Determinants, differentiation, and development of short-term marginal costs in dairy production: an empirical analysis for selected regions of the EU

This work provides evidence on the determinants, cost differentiation, and development of short‐term marginal costs of dairy farms in important production regions of the European Union. The empirical study is based on the estimation of multi‐input multi‐output Symmetric Generalized McFadden cost functions using an unbalanced panel data set of the European Farm Accountancy Data Network. The results show considerable regional differences in the impact of the outputs, input prices, and fixed factors on marginal costs. Strong evidence can be found that marginal costs decrease over time and is further underlined by the development of derived regional aggregated short‐term supply curves. Marginal cost elasticities and correlation coefficients validate the hypotheses that a high degree of farm specialization, large milk output, and low milk prices are associated with lower marginal costs. Furthermore, the marginal cost spread in the data sample is analyzed. We show that milk output, milk yield, herd size, labor input, and fodder production can be attributed to significant marginal cost differentiation of farms, whereas for crop and animal output, grassland, stock of other animals, and depreciation only minor differentiation can be found.     

Taking a new look at empirical models of adoption: average treatment effect estimation of adoption rates and their determinants

This article shows that the observed sample adoption rate does not consistently estimate the population adoption rate even if the sample is random. It is proved that instead the sample adoption rate is a consistent estimate of the population joint exposure and adoption rate, which does not inform about adoption per se. Likewise, it is shown that a model of adoption with observed adoption outcome as a dependent variable and where exposure to the technology is not observed and controlled for cannot yield consistent estimates of the determinants of adoption. The article uses the counterfactual outcomes framework to show that the true population adoption rate corresponds to what is defined in the modern policy evaluation literature as the average treatment effect (ATE), which measures the effect or impact of a "treatment" on a person randomly selected in the population. In the adoption context, a "treatment" corresponds to exposure to the technology. The article uses the ATE estimation framework to derive consistent nonparametric and parametric estimators of population adoption rates and their determinants and applies the results to consistently estimate the population adoption rates and determinants of the NERICA (New Rice for Africa) rice varieties in Côte d'Ivoire. The ATE methodological approach developed in the article has significant policy implications with respect to judging the intrinsic merit of a new technology in terms of its potential demand by the target population independently of issues related to its accessibility and in terms of the decision to invest or not in its wide-scale dissemination.     

Temporal and spatial modelling of tropical deforestation: a survival analysis linking satellite and household survey data

We estimate a spatially explicit model of the forest clearance process among smallholder farmers in an agricultural frontier of southern Mexico. Our analysis takes as its point of departure a simple utility‐maximising model that suggests many possible determinants of deforestation in an economic environment characterised by missing or thin markets. Hypotheses from the model are tested on a data set that combines a time series of satellite imagery with data collected from a survey of farm households whose agricultural plots were geo‐referenced using a global positioning system (GPS). We implement a survival analysis to identify the effect of household level explanatory variables on the probability of deforestation. This approach allows us to introduce a measure of the time until clearance as a covariate, thereby affording a control for the effect of potentially important explanatory variables that vary through time but are not directly observable. In addition to identifying several variables relevant for policy analysis, including household demographics, proximity to roads, and government provision of agricultural support, model results suggest that the deforestation process is characterised by non‐linear duration dependence, with the probability of forest clearance first decreasing and then increasing with the passage of time.     

Semi‐parametric Modelling of Investments in Heating Installations: The Case of the Dutch Glasshouse Industry

This paper applies a semi‐parametric approach to estimating a generalised model of investments in heating installations. The results suggest that marginal costs of investments in heating installations increase quickly at small investment levels, whereas the increase slows down at higher investment levels. Therefore, standard parametric adjustment cost models are probably biased such that they underestimate the costs of small investments and overestimate the costs of large investments. Results also show that investments in heating installations are very responsive to changes in energy prices. Therefore, an energy tax may be an effective instrument to encourage investments in new energy‐saving heating installations.     

Diet,trade and land use: a socio-ecological analysis of the transformation of the olive oil system

Within only two decades olive oil developed from a niche product which could hardly be found in food stores outside the producing regions towards an integrated component in the diets of industrial countries. This paper discusses the impacts of the promotion of the “healthy Mediterranean diet” on land use and agro-ecosystems in the producing countries. It examines the dynamics of olive oil production, trade and consumption in the EU15 in the period 1972–2003 and the links between dietary patterns, trade and land use. It analyses the underlying socio-economic driving forces behind the increasing spatial disconnect between production and consumption of olive oil in the EU15 and in particular in Spain, the world largest producer during the last three decades.     

A cross-section analysis of household demand for food and nutrients in Tanzania

Undernutrition and malnutrition are still problems of unacceptable proportions in many developing countries. However, the debate on the roles of income and other socio-economic variables such as women’s education and household size on food and nutrient demand continues. This study examines the demand for food and nutrients amongst households in Tanzania, using recent survey data. A quadratic almost ideal demand system (QUAIDS) is employed to estimate price and expenditure elasticities, as well as the impact of socio-economic variables on food demand patterns. A moment-based instrumental variable approach is then used to analyse the determinants of nutrient demand. The results show that income and other socio-economic variables exert significant effects on the demand for food and nutrients. The estimated expenditure elasticities for the nutrients range from 0.307 for iron to 1.26 for Vitamin B₁₂. The elasticities are higher for those micronutrients that are consumed through animal products and lower for those micronutrients that are mainly obtained through staple foods. These results reflect the higher expenditure elasticities for meat, fish, eggs, milk, and milk products, as well as fruits and vegetables, relative to cereals and pulses, reinforcing the assertion that the demand for Vitamins A and B₁₂, as well as calcium and zinc will increase with rising income.     

