Spatial price efficiency in Mozambique's post-reform maize markets

Maize (Zea mays) shortages and maize price instability continue to occur in Mozambique in spite of policy reforms and great capacity for increased production in northern Mozambique. This study measured the efficiency of spatial maize price arbitrage in Mozambique's post‐reform period. Spatial price inefficiency does not seem to explain why food shortages continue to occur in Mozambique, suggesting nonprice market constraints such as poor infrastructure and poor market institutions as more likely explanations. Baulch's spatial efficiency test indicated that it is not profitable to ship maize from northern surplus maize regions to southern Mozambique. Records of interregional maize shipments show that indeed grain is not being shipped from the north to the south. Market liberalization may have improved spatial price efficiency, but high transfer costs still limit trade and potential benefits from freeing markets. Under these circumstances, food shortages and price instability are likely to continue.     

Market integration between surplus and deficit rice markets during global food crisis period

Applying the maximum‐likelihood method of co‐integration, this study analysed spatial market integration between an adjacent rice surplus market (India) and deficit markets (Bangladesh and Nepal). The main focus is on the government policies of these three rice‐producing countries which have been imposed to reduce domestic price volatilities in rice markets during the recent ‘global food crisis’ in 2007–2008. The co‐integration tests find that domestic rice prices of India, Bangladesh and Nepal are integrated both in short‐run and long‐run periods despite the imposition of export restriction policies by India. The reason that prices are transmitted so effectively is most likely to be the widespread informal cross‐border trade through the porous borders among India, Bangladesh and Nepal.     

Cropland use,yields, and droughts: spatial data modeling for Burkina Faso and Niger

For countries with recurrent droughts, the design of drought impact mitigation measures could benefit from analyses of determinants of yields and prices of local crops at regional and district level. This study applies dynamic spatial panel data regression models to yields and prices of four major food crops across regions of Burkina Faso and Niger, over sample periods between 1984 and 2006. Results lend support to mainly simultaneous spatial spillovers, particularly for millet and cowpea prices and sorghum yields in Niger, and maize yields in Burkina Faso. After accounting for these effects, most crop yields are found to be weakly price‐responsive, as envisaged by a supply‐side geographical diffusion hypothesis. Seasonal rainfall elasticity estimates suggest that dominant food crops have slight advantage margins in terms of relative resilience to rainfall shortages. However, this result is to be weighed against low millet yields in Niger, and marked drops in sorghum yields during officially declared droughts in Burkina Faso.     

The effects of the Food Reserve Agency on maize market prices in Zambia

Over the last decade, governments throughout eastern and southern Africa have increasingly used strategic reserves and/or marketing boards to influence grain market outcomes, yet little is known about how these activities are affecting grain markets. This article estimates the effects of the Food Reserve Agency (FRA) on maize market prices in production and consumption regions in Zambia using a vector autoregression model and monthly data from July 1996 through December 2008. In recent years, FRA has become the dominant buyer of smallholder maize in Zambia. Simulations show that FRA activities stabilized market prices throughout the July 1996–December 2008 study period and raised mean prices between July 2003 and December 2008 by 17–19%. The price raising effects of FRA policies have assisted surplus maize producers but adversely affected net buyers of maize in Zambia, namely urban consumers and the majority of the rural poor. The increase in maize price stability is unlikely to have had substantial welfare effects on poor households. In contrast, relatively wealthy producers are likely to have benefited from the higher average and more stable maize prices resulting from FRA policies.     

Post–Uruguay Round price linkages between developed and developing countries: the case of rice and wheat markets

The Uruguay Round Agreement on agriculture attempted to lower distortions in global agricultural markets. However, the significant fall in commodity prices in the late 1990s may have reduced the incentives for both developed and developing countries to better integrate into world markets. This study analyzes price linkages and adjustment between developed and developing countries during the post–Uruguay Round period. Prices of two key commodities, long‐grain rice and medium‐hard wheat, are assembled for major exporters and producers. Results of multivariate cointegration analysis suggest partial market integration between developed and developing countries in the post–Uruguay Round period. Developed countries are found to be price leaders in these two markets, and in most cases, changes in their prices have relatively large impacts on those of the developing countries. Developing countries (e.g., Vietnam and Argentina) have faced considerable price adjustment due to changes in the developed countries' prices.     

Do Vietnamese upland farmers benefit from high world market prices for maize?

