Supply Management and Productivity Growth in Alberta Dairy

Specification of quota licenses as quasi-fixed inputs in a multi-variate flexible accelerator model of dynamic input adjustment reveals supply management's effect on Alberta dairy investment patterns and, thereby, on total factor productivity growth. Estimates of a dynamic dual model of Alberta dairy, using panel data from 1975–91, show that strong complementarity between cattle and quota licenses results in short-run cattle adjustments that are opposite in direction from the long-run adjustments. A model of total factor productivity growth under dynamic input adjustment shows that the distortions to cattle investment caused by investing in quota licenses adversely affects productivity growth. As a result, there is likely to be a significant understatement of single-period estimates of the cost of supply management in the dairy sector.     

Investment decisions in hog finishing: an application of the real options approach

In this paper, option-pricing theory is applied to an investment problem in hog production. A stochastic simulation model capable of pricing American-type options is developed. This is achieved by recursive calculation of the exercise frontier. The model is used to determine the investment trigger and the disinvestment trigger for a pig-fattening barn under German market conditions. It turns out that the investment trigger, taking into account the value of waiting in an uncertain environment, can be considerably higher compared to classical investment criteria such as the net present value. This offers an explanation as to why farmers are indeed reluctant to invest in hog production. Another finding is the sensitivity of the option prices with respect to the stochastic process that is assumed for revenues and variable costs of the production activity.     

On the nature and magnitude of cost economies in hog production

In this article, we assess the impact of farm size on production cost and evaluate the marginal costs and margins by considering that input prices may change with the scale of production. By using French hog farm data, we estimate a system of equations including a feed price function, input demand functions, and an output supply function based on a technology approximated by a combined generalized Leontief‐Quadratic form. Our results suggest that the marginal costs are over‐estimated when the adjustment of the feed unit prices to a change in farm size is not controlled for. More specifically, the cost economies for large farms (enjoying the highest profits) arise primarily from lower feed prices, with technological scale economies having little impact. In contrast, farms with no hired labor exhibit technological scale economies and reach higher price‐cost margins compared to larger farms.     

Pigs in Space: Modeling the Spatial Structure of Hog Production in Traditional and Nontraditional Production Regions

We posit a spatially explicit, county-level model of the hog production sector and estimate how numerous firm-specific, locality-specific, and spatial agglomeration factors affect the location, movement, and intensity of hog production within 15 key hog production states. Spatial agglomeration, urban encroachment, input availability, firm productivity, local economy, slaughter access, and regulatory stringency variables affect the sample regions' spatial organization. Analyses suggest that western states in the sample may shape hog production levels by wielding traditional business recruitment and retention tools (e.g., tax rates, environmental stringency) while Corn Belt states may shape hog production via nontraditional tools (e.g., land use controls).     

Estimation of Area Elasticities from a Standard Profit Function

This article demonstrates that both crop area and output elasticities can be calculated from a profit function. A Chambers/Just profit function (which includes land allocations as quasi-fixed factors) is used to derive shadow price equations for each crop area allocation. Jointly solving these shadow price equations for crop area makes it possible to calculate individual crop area elasticities. A profit function is specified to represent agricultural producers in the state of Iowa. Shadow price equations are jointly estimated with output supply and input demand equations. From these estimated equations, we derive the individual crop area response and output response to a change in prices.     

Testing for Dynamic Misspecification of Input Demand Functions: An Application to Canadian Agriculture

Previous applications of the inter-temporal quadratic adjustment cost model in agriculture have failed to consider information gained from pre-testing in choosing an appropriate specification for dynamic demand of quasi-fixed inputs. A test strategy is outlined taking account of this information in order to consistently estimate adjustment cost and discount rate parameters. Canadian agricultural data are used in the empirical analysis. Test results suggest that the intertemporal quadratic adjustment cost model is inappropriate for modeling dynamic demand for land, labor and machinery.     

Investment Under Uncertainty and Dynamic Adjustment in the Finnish Pork Industry

A stochastic dual model of investment under uncertainty is used to investigate structural adjustment in the Finnish hog industry. Value function restrictions are found to be comparable to those in existing dual models assuming deterministic state variables. The model also allows for an asymmetry in investment response during capital expansion and contraction phases. Empirical results show that investments respond negatively to increased uncertainty and that labor adjusts more slowly during contraction phases than during expansions. Results on economies of size, uncertainty effects, and adjustment rigidities have important implications for hog industry response to Finland's entry into the EU.     

