Measuring and causes of inequality in farm sizes in the United States

This article examines the notion of farm size inequality expressed as sales inequality in the United States. The farm size index (FSI) is developed as a measure of farm size inequality. FSIs are calculated for the farming sector in all 50 states and large variation in farm size across the states and over time is determined. The largest FSIs are calculated for a number of Southern, Southwestern, and Pacific states. Increasing FSIs over time are observed in all states as well. The spatial and temporal (between 1987 and 1997) differences in FSIs are explained by running a pooled, cross‐sectional time‐series model. The most influential variables accounting for the differences have to do with the ownership structure, where a larger presence of individual and family farms relative to corporate farms and cooperatives leads to a lower degree of farm size inequality. Also, states and regions having relatively larger number of farms owned by minorities have higher FSIs. Shrinking opportunities in the agricultural sector relative to the rest of the economy, primarily services, are reflected in a declining share of agricultural sector state income in total gross state product (GSP). This in turn leads to an increase in the farming sector's FSI suggesting that only larger, more profitable operations are the likely candidates to pursue farming activities. Finally, grains farming regions have all lower degree of farm size inequality than livestock or fruits and vegetables regions. Profitable grains farming requires relatively large farm size and equipment investments, which leads to a relatively homogeneous structure of grains farms. A larger variation in the size of profitable farm operations is possible in fruits and vegetables and livestock. This leads to the existence of a large number of very small but still sustainable farms, and a relatively small number of large farms that capture most of market sales share.     

Quantifying the structure of food demand in China: An econometric approach

This article examines food demand structure and its dynamics for 11 commodities in urban China. The analysis is based on household‐level expenditure survey data for two cross‐sectional surveys of Chinese households pertaining to food expenditure patterns during 1995 and 2003. Pre‐committed components of commodity demands, that are insensitive to economic variables, are explored. We use the generalized quadratic almost ideal demand system (GQAIDS) for its empirical superiority to the generalized almost ideal demand system (GAIDS), and estimate the associated parameters via full information maximum likelihood procedure (FIML) accounting for endogeneity of total expenditures on food for home consumption (FAH). We also use quality‐adjusted commodity unit values to control for quality differences resulting from commodity aggregation and food choice. Furthermore, we derive GQAIDS elasticity formulas, and estimate income elasticities without restrictions. The results partially support the hypothesis that an average Chinese household has incorporated elements of Western diet (fine grains) into traditional Chinese food diet over time. Moreover, the outcome of a simple test developed here points to possible preference changes for a majority of food staples under study.     

Measuring the relative importance of preferences for country of origin in China, France, Niger, and the United States

Recent labeling policies in developed countries place new focus on origin labeling, especially country of origin labeling, for a variety of food products. It is not clear if this new emphasis on origin is the result of more ethnocentric consumer preferences for food. We measure consumer preferences for country of origin in four different international locations and one domestic control location using a conjoint experiment to test the null hypotheses that consumers do not have stronger own-country preferences. In addition, we compare the relative importance of consumer preferences for origin to their preferences for genetically modified food and pesticide-free production using attribute coefficients from within location ordered probit models. The study was conducted in China, France, Niger, and the United States. We find consumers tend to prefer food from their own location indicating ethnocentric tendencies do play a role in shaping country-of-origin preferences. Country of origin is generally less important to consumers than genetically modified food content and pesticide use in food production.     

Acceptance of genetically modified food: comparing consumer perspectives in the United States and South Korea

This study examines public perceptions of biotechnology, specifically the consumer approval of genetically modified food products, from plant as well as from animal origin, based on data collected from national surveys conducted in both the United States and South Korea. South Korean consumers reported better understanding of food production, science, and technology relative to U.S. consumers. South Korean consumers also recalled having heard more about genetic modification than did U.S. consumers. Findings also suggest that consumers in the United States and South Korea who possessed an accurate knowledge of the applications and outcomes of genetic modification technology were more likely to approve of its use for the creation of foods than those who had inaccurate or no knowledge of the technology. Results also indicate that consumers who considered labeling of genetically modified foods to be necessary are less likely to approve of the genetic modification of foods than those who did not. Consumers in both countries are less approving of genetic modification of animals than the genetic modification of plants. However, U.S. consumers are more approving of using genetic modification technology to create animal‐derived foods than are South Korean consumers.     

