A Note on the Effects of the Income Stabilisation Tool on Income Inequality in Agriculture

Increasing concerns with income risks in agriculture have led to discussions on the introduction of an Income Stabilisation Tool (IST) in Europe. In this note, we extend existing evaluations of the IST by investigating the potential effect of the IST on inequality in farm incomes using Swiss agriculture as a case study. We find that the IST will significantly reduce income inequality, in particular by increasing lower quantiles of the income distribution. This property constitutes a value‐added of the IST that is not yet considered in the current policy debate.     

Marginal Analysis of Income Mobility Effects by Income Source with an Application to the Agricultural Policy Mix

The Note makes novel use of a decomposition of the Shorrocks mobility index by income source to identify the impact on farm income mobility of a marginal change in each component of income. An empirical application shows that a revenue‐neutral change in the balance of agricultural protection between market‐based support and direct payments would not have reduced the variability of relative farm incomes in Scottish agriculture.     

The Role of Ownership in Determining the Rural Economic Benefits of On‐shore Wind Farms

The development of the wind energy sector is often promoted as a means of supporting rural economies. This paper focuses on how the ownership structure of on‐shore wind power plants (external, farmer or community) affects the size and distribution of impacts within the rural part of a region. Empirical analysis is based on a regional computable general equilibrium model of North East Scotland with the results compared to those generated from a standard social accounting matrix multiplier analysis. With no local ownership, while rural GDP increases, there is almost no effect on household incomes due to the limited direct linkages of the on‐shore wind sector. Local ownership increases the household income benefits but there are still limited positive spill‐over effects on the wider economy unless factor income is re‐invested in local capital. With re‐investment, farm household ownership gives rise to the largest increase in total household income but community ownership gives rise to the largest increase in rural (non‐farm) household incomes and welfare. The results contribute to the on‐going debate about the opportunity cost of external asset ownership in rural areas.     

Rural household incomes and land grabbing in Cambodia

This paper empirically quantifies environmentally augmented rural household incomes in Cambodia and analyzes how economic land concessions (ELCs) affect such incomes. Data is derived from a structured survey of 600 randomly selected households in 15 villages in three study sites in Cambodia, where local livelihoods are highly reliant on access to land and natural resources, supported by qualitative data from focus group discussions. Gini coefficient decomposition, multiple regression models, and propensity score matching (PSM) models were employed to analyze the composition of income portfolios, determinants of major income sources, and the impacts of land grabbing on incomes. Results documented high reliance on environmental income (32–35% of total household income) and farm income (51–53%) across income quartiles; demonstrated the variation in product composition across quartiles and the contribution of each major product to income inequality; and identified the main household characteristics influencing absolute and relative incomes. ELCs were found to consistently have negative impacts on household total income, environmental income, size of available cultivable land and livestock holdings, and increasing the distance to forests. The total household annual income subjects to ELCs were estimated to decrease by 15–19%. While providing some employment opportunities, we find no evidence of positive income effects of ELCs on households in the areas where ELCs are located.     

Effects of Non‐Farm Employment on Rural Income Inequality in Developing Countries: An Investment Perspective

This paper makes several points based on a review of household survey evidence from Africa, Asia and Latin America. (i) In contrast to conventional wisdom, the evidence is very mixed as to the effect of non‐farm employment on rural income inequality. The non‐farm employment and microenterprise programmes now in vogue will not necessarily resolve rural income inequality problems and attendant social tensions nor automatically benefit the poor. (ii) Policymakers should be worried by substantial evidence of poor people's inability to overcome important entry barriers to many non‐farm activities. (iii) The main determinants of unequal access to non‐farm activities are the distribution of capacity to make investments in non‐farm assets and the relative scarcity of low capital entry barrier activities. Therefore, it is crucial for public investments and policy to favour an increase in the access of the poor to assets that allow them to overcome non‐farm employment entry barriers, (iv) It would be an error to assume that one can address asset‐poverty and inequality in the non‐farm sector without addressing farm‐side problems and vice versa.     

