Productivity growth and inter-sector spill-over in Dutch horticulture, 1976–1995

This article calculates nonparametric measures of total factor productivity growth on Dutch horticultural firms in the period 1976–1995. Individual components of total factor productivity growth, i.e., efficiency change and technical change are regressed on socioeconomic factors reflecting the effects of the world oil crises, household and demographic characteristics, location, and investment in physical capital. Also, the article investigates the presence of inter‐sector spill‐overs between groups of firms with different specializations in Dutch horticulture.     

Modeling differentiated quality standards in the agri-food sector: the case of meat trade in the enlarged EU

Quality standards play an increasingly important role in international agri-food trade, and their functioning as nontariff barriers to trade is widely discussed. We argue that food quality standards imposed by importing countries are more than just border measures and can have profound effects on the market structure of the exporting industry, thereby significantly influencing the supply response. We develop a stylized oligopoly model that accounts for compliance costs (fixed and variable) and investigate alternative policy options to explore different mechanisms an importing county may use to enhance the quality of its imports. The model explicitly recognizes the coexistence of complying and noncomplying firms, which is a situation often found in low-income countries where a small modern export-oriented segment invests in meeting foreign quality standards. We use the adjustment of the Polish meat sector to the tight EU food quality standards as an empirical example. The simulations show that a subsidy scheme can promote compliance with standards and can contribute to an upgrade of the industry in the exporting country, but its marginal effectiveness is diminishing.     

Evaluation of drought management in irrigated areas

This paper focuses on the economic consequences of droughts for the irrigation sector. We develop a dynamic‐recursive mathematical programming farm model that assumes imperfect mobility of capital and labour as well as rational expectations about future water availability. The model is calibrated to 12 representative farms belonging to three irrigation communities of the Guadalquivir Basin (south Spain) and used to simulate the 1991–1997 period, which included 3 years of intense drought. Results indicate that the drought imposed significant costs on farmers, but show also that water managers partly exacerbated these costs by allocating excessive amounts of water to irrigators in the abundant years. The model is also used to evaluate the benefits of a perfect water supply forecast and to simulate the economic gains of a voluntary water banking scheme. Results show that the benefits resulting from the perfect forecast of water supply 1 year ahead would represent a relative gain of 5%. However, a voluntary banking system would allow farmers to increase their benefits by 32–82% depending on the supply system.     

Spot water markets and risk in water supply

Water availability patterns in semiarid regions are typically extremely variable. Even in basins with a highly developed infrastructure, users are subject to unreliable water supplies, incurring substantial economic losses during periods of scarcity. More flexible instruments, such as voluntary exchanges of water among users, can help users to reduce risk exposure. This article looks at the effects of spot water markets on the economic risk caused by water availability variations. Our theoretical and empirical risk analyses are based on the random profits of water users. Profit probability density functions are formally and graphically characterized for both water sellers and buyers under several possible market outcomes. We conclude from this analysis that, where water supply is stochastic, water markets unambiguously reduce both parties' risk exposure. The empirical study is conducted on an irrigation district in the Guadalquivir Valley (Southern Spain), where there is a high probability of periods of extreme water scarcity. Water demand functions for the district representative irrigators and a spatial equilibrium model are used to simulate market exchanges and equilibrium. This programming model is combined with statistical simulation techniques. We show that the profit probability distribution of a representative irrigator is modified if water exchanges are authorized, leading to risk reductions. Results also indicate that if the market were extended to several districts and users that are subject to varying hydrological risk exposure, extremely low‐profit events would be less likely to occur. In sum, we show that exchanging water in annual spot markets can reduce farmers' economic vulnerability caused by water supply variability across irrigation seasons. These results support the water policy reform carried out in Spain in 1999 to allow for voluntary water exchanges among right holders.     