Regional obesity determinants in the United States: a model of myopic addictive behavior in food consumption

Obesity is considered one of the largest public health problems in the United States today. The premise for our study is a body of results from medical research showing that sweetened foods, i.e., an increased consumption of sugars, leads first to sugar addiction and second to carbohydrate addiction and increased consumption of fats. The latter feature is actually responsible for the increase in body mass index (BMI), but the trigger that produces cravings for extra calories is sugar and sweeteners. Based on our results, a myopic model of addictive behavior in food consumption seems to capture the food consuming habits and related outbreak of obesity among the American population. Our results indicate that lower current and past real prices of sugar contribute significantly to higher values of BMI, and increase the likelihood of becoming obese in the United States.     

Inter‐ and intra‐seasonal crop acreage response to international food prices and implications of volatility

Understanding how producers make decisions to allot acreage among crops and how decisions about land use are affected by changes in prices and their volatility is fundamental for predicting the supply of staple crops and, hence, assessing the global food supply situation. This study makes estimations of monthly (i.e., seasonal) versus annual global acreage response models for the world's principal staple food crops: wheat, corn, soybeans, and rice. Primary emphasis is given to the magnitude and speed of the allocation process. Estimation of intra‐annual acreage elasticity is crucial for expected food supply and for input demand, especially in the light of the recent short‐term volatility in food prices. The econometric results indicate that global crop acreage responds to crop prices and price risks, input costs as well as a time trend. Depending on respective crop, short‐run elasticities are about 0.05 to 0.40; price volatility tends to reduce acreage for some of the crops; comparison of the annual and the monthly acreage response elasticities suggests that acreage adjusts seasonally around the globe to new information and expectations. Given the seasonality of agriculture, time is of an essence for acreage response. The analysis indicates that acreage allocation is more sensitive to prices in the northern hemisphere spring than in winter and the response varies across months.     

Fighting global food price rises in the developing world: the response of China and its effect on domestic and world markets

This article addresses how China is being affected by and is responding to the world food crisis. So far, Chinese officials have responded to higher world prices by drawing down stocks and limiting exports of major grains. These policy instruments were not available for soybeans, so domestic prices of soy and other oilseeds have risen with international prices. Using a global CGE model, we show that the initial world price rise was largely due to higher world oil prices and demand for biofuels as opposed to other factors, especially in maize and soybeans. China's response to this shock has kept domestic grain prices low relative to world grain markets and to domestic soybean prices. As grain stocks are depleted, however, demand growth will push domestic prices back into alignment. Anticipating this pressure on consumers and accelerating supply response through public investment will facilitate adjustment.     

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.     

Implications of high food prices for poverty in Pakistan

The study estimates the impacts of rising world food prices on poverty in rural and urban areas of Pakistan. Household income and expenditure data for 2004/2005 is used to estimate compensated and uncompensated price and expenditure elasticities using the linear approximation of the almost ideal demand system. Taking the unexpected component of higher domestic food prices in 2007/2008, own and cross price compensated elasticities are used to derive the changes in the quantity consumed, food expenditure and impacts on poverty assuming the food crisis happened in 2004/2005. The results indicate that poverty increased by 34.8%, severely affecting the urban areas where poverty increased by 44.6% as compared to 32.5% in rural areas. The estimates show that 2.3 million people are unable to reach even one‐half of poverty line expenditures while another 13.7 million are just below and 23.9 million are just above the poverty line. In the short run, it is important to ensure food availability to these people. In the long run, the policy environment of subsidizing urban food consumers by keeping wheat prices lower than the international price, needs to be reconsidered to provide the right incentives to increase food availability.     

You get what you pay for: the link between price and food safety in Kenya

The lack of a reliably safe food supply in developing countries imposes both health and economic costs. Food safety is one of several dimensions of food quality that are typically unobservable at the time of purchase. Branding can overcome this information problem by allowing firms to build reputations based on the quality of their products. If a reputation for food safety is valued directly by consumers, or if food safety is correlated with other valued attributes, firms producing safer food should be able to use their brand equity to charge higher prices. In addition, firms with stronger brand equity have stronger incentives to meet food safety standards in order to maintain that equity. Using data from more than 900 maize flour samples representing 23 distinct brands in eastern and central Kenya, we explore the relationship between price and contamination with aflatoxin. Aflatoxin is a fungal toxin common in maize, groundnuts, and other crops around the world. We find a strong negative correlation between price and contamination at the brand level, consistent with the hypothesized positive relationship between brand equity and food quality.     