Worth the Risk? The Behavioural Path to Well‐Being

There is increasing interest in the ‘economics of happiness’, reflected in the volume of articles appearing in mainstream economics journals exploring the major determinants of self‐reported well‐being. We contribute by exploring the factors influencing how satisfied farmers are with their quality of life. We find that farm income, subjective perceptions relating to the adequacy of household income, debt, health and personal characteristics such as age and relationship status are significantly associated with farmers’ self‐reported life satisfaction. While significantly associated with farm income, farm structural variables such as farm size, farm type and the presence of a farm successor were not found to be significantly related with life satisfaction. Our results also suggest that farmers who are more risk averse enjoy significantly lower levels of both life satisfaction and farm income than their more risk seeking or risk neutral counterparts. We suggest that, in the same way that risk aversion inhibits farmers from making choices that could lead to an increase in their income, it may also constrain farmers (and the wider public at large) from engaging in certain types of behaviours that could lead to an increase in their self‐reported quality of life. Finally, we find that while farm income is significantly related to self‐reported life satisfaction, the direct correlation between these variables is weak, suggesting that farmer life satisfaction can be distinct from business success.     

Farmers’ Income and Production Responses to Rural Taxation Reform in Three Regions in China

The relationship between agricultural taxation and production efficiency has been thoroughly explored for many countries. Recently, China has taken various measures including the rural taxation reform (RTR) to promote grain production and to increase farmer incomes. In this study, we investigate whether the Chinese policy of abolishing rural taxation has improved farm households’ incomes and affected their production decisions. Using household survey data obtained from three regions in China, we estimate the effect of the RTR on farmers’ income. Results show that the RTR has significantly improved farmers’ post‐tax net income by 9.2% in Shandong, 16.9% in Shanxi and 16.8% in Zhejiang. These increments, mostly from farm income rather than from off‐farm income, are much higher than the direct income increase from the tax savings. In addition, we examine the dynamic impact of farmers’ net income, and find that the RTR has a sustained positive income effect in Shandong and Shanxi, whereas its positive effect in Zhejiang appears temporary. We also examine farmers’ production responses to the RTR. Results show that farmers in the three regions respond in different ways: farmers in Shandong significantly increase their labour input, farmers in Zhejiang increase intermediate inputs, whereas Shanxi farmers augment their intermediate inputs and enlarge their crop acreage. It appears that the farmers’ responses to the taxation reform vary due to the agronomic and economic factors in these three regions, suggesting that diverse post‐RTR supplemental policies should be implemented in different regions.     

On the Characterisation and Measurement of the Redistributive Effect of Agricultural Policy

The article proposes a coherent framework for the evaluation of the redistributive performance of agricultural policy. An illustrative study shows that the vertical stance of policy in Scotland was progressive in absolute terms, reflecting the chronic dependence of Scottish agriculture on policy transfers. Nevertheless, the overall redistributive effect of policy was to increase absolute inequality in farm incomes because of horizontal inequities in the incidence of transfers, though neither systematic discrimination between farm types nor systematic reranking was the main cause. The targeting of policy transfers could be improved by the use of indicator variables more strongly correlated with pre‐transfer incomes.     

Modeling and Extrapolating Wheat Producer Support Using Income and Other Factors

Using wheat market support data from 55 countries for 1961–2011 from the World Bank Agricultural Distortion database, we develop a fixed effect model that shows a more complicated, nonlinear relationship between income and wheat support and its components than previously realised. We find that income generally has a greater effect on border market price support than on domestic price support. Moreover, the difference between these types of support is greater for net importers than for net exporters and has increased with the URAA or WTO accession. Holding other variables constant, the wheat support level of China, driven mainly by border market price support, is projected to rise with future income growth. Meanwhile, Japan is projected to maintain its high level of support, while the US and EU are projected to maintain their lower levels of support. These results are relevant in the context of multilateral trade negotiations, arguing against a narrow focus on past or current policy profiles and for long‐run analyses that might mistakenly rest on the inconsistent assumptions of constant agricultural policies against the backdrop of rising incomes.     