Biodiversity Conservation and Productivity in Intensive Agricultural Systems

This paper explores the economic effects of biodiversity loss on marketable agricultural output for intensive agricultural systems, which require an increasing level of artificial capital inputs. A theoretical bio‐economic model is used to derive a hypothesis about the effect of the state of biodiversity on the optimal crop output both in the longer run and in the transitional path towards the steady‐state equilibrium. The hypothesised positive relationship between biodiversity stock and optimal levels of crop output is empirically tested using a stochastic production frontier approach, based on data from a panel of UK specialised cereal farms for the period 1989–2000. The results support the theoretical hypothesis. Increases in biodiversity can lead to a continual outward shift in the output frontier (although at a decreasing rate), controlling for the relevant set of labour and capital inputs. Agricultural transition towards biodiversity conservation may be consistent with an increase in crop output in already biodiversity‐poor modern agricultural landscapes.     

Modeling farmers' decisions on child labor and schooling in the cocoa sector: a multinomial logit analysis in Côte d'Ivoire

Since 2000, children working in the cocoa sector of Côte d'Ivoire have found themselves in the media spotlight. This situation has assumed particular importance because approximately 40% of the world's cocoa production occurs in Côte d'Ivoire. Concerned parties have since taken great interest in this thorny issue. There is a need to better understand the reality of child labor utilization in this sector. This article investigates child labor issues in the cocoa sector of Côte d'Ivoire in conjunction with schooling status of children. The study is based on a survey done in 2002, over a representative sample of more than 11,000 members of cocoa households. The multinomial logit model is used to capture choice probabilities across work and/or school options. The results reveal that child labor in cocoa farms and nonenrollment in schools are significant. Moreover, many children are involved in potentially dangerous and/or harmful tasks. Data also highlight gender and age dimensions in the participation of children in tasks and the way labor is allocated. Econometric results generally indicate that the gender and age of children, whether or not the child is the biological child of the household head, parents' education, the origin of the farmer, household welfare, household size, the household dependency ratio, the size of other perennial crop farms, the number of sharecroppers working with the household head, and communities' characteristics are all pertinent in explaining the child work/schooling outcome in the cocoa sector of Côte d'Ivoire.     

Analysis of a supply-control program under uncertainty and imperfect competition: Chinese cabbage in Taiwan

Researchers have often attributed the farm–wholesale price spread, after adjusting for marketing costs, as compensation for marketing firms' risk bearing. However, price spreads in excess of marketing costs can also be due to marketing firms' exercise of market power. In settings where both imperfect competition and marketer risk aversion are plausible, a modeling framework must be sufficiently general to accommodate both types of behavior. This article develops and estimates such a model in the context of fresh produce marketing and develops the implications for analysis of supply‐control programs. The model is applied to the production and marketing of Chinese cabbage in Taiwan and specifically to the analysis of supply‐control programs implemented in this industry by the Taiwanese government. The empirical results provide little support for the hypothesis that marketing firms exhibit risk averse behavior, but they do show that marketing firms exercise oligopsony power in procurement of the product from farmers, and that this power is positively related to the quantity supplied in each market period. This provides a heretofore unexplored impetus for supply controls intended to raise producer incomes. However, such controls are also rendered less effective by imperfect competition because marketing firms capture part of the benefits from supply reduction.     

How sustainable is participatory watershed development in India?

Watershed conservation is widely recognized as a major strategy for rural development throughout the developing world. In India, the apparent success of participatory approaches to watershed development resulted in a decentralization of project planning, implementation, and management to local communities at the village scale. We explore the effectiveness of this so‐called community‐based approach in achieving sustainable soil and water conservation in four semi‐arid regions in India, and analyze what factors explain project success. We confirm the result of earlier studies that participatory approaches are more effective in establishing soil and water conservation in the short run. However, our main result is that investments in community organization fail to ensure household commitment to maintenance in the longer term. Without better returns to investment in soil and water conservation and without local institutions to coordinate investment in the long run, the sustainability of participatory watershed management is seriously threatened.     