Optimal farm size in an uncertain land market: the case of Kyrgyz Republic

This article applies a real options model to the problem of land development. Making use of the 1998–2001 Kyrgyz Household Budget Survey, we show that when the hypothesis of decreasing return to scale holds, the relation between the threshold value of revenue per hectare and the amount of land cultivated is positive. In addition, the relation between the threshold and the amount of land owned is positive in the case of continuous supply of land and negative when there is discontinuous supply of land. The direct consequence is that, in the first case, smaller farms will be more willing to rent land and exercise the option where, in the second case, larger farms will exercise first. The results suggest three main conclusions: (i) the combination of uncertainty and irreversibility is an important factor in land development decisions, (ii) farmer behavior is consistent with the continuous profit maximization model, and (iii) farming unit revenue tends to be positively related to farm size, once uncertainty is properly accounted for.     

Higher fuel and food prices: impacts and responses for Mozambique

Rising world prices for fuel and food represent a negative terms‐of‐trade shock for Mozambique. The impacts of these price rises are analyzed using various approaches. Detailed price data show that the world price increases are being transmitted to domestic prices. Short‐run net benefit ratio analysis indicates that urban households and households in the southern region are more vulnerable to food price increases. Rural households, particularly in the North and Center, often benefit from being in a net seller position. Longer‐term analysis using a computable general equilibrium (CGE) model of Mozambique indicates that the fuel price shock dominates rising food prices from both macroeconomic and poverty perspectives. Again, negative impacts are larger in urban areas. The importance of agricultural production response in general and export response in particular is highlighted. Policy analysis reveals difficult trade‐offs between short‐run mitigation and long‐run growth. Improved agricultural productivity has powerful positive impacts, but remains difficult to achieve and may not address the immediate impacts of higher prices.     

Policies for sustainable development in the hillside areas of Honduras: a quantitative livelihoods approach

In this article, we use data for 376 households, 1,066 parcels, and 2,143 plots located in 95 villages in the hillside areas in Honduras to generate information needed by decision makers to assess the needs and opportunities for public investments, and design policies that stimulate natural resource conservation. We develop a quantitative livelihood approach, using factor and cluster analysis to group households based on the use of their main assets. This resulted in seven household categories that pursue similar livelihood strategies. We use a multinomial logit model to show that livelihood strategies are determined by comparative advantages as reflected by a combination of biophysical and socioeconomic variables. While 92% of the rural hillsides population in Honduras lives on US$1.00/capita/day or less, households that follow a livelihood strategy based on basic grain farming are the poorest because they often live in isolated areas with relatively poor agro‐ecological and socioeconomic conditions. Opportunities for off‐farm work tend to be limited in these areas and household strategies that combine on‐farm work with off‐farm work earn higher incomes. Per capita incomes can be increased by improving road infrastructure, widening access to land, policies that reduce household size and dependency ratios, and adoption of sustainable land management technologies that restore soil fertility. We used probit models to show that the latter can be promoted by agricultural extension programs and land redistribution. Investments in physical assets should be directed toward households that pursue livelihood strategies based on off‐farm employment or coffee production, while agricultural training programs are best focused on livestock producers.     

A new market for an old food: the U.S. demand for olive oil

While U.S. consumption of olive oil has tripled over the past two decades, nearly all olive oil continues to be imported. Estimation of a demand system using monthly import data reveals that the income elasticity for virgin oils sourced from EU is above one, but demand for nonvirgin oils is income‐inelastic. The demand for olive oil as a single product is price‐inelastic. Differentiated by product characteristic and origin, olive oils are highly substitutable with each other but not with other vegetable oils. News about the health and culinary benefits of olive oil and the spread of Mediterranean diet contribute significantly to the rising demand.     

