Estimating Farm Productivity Differentials using Panel Data: The Hausman‐Taylor Approach

This paper investigates the relation between unobserved farm productivity and other production factors in a system of netput equations for specialised pig breeding farms in the Netherlands. In order to estimate the system, a Hausman‐Taylor panel data estimator is developed for a system of equations with unbalanced panel data. Tests on the correlation between model variables and farm‐effects are performed, yielding an insight into the sources of differences in total factor productivity and its components (e.g. managerial ability and scale economies). Results indicate that specialised pig breeding farms that are characterised by high total factor productivity have more buildings and machinery than farms with low total factor productivity.     

Economic Comparison of Alternative Tillage Systems under Risk.

Stochastic dominance efficiency criteria are used to rank the net farm return distributions for four different tillage systems under six different farm scenarios. Pairwise comparisons of tillage systems are carried over incremental upper and lower risk-aversion coefficient (RAC) bounds identified for each farm scenario, based on the size and spread of the outcome distributions to identify regions where dominance may switch between tillage systems. Ridge-till systems are generally the dominant tillage system for all farm scenarios considered. No-till systems on clay loam soils are more dominant in the risk-preferring range and less dominant in the risk-averse range, which relates to the relatively larger range of net return values and smaller mean net return values generated by this tillage system. Conversely, the moldboard plow and chisel plow systems are more dominant in risk-aversion intervals and less dominant in the risk-preferring intervals for clay loam soils. In sandy soil scenarios, the ridge-till and no-till systems are dominant over the two fall tillage systems for all farm sizes, indicating that these tillage systems are more competitive with conventional tillage systems in lighter soil type situations. A sensitivity analysis between moldboard plow and no-till systems indicates that no-till would dominate in risk-preferring intervals, and an increase in no-till net farm returns of 16 per acre would change dominance in favor of no-till in risk-averse interval space. On a utilisé les critères d'efficacitéà dominance stochastique pour classer les divers niveaux de recettes agricoles nettes dans quatre systèmes différents de travail du sol, selon six scénarios d'exploitation. Des comparaisons en paires des systèmes de travail ont été faites en regard de tranches croissantes des limites supérieures et inférieures du coefficient d'aversion du risque (CER), établies pour chaque scénario d'après l'importance et l'étendue des distributions du rendement, dans le but d'identifier les régions où la dominance serait susceptible de passer d'un système de travail à l'autre. Le système de travail sur billons était en général le système dominant dans tous les scénarios d'exploitation examinés. La culture sans travail du sol sur loam argileux était plus dominante dans les intervalles d'acceptation du resque et moins dominante dans les intervalles d'aversion du resque, cequi s'explique au fait que ce système de travail donne lieu à une fourchette relativement plus large, mais aussi à une moyenne plus faible du revenu net. À l'inverse, le labour à la charrue classique et au chisel dominait davantage dans les intervalles d'aversion du risque. Dans les sols sableux, le travail sur billons et la culture sans labour l'emportaient sur les deux autres régimes dans toutes les tailles d'exploitation, ce qui porte à croire que, dans les sols plus légers, ces régimes sont plus concurrentiels avec les systèmes classiques. L'analyse de sensibilité entre le labour à la charrue et les systèmes sans travail du sol montre que ces derniers dominent dans les intervalles d'acceptation du risque et qu'un accroissement du revenu agricole net de 16 /acre ferait glisser la dominance vers les intervalles d'aversion du risque.     

Price and Volatility Transmission and Market Power in the German Fresh Pork Supply Chain

We investigate the relationship between the transmission of price volatility and market power in the German fresh pork supply chain. We use a theoretical model underpinning this relationship followed by an empirical application that uses monthly farm, slaughterhouse and retail pork price data for the period 2000–2011. We examine both the relationships of market power with price level transmission and price volatility transmission in the chain. We use a vector error correction model and least squares regressions to analyse price transmission and price volatility transmissions, respectively. Results show that retail market power limited both types of transmissions. Competition inducing policy measures coupled with measures that support price risk management initiatives of chain actors are suggested.     