Productivity and Structural Heterogeneity in the Brazilian Manufacturing Sector: Trends and Determinants

Structural heterogeneity (SH)—i.e. the existence of marked asymmetries in labour productivity among firms, along with low-productivity firms forming a large share of total employment—plays an important role in development theory. But only recently has the availability of micro data made the rigorous measuring of SH possible. This paper makes compatible different databases on manufacturing production, innovation and micro-social data for Brazil—PIA, RAIS, Secex and PINTEC—for 2000–2008 in order to measure SH and analyse its determinants. First, productivity groups are formed out of the universe of Brazilian manufacturing firms using a k-mean cluster methodology. Second, the variables affecting the productivity group to which each firm belongs are tested using an ordered probit model. The results indicate that increasing returns (captured by the firm's market share, the number of employees in innovative activities, workers' years of schooling and the accumulation of workers' experience), the technological intensity of the industry, learning by exporting and public support to R&D have driven productivity growth and reproduced SH through time, as predicted by development and evolutionary theories.     

Tenure security, resource poverty, public programs, and household plot-level conservation investments in the highlands of northern Ethiopia

Land degradation poses a serious problem for the livelihoods of rural producers. Furthermore, there is rarely enough private investment taking place to commensurate the scale of the problem. This article examines the role of tenure insecurity, resource poverty, risk and time preferences, and community‐led land conservation on differentiated patterns of household investment in land conservation in northern Ethiopia. We control for biophysical, household characteristics, market access conditions, and village level factors. Investments in soil bunds and stone terraces are specifically studied so as to capture the link between these various factors and the durability of conservation investments. We introduce the distinction between the determinants of the decision to invest and how much to invest in conservation. Regression results show that publicly led conservation programs seem to significantly stimulate private investment. A host of plot‐level variables and household perceptions of returns on conservation investments, expressed in terms of perceived improvements in land quality and increased crop yields, were found to be critical to the decision to invest and intensify soil conservation. The evidence on the significance of households' attitudes toward risk aversion suggests the important role of risk and the household's risk‐bearing capacity in the decision to intensify conservation measures. At the same time, tenure security indicators and households' resource endowments (resource poverty) had weaker effects in increasing willingness to invest and the level of investment made. The policy implications of these results point to the importance of agricultural research and extension efforts that target technologies which reduce household risk and poverty while enabling sustainable investments in conservation measures by individual households.     

Factors determining intercropping by rubber smallholders in Sri Lanka: a logit analysis

Variables related to farmers' awareness and attitudes towards intercropping of immature rubber (Hevea brusiliensis) stands, extension contacts, education level, and experience with farming other crops are positively associated with the probability of adoption. Higher levels of off‐farm income are associated with reduced intercropping in immature rubber stands. Farmers who are sole owners of the land and engaged in full or part‐time rubber farming show lower adoption rates than other land ownership groups. Social participation, family size, experience with farming rubber, immature and mature rubber stands size, and the nature of the land (flat/sloped) do not significantly influence adoption. These conclusions were obtained from a logit model estimated by employing the results of a survey of 588 smallholder rubber farmers from five major rubber‐growing regions in Sri Lanka.     

Determinants of food security in Southern Ethiopia at the household level

In the early 1980s, a paradigm shift occurred in the field of food security, following Amartya Sens (1981) claims that food insecurity is more of a demand concern, affecting the poor's access to food, than a supply concern, affecting availability of food at the national level. Despite the wide acceptance of Sen's thinking, many controversies including the relative importance of supply‐side versus demand‐side variables in causing and solving food insecurity have remained in academic and policy circles. This study develops a recursive household food security model within the framework of consumer demand and production theories following Singh et al. (1986) , and parses out the relative importance of supply‐side versus demand‐side variables in determining household food security in southern Ethiopia. Based on results of a test of full/reduced model and the magnitude of changes in conditional probabilities of food security, we conclude that the supply‐side variables are more powerful determinants of food security than the demand‐side variables.     

Incentives to managers or participation of farmers in China's irrigation systems: which matters most for water savings,farmer income,and poverty?