基于灰色关联分析的江西省森林公园旅游收入结构研究

以江西省境内的森林公园旅游经营收入为研究对象,运用灰色关联分析理论,系统分析了2004年~2014年江西省森林公园旅游经营收入结构特征及其动态变化,得到了有意义的结果:江西省森林公园旅游收入中,食宿收入的平均关联度最大(r=0.841 8),与旅游相关的其他收入的平均关联度最小(r=0.688 9)。门票收入的关联度呈现出先调整性增长,后较稳定下调,而后持续增加的趋势;食宿收入的关联度一直稳定下调,而后又报复性增长;娱乐收入的关联度在调整中呈现出平稳的下降趋势;而与旅游相关的其他收入在调整中呈现出不断增长的态势。基于灰色动态关联分析,提出了增加旅游服务范围、调整旅游门票价格、丰富娱乐活动特色、重视林下经济发展等建议。     

A supply‐side analysis of agritourism: Evidence from farm‐level agriculture census data in Taiwan

Due to consumers’ increased demand for leisure and farmers’ need for income diversification, researchers and policymakers have significant interest in topics related to agritourism. This study provides a supply‐side analysis on agritourism using Taiwan as a case study. Utilising a sample of 720,148 family farms from the 2010 agriculture census survey in Taiwan, we quantify the effects of engaging in the agritourism business on farm income, on farm succession, and on family members’ labour supply decisions between on‐farm and off‐farm work. An analytical framework that combines the doubly robustness regression model and semiparametric estimation is proposed to address the endogeneity bias. Results indicate that participation in agritourism increases farm income and family farm succession. Farms engaging in agritourism also have more family members working on the farm, and fewer family members working off‐farm, compared to farms not engaging in agritourism. Although agritourism enterprises are developed to meet consumers’ demand for leisure, our results show that they also improve the economic welfare of farm households.     

The Redistributive Effects of Agricultural Policy on Scottish Farm Incomes

This paper focuses on the measurement of the redistributive effects of agricultural policy, proposing measures to characterise and quantify these effects that are based on the change in absolute value of the Gini coefficient. An illustrative study shows that the distribution of support in Scotland in 1999/2000 was regressive with respect to pre‐support farm incomes. Nevertheless, the provision of support would have had an equalising effect on farm incomes but for the resulting changes in the ranking of farms within the income distribution. Reranking not only makes ‘coupled’ support policies ineffective but also inefficient as redistributive instruments.     

A Note on the Economic Significance of Dwellings on Farms

Using information from the Farm Business Survey for England and Wales, the paper explores the economic contribution of farm dwellings to the farm business in 1983 and 1993. Despite the stagnant property market and increasing farm incomes in the early 1990s, rent revenues rose as a proportion of net farm incomes. Including a low imputed rental value for farmhouses in farm income calculations may mean that incomes are being understated. Returns from letting property and a low imputed rent for the farmhouse help to stabilise farm incomes.     

Farm Level Costs of Agri‐environment Measures: The Impact of Entry Level Stewardship on Cereal Farm Incomes

Applying a difference‐in‐difference approach with propensity score matching, we examine the impact of participation in the Entry Level Stewardship (ELS) scheme on cereal farm incomes in eastern England. We assess the extent to which impacts are related to a) the source of income affected – whether only from agricultural or total business income; b) the channel of the impact – through land use and/or labour input; and c) the level of impacts through time. In addition, we assess the appropriateness of the level of the ELS payment. We find that: a) entering the ELS scheme could negatively affect cereal farm incomes – in particular, the total business income; b) that negative impacts arise primarily in relation to the use of land resources; c) that impacts may diminish over a relatively short period of time; and d) that the ELS payment broadly compensates for losses without providing over compensation. Given the diminishing negative impact over time, the level of ELS payment might need to be reviewed in the longer term, although policy evaluation should consider the wider implications for efficiency of alternative payment levels. We also discuss some limitations of the approach and potential extensions.     