Assessing the Impact of Changing Economic Environment on Productivity Growth: The Case of the Spanish Dairy Processing Industry

This article analyzes the productivity growth of the Spanish dairy processing industry from 1996 till 2011, which concerns the period of increased EU regulation regarding food safety as well as economic crisis. Data envelopment analysis is used to compute the Malmquist index and its components. The results suggest that productivity on average declined during the period under investigation. The decomposition of the Malmquist index finds that technical regress contributed to productivity decline despite improvements in technical and scale efficiencies. Our results also suggest that food safety regulations did not have a negative impact on productivity growth. Technical change and scale efficiency change made significant negative contributions to productivity growth in the period under crisis, whereas firms significantly improved their technical efficiency in that period.     

Interest Income Tax Evasion,the EU Savings Directive and Capital Market Effects*

The EU Savings Directive has been celebrated as a major political breakthrough in coordinating taxation in Europe. Against this background, the present paper evaluates the real‐world effects of this directive. The directive has left a loophole by providing grandfathering (exemption from withholding tax) for some securities. In this paper, we compare the pre‐tax returns of exempt bonds and comparable taxable bonds. If working around the Savings Directive is difficult for income tax evaders in Europe, then investors should be willing to pay a premium for bonds that are exempt from the withholding rate. Conversely, if such a premium is absent, then this suggests that the supply of existing loopholes (exempt bonds included) is large enough to allow tax evaders to continue evasion at no additional cost. The findings of our study are in line with this latter interpretation.     

A model of optimal import phytosanitary inspection under capacity constraint

Growth and liberalization of world trade have increased the risks of introduction of quarantine plant pests into importing countries. Import inspection of incoming commodities is a major tool for prevention of pest introductions related to world trade, but inspection capacities are limited. This article develops a theoretical and an empirical model for the optimal allocation of inspection effort for phytosanitary inspection of imported commodities when the inspecting agency has a limited capacity. It is shown that the optimal allocation of inspection effort equalizes marginal costs of pest introduction across risky commodity pathways. The numerical illustration finds the optimal allocation of inspection effort of chrysanthemum cuttings imported in the Netherlands. The numerical results suggest that ceteris paribus , greater inspection effort should be allocated to pathways whose inspection yields a greater reduction in the expected costs of pest introduction. The numerical results also suggest that import inspection has a high marginal benefit. In particular, we found that each additional euro of the inspection capacity decreases the expected costs of pest introduction from 18 to 49 euros, depending on the initial inspection capacity.     

More reasons why farmers have so little interest in futures markets

The use by farmers of futures contracts and other hedging instruments has been observed to be low in many situations, and this has sometimes seemed to be considered surprising or even mysterious. We propose that it is, in fact, readily understandable and consistent with rational decision making. Standard models of the decision about optimal hedging show that it is negatively related to basis risk, to quantity risk, and to transaction costs. Farmers who have less uncertainty about prices and those with a diversified portfolio of investments have lower optimal levels of hedging. If a farmer has optimistic price expectations relative to the futures market, the incentive to hedge can be greatly reduced. And finally, farmers who have low levels of risk aversion have little to gain from hedging in terms of risk reduction, in that the certainty‐equivalent payoff at their optimal hedge may be little different than the certainty equivalent under zero hedging. These reasons are additional to the argument of Simmons (2002) who showed that, if capital markets are efficient, farmers can manage their risk exposure through adjusting their leverage, obviating the need for hedging instruments.     

Non‐Parametric Modelling of CO2 Emission Quota

Dutch glasshouse firms are facing the introduction of a system of tradable CO₂ emission quotas. This paper employs a non‐parametric method for modelling tradable CO₂ emissions of Dutch glasshouse firms. The method is capable of generating shifts in CO₂ emissions across the sample of firms. Moreover, changes in volumes of outputs produced and inputs used are computed. Results show that firms using a conventional heating technology will be net purchasers of CO₂ emissions, whereas firms using more advanced heating technologies will sell part of their emission quota.