Information Based Estimators for the Non-Stationary Transition Probability Matrix: An Application to the Danish Pork Industry

A generalised cross entropy instrumental variables estimator is used to recover the non-stationary transition probability matrix for the Danish pork industry. A technique is also developed to recover missing data points due to category re-specifications. The impact of a set of exogenous variables (prices of pork meat, inputs, and pork substitutes), are evaluated in the form of elasticities. An overall assessment of entry exit and growth of farms is performed.cross entropy estimator, Markov chain, pork industry, Denmark, Livestock Production/Industries, C340, C130, Q120,

Price Transmission in the Swedish Pork Chain: Asymmetric non linear ARDL

Agribusiness, Livestock Production/Industries,

Genetically modified foods in vertically differentiated and vertically oligopolistic markets

Agribusiness,

Cooperative Supply Chains in Peace and at War

In the competition between supply chains, governance structure and coordination mechanisms can be as important as cost-efficiency. Flexible and non-committing contracts among upstream suppliers in cooperative alliances may lead to lower chain surplus through internal competition and renders the coordinator's position vulnerable for hostile take-overs. Cooperative supply chains are found in e.g. food industry, banking services, lawfirms and brokerage. The downstream processing or brand is owned collectively by the suppliers or service-providers. The supplier are linked to the chain by strong delivery (channel) rights and volume-based revenue-sharing schemes. The governance is flexible, promotes entry and market expansion. However, the decentralized decision making comes at a cost in terms of chain performance and resilience. A dynamic two-chain model with a captive and competitive market addresses the particular situation where the competing chain aggressor has a cooperative governance structure. The overt aggression at merger may have more to do with shortcomings in the managerial incentive structure than with the pursuit of market power. The results from the dynamic game is illustrated with empirical findings among dairy cooperatives in Denmark.Agribusiness,

Reversing the road to super farms

The organization of primary agriculture is dependent upon whether the institutions of a country allow for reverse franchising by farmers. If the transaction costs of managing a farm can be minimized by farmers conducting a form of collective action, such as cooperatives, then the size of farms will be smaller. If farms have to make the products in the firm, which are subject to very large economies of scale than super farms will be the result. The key is the existence of institutions, such as collective action and property rights, that allow for the minimization of costs. For this reason the organization of primary agriculture is, among other things, a public policy issue. In this paper we develop this argument, we sketch a theoretical framework based on a model of adaptive relational contracts, and we present two illustrative examples: the Danish cooperative system, and the Canadian Wheat Board.Agribusiness, Farm Management,

The Doha Talks and the Bargaining Surplus in Agriculture

The Doha Round has been slow to achieve a reduction in the level of agricultural protection. This remains the case notwithstanding the substantial economic benefits that would arise from a more liberal agricultural trading regime. We provide one explanation for this slowness using a simple bargaining model. We demonstrate that the bargaining countries received a substantial fiscal gain from reducing government expenditures in the run-up to the Uruguay Round. This fiscal pressure was sufficient to block rent seekers who wanted farm payments to continue. Since the Uruguay Round these fiscal constraints have been reduced and the same pressure to reach a bargain and control rent-seeking behaviour is not present in the Doha Round.Doha Round, rent seeking, bargaining, International Relations/Trade,

Gravity model of outward FDI and trade in Agri-food in Denmark

Agribusiness,

Relational Contracting and Allocation of Decision Rights in the Agri-Food Industry: Producer Contracts and Food Safety

We apply a formal theoretical model of adaptation to two empirical settings within the agri-food industry: specialized pig production and food safety in Denmark. The objective is to allocate decision rights ex ante so that actual decisions taken ex post will optimize the profit accruing to the two parties in a contractual or integrative relation. Two applications are presented in this paper: First an actual partnership between two pork producers in Denmark. Based on detailed budgets we develop detailed schedules for the “reneging temptations” of the two partners- These are the temptations to renege on the contract during the evolution of the partnership. Using a model developed by Baker, Gibbons and Murphy (2006) we calculate equilibria using the Folk theorem in order to determine which is the best allocation of decision rights. We find that the existing allocation of decision rights in the case we examine is efficient in the sense that it results into a second best allocation. Using the same modelling approach we present a second application on salmonella control related to end-feeding, that is, salmonella contamination of pork due to filled bellies of pigs fed for the last 12 hours before delivery. Based on appropriate assumptions, the parties should give the decision right (whether to end-feed or not) to the slaughterhouse in order to reach the firstbest solution which, given the assumptions, is feasibleTheory of the firm, Adaptation theory, Contracts, Decision Rights, Pig production, Food safety, Agribusiness, Agricultural and Food Policy, Farm Management, Food Consumption/Nutrition/Food Safety, Industrial Organization, D21, L2, Q1,

TRACEABILITY AMONG SMALLHOLDERS IN ORGANIC FRESH PRODUCE VALUE CHAINS: CASE OF NAIROBI

Traceability enhances information sharing and disclosure thereby increasing trust among stakeholder along value chains. This research evaluated information flow along organic fresh produce value chains using a participatory study of organic certified farmers and outlets around Nairobi in 2012. Traceability was limited as majority of stakeholders were smallholders who had no functional traceability system. Presence of traceability was positively related to two factor groups; organizational activities and personnel perception. Variables in the organizational activities were also interrelated and include documentation, certification by other quality management standards, training on food safety and traceability system and monitoring. In addition, group activities increased trust among value chain actors. Extension services emphasizing on documentation, quality management certification, employee training, group activities and system monitoring should be conducted to improve traceability

WHY TRANSACTION COSTS IMPEDE SMALLHOLDER FARMERS’ PARTICIPATION INTO EXPORT ORGANIC MARKETS

Abstracts There have been growing trends of exports from countries dominated by smallholder agriculture to many of developed world (Kledal and Kwai, 2010). This shows that smallholders’ farmers development perspectives have gained interests in global markets and Value chain Approaches. However, apart from standard constraints in economics that impede participation of smallholder farmers in value chains at production and marketing, transaction costs do also constrain smallholder farmers in participating in value chains. To understand transaction costs effects on smallholder farmers’ participation in global value chains a study on governance of global value chains for organic ginger exports was conducted in Tanzania. The study employed a case study method, using transaction cost theory in a value chain approach. General characteristics that describe the smallholder farmers (such as small acreage size, proximities to and status of markets infrastructures, the levels of dependence on agriculture farming, household business structure) and the institutions they operate in were found to be the main reasons for high transaction cost proxies, hence the main reason for failure of smallholders to participate in global markets. This is because they cause high frequency of transaction, high asset specificity, high uncertainty, opportunism and bounded rationality. When developing global value chain these characteristics of Smallholders should be taken care of apart from the other measures that describe the trading between countries and those which determines production and productivity