For rural households in the north of Vietnam, maize cropping is the main source of income. In the face of the world market price increases of the recent past, we analyze the regional marketing chain of this commodity qualitatively and econometrically investigating to what extent smallholder farmers in developing countries are affected by international price movements. Vietnamese maize markets are found to be well integrated. Recent price hikes have fully transmitted along the regional supply chain so that farmers profited. Nevertheless, adverse factors such as increasing input prices have neutralized these benefits resulting in a decline in real income of smallholders.     

Welfare effects of maize technologies in marginal and high potential regions of Kenya

This paper describes the findings of a study that used a multi‐market model to assess the potential impact of improved maize technologies on the welfare of various types of rural and urban households in Kenya. The modelling results indicate that technologies developed for high potential regions are likely to have more profound aggregate impacts on maize production and lead to greater reductions in import demand (if prices are controlled) or maize prices (if maize prices are flexible). Technology adoption in high potential regions is likely to have substantially greater positive impacts on aggregate real incomes, but inferior income distributional outcomes compared to technology adoption in marginal regions.     

The Contingent Tariff of the Special Safeguard Mechanism: What Happens When Markets are Imperfectly Competitive?

Contingent tariffs for agri‐food commodities have been proposed as a Special Safeguard Mechanism (SSM) in the Doha Round negotiations by the G33 group of countries as an instrument to control downward spikes in their border prices and/or surges of imports. The objective is to safeguard the livelihood security of farm households in poor countries. To date, most analysis of such tariffs uses stochastic partial equilibrium models with perfect competition. Yet in many markets for such commodities, imperfectly competitive market intermediaries play an important role in determining producers' prices, as do state trading enterprises (STEs). A stochastic partial equilibrium model of a typical importing country situation is specified in which there are either imperfectly competitive domestic intermediaries with a contingent tariff or an STE. The role of these intermediaries in influencing price behaviour and livelihood security in the presence of contingent tariffs alters the conclusion based on models of perfect competition. Using Monte‐Carlo simulation, it is shown that the efficacy of a contingent tariff is substantially reduced as the number of firms declines because increasingly they absorb the tariff, and the procurement price and producer surplus do not increase to the extent that they do under perfect competition.     

Food Price Pass‐Through and the Role of Domestic Margin Services

The recent volatility in international agricultural markets has drawn attention to the impact of rising international agricultural prices and the induced price‐insulating measures on consumer food prices. Analyses based on simulation models on this topic typically ignore the role of domestic margin services. We extend the standard Global Trade Analysis Project (GTAP) model to allow for variations in the share of domestic margin services in consumed food across countries. This approach enables us to differentiate consumer prices from producer prices. Following the extension, the results show that domestic margin services reduce the consumer food price volatility for all countries, especially in high‐income countries, where the share of domestic margin services in final food consumption is higher. The effect of price‐insulating border policies is also reduced in the extended model. We find that our extension of the GTAP model greatly improves simulations of the 2007 surge in international agricultural prices. We validate our extension of the GTAP model by showing that the econometrically estimated food price pass‐through is decreasing with income and thus, is smaller in high‐income countries.     

The impact of commodity price shocks among regional economies of a developing country

Volatile commodity prices have become commonplace in the world economy. Although is widely accepted that commodity‐rich countries are affected by this phenomenon, information about how commodity price shocks impacts their regional economies is scarce. This work analyses how shocks in copper prices impact the economies of the major copper‐producing regions in a developing country, such as Chile. To achieve this goal, a two‐step method is implemented. First, we estimate long‐term copper prices using the Wets and Rios approach (2015) and these estimates are then contrasted with those forecast by the Chilean public advisory committee. Second, a general equilibrium model is implemented to simulate the effects of both expansive and restrictive copper price cycles within major producing regions in Chile. Our results show that the proposed approach yields more homogeneous price projections than those made by the Chilean Government, which, in turn, are very close to variations in response to negative shocks. The price simulations confirm that price cycles affect the savings of government and business, which directly dampens regional production, mainly via investment, capital mobilisation and diversification of production. Because of this, fiscal revenues generated by copper sales act as a trade cycle term multiplier in regional economies. Overall, within copper‐producing regions, we suggest implementing long‐term policies to improve profit distribution efficiency.     

Why does on-farm storage fail to mitigate price volatility?