The overall goal of our article is to better understand which matters for water savings, farmer income and poverty in China's irrigation systems: incentives to managers or participation of farmers. To pursue this goal, the article has three objectives. First, we track the evolution of water management reform, examining the practice of providing incentives to managers, and increasing the participation of farmers. Second, we identify the impact of water management reform on crop water use. Specifically, we want to measure whether or not incentives to managers and farmer participation in water management institutions affect the performance of the irrigation system. Because we also are interested in the potential results of water management reform, the article explores how changes in incentives and farmer participation affect farmer income and poverty. Based on a random sample of 51 villages and 189 farmers in four large irrigation districts in Ningxia and Henan provinces, both in China's Yellow River Basin, our results show that the two major forms of water management reform, water users' associations (WUAs) and contracting, have begun to systematically replace traditional forms of collective management. Our analysis demonstrates, however, that it is not the nominal implementation of the reform that matters, but rather it is the creation of new management institutions that offer water managers monetary incentives that lead to water savings. In contrast to the original design of China's reform policies, participation of farmers has not played a role in saving water. Importantly, given China's concerns about national food production and poverty alleviation, the reductions in water, at least in our sample sites, do not lead to reductions in income and do not increase the incidence of poverty.     

Productivity growth and convergence in crop, ruminant, and nonruminant production: measurement and forecasts

Projections of future productivity growth rates in agriculture are an essential input for a great variety of tasks, ranging from development of an outlook for global commodity markets to the analysis of interactions between land use, deforestation, and ecological diversity. Yet solid projections for these variables have proven elusive—particularly on a global basis. This is due, in no small part, to the difficulty of measuring historical total factor productivity growth. Consequently, most productivity projections are based on partial factor productivity measures that can be quite misleading. The purpose of this work is to provide worldwide forecasts of agricultural productivity growth till the year 2040 based on the latest time series evidence on total factor productivity growth for crops, ruminants, and nonruminant livestock. The results suggest that most regions in the sample are likely to experience larger productivity gains in livestock than in crops. Within livestock, the nonruminant sector is expected to continue to be more dynamic than the ruminant sector. Given the rapid rates of productivity growth observed recently, nonruminant and crop productivity in developing countries may be converging to the productivity levels of developed countries. For ruminants, the results show that productivity levels in developing countries are likely to be diverging from those in developed countries.     

Irrigation water productivity in Cambodian rice systems

Knowledge of the marginal productivity of water is crucial for decisions about its allocation between uses, which is particularly important in the context of increasing competition for water. Using primary, plot‐level panel data, this article estimates the marginal productivity of water from supplementary irrigation in lowland rice systems in Cambodia, taking into account farmer and plot heterogeneity as well as self‐selection of supplementary irrigation. Our estimates indicate a range of elasticities for rice output with respect to water inputs of between 0.057 and 0.069 for wet season production, substantially lower than previous estimates based on either aggregate or trial data. We discuss the policy implications of these results, in particular with respect to the utility of demand management policies and the challenges they pose to the decentralization of water management to Farmer Water Users Groups.     

Productivity,credit, risk,and the demand for weather index insurance in smallholder agriculture in Ethiopia

The article explores the relationship between fertilizer use and the demand for weather index insurance (WII) among smallholder farmers in Ethiopia. We examine whether fertilizer use is profitable under current smallholder production conditions, whether risk‐related factors affect fertilizer use, and we estimate the returns to inputs in the agricultural production function in the absence of insurance. We then study how these primitives of agricultural production functions relate to insurance demand. The study compares a survey‐based estimate of willingness to pay with actual uptake for the weather insurance, finding the stated and actual demand to be almost completely uncorrelated. While those with high marginal returns to inputs say they would purchase insurance, only those with low marginal returns actually do, consistent with the stated purpose of the product as input insurance. Insurance demand proves to be highly responsive to the existence and amount of randomly allocated insurance vouchers.