Regional Impacts of a U.S. Hog Slaughter Plant Closing: The Thorn Apple Valley Case

As the 1998 U.S. hog market collapse unfolded, Thorn Apple Valley ceased hog slaughter operations at its Detroit, Michigan plant. We examine the impacts on Michigan live hog prices relative to Eastern Corn Belt hog prices. Results indicate that Michigan producers' relative price advantage diminished after the closure as procurement competition changed. As the impacts of the 1998 hog market collapse were absorbed, Michigan producers' relative price advantage became consistently negative. Examination of Michigan's market hog production distribution indicates postclosure shifts away from production in areas geographically near to Thorn Apple Valley and growth in counties geographically closer to alternative packers.     

中国生猪产业国际竞争力评价研究基于贸易与产业发展视角的比较分析

目的 中国是世界上最大的生猪生产国和消费国,科学评价中国生猪产业国际竞争力水平,对于提高生猪产业国际竞争力水平,促进生猪产业可持续发展,具有重要的理论和现实意义。方法 文章基于产业发展视角构建了包含资源禀赋竞争力、生产竞争力、消费竞争力和贸易竞争力4个一级指标及13个相关二级指标的生猪产业国际综合竞争力评价指标体系,利用1995—2018年生猪产业相关数据,对中国、美国、德国、巴西、西班牙、俄罗斯等生产、消费和贸易大国生猪产业国际综合竞争力进行评价,并与传统的基于贸易视角的竞争力评价结果进行对比分析。结果 研究发现,基于贸易视角与产业发展视角的测算结果存在一定差距。基于贸易视角的测算结果显示,中国生猪产业缺乏竞争力,且竞争力仍在持续减弱。基于产业发展视角的测算结果显示,中国生猪产业具有一定竞争优势。其中,中国猪肉消费竞争力极强,显著拉升了中国生猪产业国际综合竞争力水平;生产竞争力和资源禀赋竞争力也具有一定优势;贸易竞争力处于劣势地位,明显拉低了中国生猪产业国际综合竞争力水平。结论 建议中国生猪产业充分发挥巨大的内需优势,提升生猪产业国际竞争水平,实现生猪产业高质量发展。进一步提高中国生猪种业创新能力,保障优良种猪供给;提高生猪生产技术效率与经济效率,提升生猪养殖场组织化、标准化、规模化水平;稳定生猪生产饲料供给;建立生猪产业风险防范机制。     

U.S. Hog Production and the Influence of State Water Quality Regulation

The U.S. hog industry is experiencing an increase in both the average size and in the geographical concentration of feeding operations. These increases have caused public attention to focus on the environmental consequences of hog production and on the regulations imposed to limit these consequences. This study examines the influence of state water quality regulatory stringency on hog production in the United States. The results of this analysis provide evidence that environmental compliance costs are significant for small hog feeding operations, while production on large operations does not appear to be influenced by the level of state environmental regulatory stringency.
On assiste présentement à une augmentation de la taille des exploitations et à une concentration géographique des établissements d'engraissement dans le secteur américain de l'élevage porcin. Ces changements ont amené la population à s'intéresser aux répercussions de la production porcine sur l'environnement et aux réglements adoptés en vue d'atténuer de telles répercussions. L'auteur détermine de quelle maniére la sévérité des réglements d'État sur la qualité de l'eau influe sur l'élevage des pores aux États-Unis. Les résultats de son analyse prouvent que le respect des règlements sur la protection de l'environnement engendre des coûts appréciables pour les petits éleveurs, alors que les exploitations de plus grande envergure ne sont pas aussi affectées par la rigueur de la réglementation d'État en matiére d'environnement.     

O‐Ring production on U.S. hog farms: joint choices of farm size,technology, and compensation

We hypothesize that hog production can be characterized by complementarities between new technologies, worker skills, and farms size. Such production processes are consistent with Kremer's O‐ring production theory in which a single mistake in any one of several complementary tasks in a firm's production process can lead to catastrophic failure of the product's value. In hog production, mistakes that introduce disease or pathogens into the production facility can cause a total loss of the herd. Consistent with predictions derived from the O‐ring theory, we provide evidence that the most skilled workers concentrate in the largest and most technologically advanced farms and are paid more than comparable workers on smaller farms. These findings suggest that worker skills, new technologies, and farm size are complements in production. The complementarities create returns to scale to large hog confinements, consistent with the dramatic increase in market share of very large farms over the past 20 years.     

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.     

