The role of productivity growth and farmers’ income protection policies in the decline of relative farm prices in the United States

The paper emphasizes three interrelated questions about the decline in relative farm to non-farm prices in the United States since 1973: (1) Is it unusual, (2) What caused it, and (3) Is it likely to continue? We find that based on historical and international evidence this phenomenon may be considered unusual. Separating farm price and income support in 1973 and growing relative productivity in agriculture have been the major contributors to changing the trend of the relative farm goods inflation. This trend is likely to continue based on predicted steady growth of relative agricultural productivity and continuation of direct payments and other forms of farm income support policies.     

Causes and impacts of the mis-representation of agricultural policy—The case of food supply security payments in Switzerland

Although the supply situation of the Swiss population is sufficient in terms of food security, contributions to security of food supply have been made since 2014 as part of the country’s current agricultural policy. Amounting to around CHF 1.17 billion, such contributions account for more than a third of Switzerland’s total direct payments budget. The effectiveness and the efficiency of this policy in terms of both calorie production and income transfer were analysed. With the help of an agent-based model approach, the extent to which the achievement of targets is guaranteed in the long term was examined. Possible gains in efficiency become visible alongside a stepwise reduction in the levels of the contributions. If the current policy is continued, Switzerland will barely achieve its actual operationalised calorie production targets. A focus on demand during times of supply shortages and a stronger focus on maintaining production factors could release the resources necessary to close existing gaps in relation to meeting targets. With an income ratio of about 0.3, the payments have a high income transfer effect and, therefore, make a major contribution to securing agricultural income. This fact is not evident in either the formulation of targets or the labelling of the policy. The present study contributes to the discussion concerning the possible reasons and likely impacts for the mislabelling of this policy measure.     

Farm-household investment behaviour and the CAP decoupling: Methodological issues in assessing policy impacts

The objective of this paper is to compare and discuss the role of farm-household surveys and farm-household models in assessing the impact of the Common Agricultural Policy reforms, focusing in particular on the effects of 2003 decoupling on farm investment behaviour. The paper compares two specific approaches: (i) in-depth face-to-face interviews with farm-householders and (ii) mathematical programming models of individual farm-households. The effects of decoupling estimated by these two approaches coincide in a majority of cases, while the differences suggest relevant complementarities. Altogether the paper suggests a wider scope for using mixed methodologies in assessing CAP policy impacts.     

Farm level effects of policy reforms in Germany: First empirical evidence

The farm level effects of policy reforms in agriculture have been discussed in the literature for a long time. However, empirical studies based on field data are not yet available. In this paper, the effects of the EU agricultural reforms in the last two decades and the introduction of the German Renewable Energy Sources Act on agricultural enterprises are investigated. For this, panel data of arable farms in the German federal state of North Rhine-Westphalia for the period from 1984/85 to 2010/11 is analyzed by means of a fixed effects model. The results suggest that the farm income level, transmission effects on land rental markets and the farm income risk were significantly affected by the respective reforms.     

Nonparametric modelling of biodiversity: Determinants of threatened species

This study uses a sample of 71 countries and nonparametric quantile and partial regressions to model a number of threatened species (reptiles, mammals, fish, birds, trees, plants) in relation to various economic and environmental variables (GDPc, CO₂ emissions, agricultural production, energy intensity, protected areas, population and income inequality). From the analysis and due to high asymmetric distribution of the dependent variables it seems that a linear regression is not adequate and cannot capture properly the dimension of the threatened species. We find that using OLS instead of non-parametric techniques over- or under-estimates the parameters which may have serious policy implications.     

Terrorism,military operations and farmer’s income in Waziristan (Pakistan)

This study examined the impact of military operations induced by terrorism on farmer’s income by collecting data from North and South Waziristan Agencies in Pakistan. Both regions have similar climate, lifestyle and agricultural activities but North was facing war while there was no war on terrorism in South. Data were collected from 110 respondents through interviews by using structured questionnaire. In estimated models, North Waziristan farmers’ income was significantly lower than the South Waziristan farmers due to military operation induced by terrorism. Government of Pakistan can enhance farm income by promoting education, livestock, orchard farming, market access and extension services.     