The Dynamics of Farm Incomes: Panel data analysis using the Farm Accounts Survey

This paper uses longitudinal information from the Scottish Farm Accounts Survey to explore the dynamics of Scottish farm incomes between 1988/89 and 1999/2000. Both the Net Farm Income and Cash Income of farms are considered. The results show high levels of income variability and income mobility within Scottish agriculture. Although exit rates from the lowest income groups remain relatively high even when spells of low income have lasted a number of years, there is evidence of farms with persistent low farm income and farms experiencing repeated spells of low‐income. Smaller farm size and having a farmer aged over 65 increase both the probability that a farm will fall into the lowest income group and the length of time spent in that income group. Further the results suggest that the impact of the post‐1997 agricultural recession on income mobility depended on the income status of the farm when the recession began.     

Income distribution in rice–growing villages during the post-Green Revolution periods: the Philippine case, 1985 and 1998

This paper aims to examine changes in household income sources and its impact on household income distribution in the post‐Green Revolution periods in 1985 and 1998 in the rural Philippines. We found that there has been a structural shift of household income away from farm in favor of nonfarm labor income sources. This finding indicates that rural development is being led by nonfarm sectors. Such a shift has resulted in an increase in household income inequality as the distribution of nonfarm income has become less equal over time and was markedly more unequal than that of farm income in 1998.     

Assessing the Reliability of Self‐reported Income Information in Informal Small Business Lending through a Bogus Pipeline Experiment

Coping with asymmetric information plays a major role in successful small business lending. Our purpose is to determine if small business applicants report their income information correctly when requesting a loan. We use a randomised controlled trial bogus pipeline experiment, established during a typical cash‐flow analysis of a bank for small businesses in the Philippines. The bogus pipeline approach is commonly applied in social science and aims to increase the rate of truth telling by informing participants that answers will be verified by a lie detector. The experimental data, which include 243 observations of credit clients that are mainly from the agricultural and food value chain, served to identify asymmetric information. Additionally, debtors’ repayment behaviour for approved loans was observed by the bank. Our results indicate that loan applicants of the treatment group report lower incomes, an effect which is most pronounced in lower income quantile. Our analyses also reveal higher loan delinquencies in the control group.     

The Role of the Common Agricultural Policy in Enhancing Farm Income: A Dynamic Panel Analysis Accounting for Farm Size in Italy

As a multi-objective policy, the EU Common Agricultural Policy continues to secure significant income support for farmers as one of the nine specific objectives. We estimate the income transfer efficiency of a broad set of pivotal policy measures, focusing on the effects of farm structure on income transfer efficiency. We use dynamic modelling, based on a micro-data panel of Italian farms for the period 2008–2014, allowing for endogeneity, simultaneity bias, and omitted variables. In line with previous studies and economic expectations, we find that decoupled direct payments provide the highest contribution to agricultural incomes, followed by agri-environmental payments and on-farm investment subsidies. Coupled payments have no significant impacts on farmers’ income. Generally, for all analysed Common Agricultural Policy measures, large farms benefit from greater transfer efficiency levels compared with medium and small farms. These differences among instruments and across farms suggest that policy-participation costs may play a pivotal role, together with the economic structure of farms, in determining the income transfer efficiency of CAP policies.     

Contract farming,contract design and smallholder livelihoods*

Contract farming has gained in importance in many developing countries. Previous studies analysed effects of contracts on smallholder farmers’ welfare, yet mostly without considering that different types of contractual relationships exist. Here, we examine associations between contract farming and farm household income in the oil palm sector of Ghana, explicitly differentiating between two types of contracts, namely simple marketing contracts and more comprehensive resource-providing contracts. Moreover, we look at different income sources to better understand how both contracts are linked to farmers’ livelihood strategies. We use cross-sectional survey data and regression models. Issues of endogeneity are addressed through measuring farmers' willingness-to-participate in contracts and using this indicator as an additional covariate. Farmers with both types of contracts have significantly higher household incomes than farmers without a contract, yet with notable differences in terms of the income sources. Farmers with a marketing contract allocate more household labour to off-farm activities and thus have higher off-farm income. In contrast, farmers with a resource-providing contract have larger oil palm plantations and thus higher farm incomes. The findings suggest that the two contract types are associated with different livelihood strategies and that disaggregated analysis of different income sources is important to better understand possible underlying mechanisms.