Risk Preferences of Dairy and Hog Producer in Quebec

The objective of this study is to investigate the nature of risk preferences of Quebec dairy and hog producers. The direct elicitation of utility method is employed to determine producers'degree of risk aversion. The Delphi process is used to obtain more refined and realistic responses. The results reveal that the risk preferences of the randomly selected Quebec farmers are highly diverse. The percentage of risk-taking farmers ranges from 8% to 23% depending upon the level of investment and the nature of the enterprise. On average, the majority of farmers in both groups are found to be risk averse. Based on the differences between the means as well as distributions, although not significant in all cases, hog producers are found to be consistently more risk averse than dairy producers. Moreover, the gap between the two groups widens as the level of investment increases. The implications of this result are that the stability of farm income due to supply management in dairy sector may facilitate investments of a given risk (for example, adoption of a new technology) more so than it would in the hog sector.     

Impacts of prices and transactions costs on input usage in a liberalizing economy: evidence from Tanzanian coffee growers

Despite improvements in production incentives, agricultural output in Africa remained sluggish through the 1990s. Low use of purchased inputs may be part of the cause of persistently low productivity in African agriculture. This article analyzes the roles of relative prices and transactions costs in explaining low use of chemical inputs among Tanzanian coffee growers. A sample selection model indicates that output prices exert great influence on input purchases and that both fixed and variable transactions costs affect input use decisions. Travel costs in input and output markets have distinct effects on input usage, implying distinct avenues for interventions to promote more intensive use of agricultural inputs.     

A Cost Function Approach to Dynamic Duality: An Application to the US Cigarette Manufacturing Industry

The dynamic duality econometric approach with the case of multiple outputs is applied to the US cigarette manufacturing industry to test for the presence of adjustment costs and quasifixed inputs with regard to stocks of capital and tobacco. Capital and tobacco stocks are found to be quasi-fixed inputs and the empirical results indicate that there are significant adjustment costs associated with adjusting these inputs. Short- and long-run own- and cross-price elasticities of factor demands are estimated for domestic and imported tobaccoes, materials, tobacco stocks, and capital. Output demand elasticities are also estimated. The two outputs, cigarettes produced for export and for the US market, are examined for equality of marginal costs. No evidence of differences in marginal costs was found. There is evidence that government restrictions on advertising have negative effects on output demand.     

Empirical investigation of investment behaviour in Australia's pastoral region*

Optimal intertemporal investment behaviour of Australian pastoralists is modelled using panel data for the period 1979–1993. Results indicate that quasi‐fixity of inputs of labour, capital, sheep numbers and cattle numbers is characteristic of production in the pastoral region. It takes about two years for labour, four years for capital and a little over two years for both sheep numbers and cattle numbers to adjust towards long‐run optimal levels. Results also indicate that, after accounting for adjustment costs, own‐price product supply and input demand responses are inelastic in both the short and long run.     

Soil quality and fertilizer use rates among smallholder farmers in western Kenya

Studies of fertilizer use in sub-Saharan Africa have been dominated by analyses of economic and market factors having to do with infrastructure, institutions, and incentives that prevent or foster increased fertilizer demand, largely ignoring how soil fertility status conditions farmer demand for fertilizer. We apply a switching regression model to data from 260 farm households in western Kenya in order to allow for the possibility of discontinuities in fertilizer demand based on a soil carbon content (SCC) threshold. We find that the usual factors reflecting liquidity and quasi-fixed inputs are important on high-SCC plots but not on those with poorer soils. External inputs become less effective on soils with low SCC, hence the discernible shift in behaviors across soil quality regimes. For many farmers, improved fertilizer market conditions alone may be insufficient to stimulate increased fertilizer use without complementary improvements in the biophysical conditions that affect conditional factor demand.     

Technological Change and Economies of Scale in U.S. Poultry Processing

This article uses a unique data set provided by the Census Bureau and a translog cost function to empirically examine technological change in the U.S. poultry industry. Results reveal substantial scale economies that show no evidence of diminishing with plant size and that are much greater than those realized in cattle and hog slaughter. Findings suggest that consolidation is likely to continue, particularly if demand growth diminishes, and that controlling for plant product mix is critical to accurate cost estimates.     

Large agricultural investments in Kenya’s Nanyuki Area: Inventory and analysis of business models

Many experts agree that more agricultural investment is needed in the global South to improve local food security and reduce poverty. However, there is a lack of consensus about the types of investment needed to achieve these goals. This paper contributes to the literature on large agricultural investments and corresponding business models by inventorying and analysing such investments in Kenya’s Nanyuki area. We identify four clusters of business models that differ primarily by type of production and other distinct determinants, namely: demand from markets; access to land; land tenure regime and colonial history; actors involved; biophysical context; labour availability; and governance of the value chain via private standards. The study results shed light on the factors that help or hinder implementation of large agricultural investments and shape their impacts in the context of African land use systems. The way land is accessed represents one of the most-decisive factors determining the risks and opportunities associated with such projects. We find that most investments in the Nanyuki area occur on land bought or leased from private owners.