agricultural sector. Thereby it is possible to explain the probabilities of farm
growth, decline or exit in terms of the current and former regional farm size structure. Further, the impact of variables describing the regional farm structure, thereby indicating market power of the
large, the potential of high competition for land within a region and possibly high rents of the status quo in combination with sunk costs, is quantified. The results confirm the relevance of strategic interaction as a crucial determinant of regionally different structural change and persistent regional
differences in the farm size structure over time
The Effect of Value Chain Interventions for Staple Crops: Evidence from Small-Scale Farmers in Nicaragua
This paper quantitatively assesses the effect of value chain development projects on market linkages of small-scale farmers of a staple crop and agricultural income. We focus on Nicaraguan bean producers participating in a value chain development project. Using a panel data set, we apply difference-in-differences and instrumental variables estimators to identify causal effects of programme participation. We first quantify the positive direct effect of training on bean sales in terms of quantity and percentage of beans sold in linked markets. Second, we show that intensified commercialisation contributes to total agricultural income, suggesting a positive indirect effect of the intervention. Our results indicate that market linkage of smallholder farmers requires different sets of intervention tools than farm technical assistance.Department for International Development [ZELS]Deutscher Akademischer Austauschdienst [PhD Scholarship]German Research Foundation [RTG1666
The Role of Small Farms in Structural Change
This paper explains regionally differentiated patterns of structural change based on a theoretical framework dealing with strategic interaction of farms on the land market. The main research question focuses on the causes of regionally persistent structures. An empirical Markov chain model is defined for the West German agricultural sector. Thereby it is possible to explain the probabilities of farm growth, decline or exit in terms of the current and former regional farm size structure. Further, the impact of variables describing the regional farm structure, thereby indicating market power of the large, the potential of high competition for land within a region and possibly high
rents of the status quo in combination with sunk costs, is quantified. The results
confirm the relevance of strategic interaction as a crucial determinant of regionally different structural change and persistent regional differences in the farm size structure over time