Food price increases and net food importing countries: lessons from the recent past

Recent increases in food and other commodity prices have highlighted concerns that many poor countries are net food importers and higher food prices would worsen their trade balances. In this article, we analyze the changes in food trade balances associated with the 32% increase in food prices from 2000/2001 to 2004/2005. We find a small deterioration in food trade balances of low‐income countries and an improvement in middle‐income countries. The deterioration is most severe for countries in conflict and small island states, so attention should be placed first on these countries and on a few very‐low‐income countries that are also vulnerable. Because low‐income countries as a group had much lower agricultural GDP growth rates than middle‐income countries, the answers to food vulnerability in low‐income countries should probably be addressed within the context of incentives for agricultural production.     

Enhancing food security in South Sudan: the role of markets and regional trade

South Sudan faces serious problems of food insecurity due to low levels of domestic food production, periodic droughts, widespread poverty, and since late 2013, renewed armed conflict. This article explores market price behavior using cointegration analysis and estimates the effects of production and trade shocks through multimarket model simulations. We show that market prices in the capital city, Juba, of both maize and sorghum are cointegrated with import parity prices of these cereals sourced from Uganda, consistent with observed trade flows. Model simulations, using econometrically estimated demand parameters, suggest that private sector imports of maize and wheat would greatly mitigate the potential fall in consumption in the case of a decline in domestic cereal production. Other simulations indicate that if total imports of cereals are reduced by one‐third (still more than two times the levels of food aid in 2013) because of disruptions to private market flows, domestic prices of cereals could rise by 45% or more. The article concludes that whatever measures are taken involving national food security reserves, it is crucial that government policy serves to maintain incentives for private sector imports to avoid destabilizing market supplies, domestic prices, and ultimately, food consumption of the poor.     

A trait-based model of the potential demand for a genetically engineered food crop in a developing economy

We predict the potential demand of smallholder farmers for genetically transformed varieties of a food crop, the cooking banana of the East African highlands. Farmer demand for planting material is derived in an agricultural household model that accounts for variety traits and missing markets. The demand for candidate host varieties is predicted using a Zero‐Inflated Poisson (ZIP) regression system. The fitted model is used to illustrate the sensitivity of farmer demand for improved planting material to (a) investments in research and development, represented by the effectiveness of gene insertion and expression, and (b) other public investments in education, extension, and market infrastructure that support diffusion. By comparing the characteristics of agricultural households we demonstrate that the choice of host variety can have social consequences, favoring one rural population compared with another. Clients for transgenic banana planting material are likely to be poorer, subsistence‐oriented farmers in areas greatly affected by biotic constraints. A model of this type might be useful in assessing the investments needed to support the systematic dissemination of improved planting material. The approach can be generalized to other crop biotechnologies for smallholder farming systems, particularly in developing economies.     

Land degradation, drought and food security in a less-favoured area in the Ethiopian highlands: a bio-economic model with market imperfections

This paper presents a bio‐economic model of Andit Tid, a severely degraded crop‐livestock farming system with high population density and good market access in the highlands of Ethiopia. Land degradation, population growth, stagnant technology, and drought threaten food security in the area. Drought or weather risk appears to have increased in recent years. The bio‐economic model is used to analyse the combined effects of land degradation, population growth, market imperfections and increased risk of drought on household production, welfare and food security. We find that the indirect effects of drought on household welfare through the impact on crop and livestock prices are larger than the direct production effects of drought. Provision and adoption of credit for fertiliser, although risky in itself, may lead to increased grain production and improved household welfare and food security. Provision of credit may have a negative effect on conservation incentives but this effect may be mitigated by linking a conservation requirement to the provision of credit for fertiliser.     

Estimating the supply response of cotton and cereal crops in smallholder production systems: recent evidence from Mali

Cotton is one of the most important crops in West Africa and is a major catalyst of economic development in rural areas, but the sector has suffered from a decline in the world cotton price after 1999. This article exploits an unusual data set following 82 farmers over 14 years, from 1994 through 2007, to estimate a Nerlovian supply response model for cotton, maize, sorghum, and millet in long-term rotation. The resulting system of equations is estimated with two-stage least squares (2SLS), showing that this sample of Malian cotton producers have responded to prices in a relatively inelastic manner, with supply elasticities only about one-half of those estimated for producers in developed countries. Policy reforms could help producers respond more easily to prices changes, as well as to raise average productivity levels.