Forecasting the Adoption of GM Oilseed Rape: Evidence from a Discrete Choice Experiment in Germany

This paper explores farmers’ willingness to adopt genetically modified (GM) oilseed rape prior to its commercial release and estimates the ‘demand’ for the new technology. The analysis is based upon choice experiments with 202 German arable farmers. A multinomial probit estimation reveals that GM attributes such as gross margin, expected liability from cross pollination, or flexibility in returning to conventional oilseed rape significantly affect the likelihood of adoption. Neighbouring farmers’ attitudes towards GM cropping and a number of farmer and farm characteristics were also found to be significant determinants of prospective adoption. Demand simulations suggest that adoption rates are very sensitive to the profit difference between GM and non‐GM rape varieties. A monopolistic seed price would substantially reduce demand for the new technology. A monopolistic seed supplier would reap between 45% and 80% of the GM rent, and the deadweight loss of the monopoly would range between 15% and 30% of that rent. The remaining rent for farmers may be too small to outweigh possible producer price discounts resulting from the costs of segregating GM and non‐GM oilseed rape along the supply chain.     

Food consumption impacts of adherence to dietary norms in the United States: a quantitative assessment

Promotion of adherence to healthy-eating norms has become an important element of nutrition policy in the United States and other developed countries. We assess the potential consumption impacts of adherence to a set of recommended dietary norms in the United States using a mathematical programming approach. We find that adherence to recommended dietary norms would involve significant changes in diets, with large reductions in the consumption of fats and oils along with large increases in the consumption of fruits, vegetables, and cereals. Compliance with norms recommended by the World Health Organization for energy derived from sugar would involve sharp reductions in sugar intakes. We also analyze how dietary adjustments required vary across demographic groups. Most socio-demographic characteristics appear to have relatively little influence on the pattern of adjustment required to comply with norms. Income levels have little effect on required dietary adjustments. Education is the only characteristic to have a significant influence on the magnitude of adjustments required. The least educated rather than the poorest have to bear the highest burden of adjustment. Our analysis suggests that fiscal measures like nutrient-based taxes may not be as regressive as commonly believed. Dissemination of healthy-eating norms to the less educated will be a key challenge for nutrition policy.     

Agent‐based modeling for ex ante assessment of tree crop innovations: litchis in northern Thailand

This study uses an agent‐based model for ex ante assessment of agricultural innovations. The model builds on whole farm mathematical programming (MP) and extends the methodology with a spatial representation of the system, the heterogeneity of farm households and landscapes, and the interaction between farm households. We apply the model in a northern Thai watershed to study the potential of four innovations to increase the profitability of litchi orchards. Cost‐benefit analysis shows that each innovation would increase the profitability of litchi growing; however, the results of the agent‐based model show that at current price levels these innovations alone would not be enough to stem the decline in the area under litchis. The model was validated and the sensitivity of the results tested for variations in the irrigated water supply and liquidity. We report on how farmers responded to these results and discuss the implications for other areas in northern Thailand.     

Patterns in Technical Efficiency and Technical Change at the Farm‐level in England and Wales, 1982–2002

English and Welsh farm‐level survey data are employed to estimate stochastic frontier production functions for eight different farm types (cereal, dairy, sheep, beef, poultry, pigs, general cropping and mixed) for the period 1982 to 2002. Differences in the relative efficiency of farms are explored by the simultaneous estimation of a model of technical inefficiency effects. The analysis shows that, generally, farms of all types are relatively efficient with a large proportion of farms operating close to the production frontier. However, whilst the frontier farms of all types are becoming more efficient through time because of technical change, it is also the case that the efficiency of the average farm for most farm types is increasing at a slower rate. In addition, annual mean levels of efficiency for most farm types have declined between 1982 and 2002. The factors that consistently appear to have a statistically significant effect on differences in efficiency between farms are: farm or herd size, farm debt ratios, farmer age, levels of specialisation and ownership status.     

Production Risk and Technical Efficiency in Organic and Conventional Agriculture – The Case of Arable Farms in Germany

This paper quantifies the importance of production risk and technical efficiency as two possible sources of production variability in German organic and conventional farming. Determinants of production risk and inefficiency are investigated based on a combination of Just and Pope’s stochastic production framework and a Stochastic Frontier Analysis. The empirical analysis is conducted using a balanced panel of farm records from 1999/2000 to 2006/2007 on 37 organic and conventional arable farms, respectively. Euclidian‐Distance‐Matching is used to identify for each organic farm a conventional counterpart with similar structural features. Results indicate that output variability in both production technologies is mainly caused by production risk. Land and labour are identified as risk‐increasing inputs in both farm types whereas higher capital endowment, seed costs and soil quality have risk‐reducing effects.