论农业产业化向国际化迈进

农业产业化若局限国内市场,当各类农产品的供需达到均衡后,专业化、规模化生产就难以进一步增加农民的收入。农业产业化只有进一步向国际化迈进,充分利用自己的资源的优势,生产劳动密集型的农副产品,我国农民才能从扩大出口中增加收入。农产品在质量、安全、卫生以及口味、色泽等方面必须达到国际标准时,才能开拓国际市场,扩大出口,增加收入。     

Modeling agricultural risk management policies – The implementation of the Income Stabilization Tool in Italy

This paper investigates the potential impact of the income stabilisation tool (IST), currently introduced in the European Common Agricultural Policy to reduce farmers’ income risks using Italian agriculture as case study. The paper extends the existing literature by investigating the effects of two implementation issues: level of aggregation of mutual funds (MF); definition of farmers’ contribution (i.e. premium) to MF. We use a simulation approach based on a FADN panel data set of 3421 farms over a period of 7 years to investigate effects on (i) farm-level income variability, (ii) the expected level and variability of indemnifications at the level of mutual funds and (iii) the distribution of net benefits from this policy instrument across the farm population. We find that the introduction of the IST would lead to a significant reduction of income variability in Italian agriculture. Our results support the establishment of a national mutual fund due to the high volatility of indemnification levels at more disaggregated (e.g. regional or sectoral) levels. In addition, our results propose that farmers’ contribution to mutual funds, i.e. premiums paid, should be modulated according to farm size as this reduces the inequality of the distribution of benefits of such tool within the farm population.     

The impact of avian influenza on the Korean egg market: Who benefited?

The historical decomposition and directed acyclic graph methods are employed to estimate the effect of avian influenza in Korea on egg price transmission between the farm, wholesale, and retail levels. Our findings suggest that farm and retail egg prices are connected by the wholesale price. We also find that the farm-wholesale and the wholesale-retail margins increase during the avian influenza period. Our results imply that the retailer and wholesaler use their market power to increase their price during the food safety crisis. Therefore, the Korean government should control market power by allowing more emergency egg imports.     

增加农民收入的几点思考

发展农村经济,有效增加农民收入,是当前一个亟待研究和解决的重大问题。要解决好这个问题,应从以下方面着手建构新的国民收入分配体系,增加对“三农”的投入,建立和完善农产品价格支持政策;加快农村产业结构调整的步伐,提高农业整体效益。拓宽农民就业渠道,有效增加农民收入;加快城镇化步伐,促进农业富余劳动力转移;以三个转变强化销售,拉动农村经济结构调整和产业化建设;加快农业科技进步,推动农村经济发展。     

The impact of India’s food security policy on domestic and international rice market

Food security policy making in India is at crossroads. India has emerged as a leading rice exporter. The Government of India has introduced the National Food Security Act which requires 33.6 million tons of rice per year for its public food distribution system. In this study, we modeled India’s rice market and analyzed policy implications of the long-term impact of India’s food security act on domestic and international rice market. We developed a structural economic demand and supply model for India’s rice market and further added subsidy equations to trace the consequence of National Food Security Act on domestic rice consumption and on the international market. We specifically focus on three different scenarios: subsidy as price effect, subsidy as inelastic income effect, and subsidy as elastic income effect under the broader framework of National Food Security Act. We found that at the end of the projection period (2024–2025), as a result of rice subsidy program, the consumption of rice increases significantly in the case of price effect while the inelastic income effect has no or less impact on production, consumption, and export of rice. Hence, the policy implication of our study is that if the objective of the National Food Security Act is to increase consumption then it needs to be implemented as price effect.     

Vyāghranomics in space and time: Estimating habitat threats for Bengal,Indochinese, Malayan and Sumatran tigers

The wild tiger population in tropical Asia has dropped from about 100,000 to 3500 in the last century, and the need to conserve tiger habitats poses a challenge for the Global Tiger Recovery Program. This paper develops and uses a high-resolution monthly forest clearing database for 74 tiger habitat areas in ten countries to investigate habitat threats for Bengal, Indochinese, Malayan and Sumatran tigers. The econometric model links forest habitat loss and forest clearing to profitability calculations that are affected by market expectations, environmental conditions and evolving patterns of settlement, among others. It uses new spatial panel estimation methods that allow for temporal and spatial autocorrelation. The econometric results emphasize the role of short-run market variables, including the exchange rate, real interest rate and prices of agricultural products in forest clearing, with considerable variation in the estimated timing for response and impact elasticities across countries. The results highlight a critical message for the conservation policy community: Changes in world agricultural-product markets and national financial policies have significant, measurable effects on tropical forest clearing, with variable time lags and degrees of responsiveness across countries. Measuring these effects and pinpointing areas at risk can provide valuable guidance for policymakers, conservation managers, and donor institutions.     

The impact of Oportunidades on human capital and income distribution in Mexico: A top-down/bottom-up approach

To analyze the effects of the Mexican Oportunidades conditional cash transfer program on school attendance and household income distribution, this paper links a microeconometric simulation model and a general equilibrium model in a bidirectional way, so to explicitly take spillover effects of the program into account. Our results suggest that partial equilibrium analysis alone underestimates the distributional effects of the program. Extending the coverage of the program to the poor increases school attendance, reduces child labor supply, and increases the equilibrium wages of children who remain at work. With a relatively low fiscal cost, Mexican social policy could further reduce income inequality and poverty.     