We analyze the role of farm stock management on price volatility under liquidity constraints and heterogeneous price expectations. In commodity markets, speculative behaviors by stockholders tend to reduce price volatility, but this is not the case in certain agricultural markets, where speculation by farmers regarding decisions to sell or store grain is subject to liquidity constraints and heterogeneous price expectations. Like stockholders, most farmers sell grain if they expect a price drop in the near future, but unlike stockholders, they are not necessarily able to purchase grain if they expect a price increase in the next period. Heterogeneous price expectations can also lead to suboptimal storage decisions, further increasing price volatility. For these reasons, the storage management behavior of farmers often fails to mitigate price drops in the way that speculation by stockholders does. We merge historical data on maize prices and household storage collected in Burkina Faso in order to build a dynamic panel over the 2005–2012 period. We show that carryover from one season to the next is associated with unexpected price drops during the preceding lean season and that carryover is associated with more frequent unexpected price drops following the subsequent post‐harvest season.     

生猪价格的省域空间溢出效应及其动态关联分析——基于空间面板模型和DY分解

目的 分析生猪价格的省际空间溢出效应,并通过各省域间价格联动效应探究我国生猪价格体系的传导机制,对治理我国生猪产业区域不均衡发展问题具有重要意义。方法 文章建立空间杜宾模型探索生猪价格的空间传导特性,引入溢出效应分解分析替代品价格、成本要素对省域生猪价格的冲击效应,并运用广义预测误差分解测定省际生猪价格关联水平及方向。结果 （1）我国生猪价格波动具有显著空间相关性和异质性,其空间集聚特征随时间推移愈发显著,产业布局呈现“高—高南部簇拥,低—低东向西扩”的空间演变特征。（2）省内替代品价格、成本要素对生猪价格波动的影响显著但作用力度有限,省际溢出效应是生猪价格发生空间传导的主导因素。（3）鸡肉价格与省内、省外的生猪价格存在密切正向关联;牛肉价格波动推动本省生猪价格同步波动;豆粕价格波动对本省或邻省生猪价格均起到正向推动作用;玉米价格变化引起本省或邻省生猪价格的负向变化。（4）辽宁、河北、吉林、河南等省的正向净关联度较大,属于波动“主导者”或“发动者”;上海、广西、重庆等省市的负净关联度较大,隶属价格波动的“接收者”;江苏、湖南、福建等省市的关联度和全国平均关联度持平,在价格波动传导体系中属于波动“中介者”。结论 有关部门应针对不同省域在生猪价格传导体系中所发挥职能的不同,分级管控生猪价格,同时促进地方畜牧业经济发展,不断优化我国生猪养殖产业区域布局。     

Applying cointegration and error correction to measure trade linkages: maize prices in the United States and Mexico

The impact of U.S.‐grown maize on Mexican markets is a subject of heated debate, and is complicated by limited substitution between white and yellow maize as well as regional price differences within Mexico. This article improves on previous analyses using a detailed data set of white maize prices reported weekly in 11 states across Mexico from 1998 through 2005. Using cointegration analysis and the error‐correction model, we find that prices between the United States and Mexico do not share a common long‐run relationship. Within Mexico, prices in Michoacán and Oaxaca are only weakly related with prices in neighboring states, whereas prices in Sinaloa and Jalisco exert considerable influence on prices elsewhere in Mexico. We conclude that, despite North American Free Trade Agreement (NAFTA), white maize prices in Mexico are determined by local conditions including particularly the degree of integration to other regions within Mexico.     

Self‐protection from weather risk using improved maize varieties or off‐farm income and the propensity for insurance

We investigate how self‐protection from the adoption of Improved Maize Varieties (IMV) and off‐farm income affects risk premiums for smallholder maize producers in Uganda. To unbundle these effects, we specify the cost of risk to explicitly capture four risk components—mean, variance, skewness, and kurtosis. Using unique plot‐level panel data for Uganda, we estimate and test moments of a flexible production function based on an expanded form of the Johnson S_U family distribution and proceed to simulate the degree of responsiveness of risk premiums and welfare estimates to marginal changes in the share of land under IMV and off‐farm income. Scenarios of joint adoption of IMV accompanied with low and high application of inorganic fertilizer, and the effect of off‐farm income when there is high and low supply of farm labor are examined. Results show that the use of IMV and off‐farm income substantially reduces risk premiums and the individual effect is much higher under low fertilizer application and high supply of farm labor, respectively. Thus implying that self‐protection is likely to reduce the propensity for index insurance especially if its design fails to consider the reduction in downside risk.     