Macroeconomic stabilization of primary commodities price cycles in developing economies

This paper proposes a strategy for stabilizing macroeconomic policy to address jointly the effects of changes in the prices of food, minerals and energy (oil). Our approach differs from the general literature, which analyzes the effects of a commodity boom or bust and therefore the solutions in terms of economic policy separately, that is, by type of commodity. The stabilization strategy that we propose considers a key fact affecting many open economies, namely, that they not only are affected by increases or decreases in commodity prices, but also benefit from them. Consequently, we use a structural model for an open economy with restricted households to show that welfare could be improved with a fiscal rule incorporating transfers to stabilize household consumption. This strategy noticeably dominates an aggressive monetary policy focused only on stabilizing inflation and a fiscal policy that has an excessive bias toward saving income from exports.     

The microeconomics of distribution: A simulation of the farm economy

A simulation model that incorporates both production and consumption behavior of farm households in Taiwan is presented. The model is used to analyze the effects of policy instruments (price supports, minimum wages, taxes, subsidies, demographic policies, and land and capital redistribution) on the aggregate values of the endogenous variables of the system—the supplies of output and labor, the demands of factors and consumption, income and expenditure—and their distribution among households. The model differs from other simulation models in that it is based on microsimulation, in which the joint distribution of individual household characteristics such as farm-specific prices, initial endowments of land and capital, and numbers of workers and dependents, is explicitly taken into account. As a result, the model is capable of capturing the distributional as well as aggregate impacts of policy changes.     

Impact of microcredit on rural household welfare and economic growth in Vietnam

Since its birth in 1970s, microcredit has been growing rapidly with the aim to reduce poverty and to promote economic growth. Using the large panel data of the Vietnam Access to Resources Household Surveys, the objectives are twofold: (i) to evaluate the micro-impact of microcredit on rural household economy, particularly on output value and net income of rural households, using Matched Difference-in-Difference method; and (ii) to evaluate its macro-impact on economic growth, especially the aggregate effect of production increase and income growth, using Input–Output analysis. The results at micro level find that microcredit benefits self-employment rather than other economic activities of households. The salient results from the macro-economic analysis reveal that, not as expected, the effect of microcredit on output increase is not so large. The findings suggest that microcredit is an effective development strategy at both micro and macro levels, thus the Vietnamese government should enact the relevant policies to enhance the effectiveness and outreach of microcredit.     

Direct payments to Japanese farmers: Do they reduce rice income inequality? Lessons for other Asian countries

This study investigates the income-equalizing effect of direct payments on rice income inequality in Japan using the Gini decomposition and the concentration curve. The results indicate that the direct payments in Japan are highly concentrated but they nevertheless reduce rice income inequality. However, the equalizing effect of direct payments is less than that in other countries because the Japanese payments are linked to participation in an acreage reduction program and are not fully decoupled. To pursue greater income equality, policymakers should decouple the payments and introduce mechanisms to decrease or limit the amount of support to the largest beneficiaries.     

Reforms of the Common Agricultural Policy of the EU: Expected results and their social acceptance

The Common Agricultural Policy of the European Union (CAP) is one of the oldest and most controversial of the UE policies. Different possible scenarios of the future reforms of the CAP are currently being discussed. They vary in terms of the extent and the type of the intervention and consequently the welfare effects for different social groups. The objective of this paper is to demonstrate that the partial equilibrium model (CAPRI) and the Theory of Moves (TOM) can be jointly used to test socio-political acceptance of the CAP’s reforms, informing subsequent changes to the policy. Our exemplary results demonstrate that liquidation of the first pillar of the CAP would negatively influence the socio-political acceptance of the CAP.     

The impact of the EU sugar trade reform on poor households in developing countries: A general equilibrium analysis

We use a modified version of the applied general equilibrium model GTAP, called GTAP_MH, to evaluate the impact of a reduction in the EU's support price for sugar on income distribution of African households. For LDC countries, non-ACP but participant in the EBA initiative a +2% change is indicated in term of income generation across all ten social strata identified within GTAP_MH framework, with positive percentage changes in supply prices at household level of endowment commodities, and positive percentage changes in price indices for private household expenditures. The big losers will be those countries that would no longer be able to compete at an international level as a result of the lost preferences.     

Social attitudes in southern Spain to shape EU agricultural policy

The Common Agricultural Policy (CAP) is one of the most important European policies. Since its inception, the CAP has been reformed in response to high budgetary costs, international trade pressures and socio-economic changes. Despite the reforms, this policy did not always serve the best interests of farmers and provoked social criticisms. In anticipation of the post 2013 design, it is widely agreed that the forthcoming CAP should be more understandable to taxpayers. In this study, the social preferences towards the budgetary allocation of this policy, its equity, and its co-financing are investigated by means of the Choice experiment methodology to shed light on how to shape the future CAP to gain social legitimacy. Results reveal that the CAP post 2013 proposal is more in line with public preferences, although alternative measures are needed to tailor it effectively to regional needs.