The transmission of world maize price to South African maize market: a threshold cointegration approach

This article seeks to provide an explanation for the relationship between domestic maize price in South Africa and world maize prices in order to evaluate comovement and transmission of world prices to domestic prices in sub‐Sahara African countries. This is done by comparing nested and nonnested models that capture different forms of nonlinearity in the price spread. Adopting a Bayesian approach that allows for comparison of models using Bayes factor, we found that the relationship between South African price and world price for maize indicates the presence of nonlinearity in price transmission with three regimes that is triggered by the price spread in previous period.     

Price Transmission in Nigerian Food Security Crop Markets

This paper comprehensively examines price transmission from world, neighbour country, and internal commercial hub markets to Nigerian urban markets, as well as from urban to rural markets within the country, for seven key food security crops (maize, millet, sorghum, rice, cassava, yams and cowpeas). There are three key findings: (i) tradability matters for price transmission, but tradability varies across crops and regions. The strongest international linkages are with neighbouring countries. Rice price transmission is high across all markets, while coarse grain price correspondence is low with world prices but high with neighbour country market prices; (ii) our results imply that local conditions matter for price transmission, and are relatively more important than trade for some crops (e.g. yams, cassava) than others (e.g. imported rice, maize); (iii) larger than expected long‐run price transmission parameters in world and neighbour countries for rice and coarse grains suggest that, in these select markets, there are either large transactions costs or quality premiums that vary systematically with border prices, and/or mark‐ups captured by traders with market power.     

Navigating the perfect storm: reflections on the food,energy, and financial crises

The closely interlinked food, energy, and financial crises pose a significant new challenge to the global effort to reduce poverty. In 2008, food prices rose sharply in many countries, and global poverty and hunger levels increased quite markedly. The good news is that the agricultural supply response in many countries was also strong. The impacts of the financial crisis on poor countries have yet to fully roll out, but it is clear that more people have fallen into poverty and more are suffering from hunger. Lastly, there are strong indications that the global food system is fundamentally changing in a number of dimensions. Biofuels are here to stay, and energy and food prices appear to have adjusted to a higher equilibrium and will in turn raise the prospects of renewed volatility in agricultural commodity markets. Trade protection has also resurfaced, but so have renewed investments in agriculture. These fundamental shifts bring with them opportunities and risks that require internationally coordinated responses with strong national buy‐in, as well as timely and relevant research.     

Marketing,cooperatives and price heterogeneity: evidence from the CIS dairy sector

Drawing on survey data, this article identifies the determinants of variations in farm gate milk prices for three CIS countries (Armenia, Moldova, and Ukraine). We apply a multi‐level modeling approach, specifically a bootstrapped mixed‐effects linear regression model. The analysis suggests three main strategies to improve the price received by farmers for their output: consolidation, competition for output, and stable supply chain relationships. In Armenia and Ukraine selling through a marketing cooperative has a significant, positive, albeit modest, effect on farm gate milk prices. In all three countries studied, the size of dairy operations, trust, and contracting also affect positively the prices received by farmers.     

The effects of a large discrete maize price increase on the distribution of household welfare and poverty in rural Kenya1

This study estimates the effects of a large discrete maize price increase on the welfare of a sample of rural Kenyan households. The usual first‐order welfare approximation formula is extended to a second‐order formula that allows for supply and demand responses to the price change. Results show that many rural households are not affected greatly by the price change, and there are about as many gainers as losers. However, these full sample results mask important differences across regions. Welfare gains generally take place in major production areas while losses are in areas where most households are net buyers of maize. Semiparametric methods are used to investigate the relationship between income and the size of the welfare effect, and poverty dominance techniques are applied to study the impacts of the maize price increase on rural poverty.     

The evolution of global farming land: facts and interpretations

Although land plays a crucially important role in economic development and structural transformation, the causes and consequences of the evolution of farming land have received scant attention in recent decades. In this article, I document global and regional changes in aggregate agricultural land use, per capita land use, and average farm sizes. The spatial distribution of global farming land has changed dramatically, with developed countries substantially reducing their share of global agricultural land, and land‐abundant developing countries substantially increasing their share. In per capita terms, we see a rather different pattern, with average farm sizes increasing in rich and more commercialized agricultural systems, and generally declining or staying constant in poorer and less commercialized systems. These outcomes are the result of complex processes that are not always well understood. I conclude the article by suggesting new, or neglected, areas of research that would facilitate a better understanding of these critically important developments.