Marketing Co‐operatives: An Incomplete Contracting Perspective

Marketing co‐operatives (MCs) are analysed from an incomplete contracting perspective. The requirement of the domination of control by the members of an MC is a threat to the survival of an MC in markets where the level of asset specificity at the processing stage of production is increasing. However, an MC may remain an efficient governance structure when the increasing level of asset specificity is compensated for by a sufficient increase in the extent of product differentiation.     

Why do transaction costs of agricultural policies vary?

Policy related transaction costs (TCs) is an important issue when evaluating different policy options. However, TCs are often not taken into account in policy evaluations, but may be as important for efficiency as the direct production costs. Different policies may result in different TCs, and the main aim of this article is to explore possible reasons for these differences. We compare the level of TCs for 12 different agricultural policy measures in Norway, and we analyze the causes of the differences along three different dimensions: asset specificity, frequency, and point of policy application. At the national level we find that all three dimensions are of importance when explaining the differences, while variation in TCs incurred by farmers are mainly due to differences in point of policy application and asset specificity. Data show that direct price support has the lowest TCs, while more direct payments for environmental amenities has the highest.     

Agrarian reform and cooperation between settlers in the Midwest of Brazil: An institutional approach

Cooperation is an important factor in improving the efficiency of agrarian reform, but hardly occurs, which is a serious problem in Brazil. This research tries to explain why cooperation is so difficult in Brazilian settlements. It focuses on the Midwest of Brazil, a region with a high concentration of land, located in the main region for production of commodities. Research combines a New Institutional approach with aspects from the economic sociology. The model developed in the paper is original and highlights factors responsible for cooperation. Research differentiates institutional arrangements according to asset specificity and sunk costs. Beside associations for representation with public authorities, where cooperation is easier, cooperative arrangements need specific investments from the settlers, who require warranties before participating. Institutions serve as warranties for adopted governances. In the case of cooperation in Brazilian settlements, these warranties should come from informal institutions, which can be a problem in some communities. Leadership of a producer can also have an important role in hierarchical networks.     

Ownership Structure in Agrifood Chains: The Marketing Cooperative

Globalization, technological developments, and consumer concerns press farmers and food producers to enhance product innovation and to seek more efficient production and distribution structures. These changes in agrifood markets shift the relative importance of the investments by different chain partners. It may therefore be necessary to change the allocation of ownership of essential assets to induce agents to make those investments that generate the chain optimum. This article analyzes the impact of ownership structure on investments in a three-tier supply chain from an incomplete contracting perspective. Circumstances are determined in which a marketing cooperative is the unique first-best ownership structure.     

Oligopsony Power, Asset Specificity, and Hold-Up: Evidence from the Broiler Industry

In this article we look for empirical evidence of hold-up in broiler industry production contracts by using the cross-sectional national survey of broiler growers. First, we focus on the problem of under-investment and hypothesize that the degree of agent's (grower's) under-investment systematically depends on the principal's (integrator's) market power and the level of asset specificity. Second, we provide an indirect test of hold-up by looking at the grower contract payoffs as a function of the frequency of the housing facilities upgrade requests and the principal's market power. The results show moderate empirical support for the presence of hold-up.     

Regional Shifts in Pork Production: Implications for Competition and Food Safety

U.S. pork production and processing is consolidating in larger, more economically efficient units, and shifting from the Midwest into the Southeast. A regional model of farm supply and processing demand shows that smaller Midwest operations can survive only if processing capacity remains concentrated in that region. Salmonella incidence is higher in the Southeast and on larger farms. Restricting salmonella incidence in hogs delivered for processing to the minimum feasible level would increase total industry costs by 3%, due to increased production and delivery costs. It would also increase the comparative advantage of farms and processing firms in the Midwest.     

Impact of de-coupling agricultural support on dairy investment and milk production volume in Finland

This study analyses the impacts of de-coupling of agricultural support from production in Finland. A dynamic agricultural sector model, which includes 17 production regions and endogenous investments and technical change, is used in the analysis. Investment in different production techniques is dependent on the relative profitability and the spread of each technique in the population of heterogeneous farms. There are relatively few large farms which use efficient production techniques in Finland. De-coupling weakens the incentive for investment in dairy production and causes a temporary but significant slow down in dairy investments and technical change. Consequently, de-coupling is likely to result in a significant drop in milk and beef production in the next 10-20 year period if no corrective measures are taken in agricultural policy in less-favoured areas such as Finland. However, a slow recovery of investment and output levels are expected in the long run.     

Assessing the Financial Performance of Forestry-Related Investment Vehicles: Capital Asset Pricing Model vs. Arbitrage Pricing Theory

Capital asset pricing model (CAPM) and arbitrage pricing theory (APT) are used to assess the financial performance of eight forestry-related investment vehicles. Although results from APT support previous findings from CAPM about timberland investments, three bodies of evidence show that APT findings are more robust. The major conclusions are (a) institutional timberland investments and timberland limited partnerships have a low risk level and excess returns; (b) forestry industry companies have not earned risk-adjusted returns, and the performance of medium forest industry firms is worse than that of large firms; (c) stumpage price does not resemble the return generation process of timberland investments; and (d) lumber futures have little excess return.     

Migration and technical efficiency in cereal production: evidence from Burkina Faso

This article uses a double bootstrap procedure and survey data from Burkina Faso in a two‐stage estimation to explore ways in which continental and intercontinental migration determine efficiency in cereal production of rural households. Findings suggest that continental migration has a positive relation and intercontinental migration no relation with technical efficiency. For continental migrant households, migration has removed surplus male labor, a cause for inefficiency in production. Intercontinental migration leads to a gender imbalance in the household, which cannot be compensated for by investments in farm equipment. The failure of intercontinental migration to transform cereal production from traditional to modern is attributed to an imperfect market environment.     

Water conveyance,return flows and technology choice

This paper develops a spatial conjunctive use model of an irrigation project in which the regulatory agency determines investments in the centralized distribution system and farmers decide the level of on-farm technology in the field. Irrigation return flows are assumed to recharge the groundwater aquifer. It is shown that there is specialization in production with upstream farmers using surface water and downstream farmers pumping from the aquifer. An empirical model suggests that the proportion of return flows has a significant effect on the level of investments in water distribution as well as in the field. For example, if return flows are relatively high, it may be optimal to allow for significant water losses from the canal and the fields. It suggests that the project pricing and technology adoption policies may need to be tempered by consideration of the basinwide impacts of water diversions.     

价值链视角下福建省渔业经济效率与影响因素对比

目的 文章以福建省为研究区域，选取渔业价值链中最具代表性的“生产—加工”两阶段，对比分析经济效率及影响因素。方法 从价值链视角构建渔业“生产—加工”两阶段投入产出系统，讨论选定指标，基于SBM-Tobit模型测度效率和影响因素。结果 （1）福建省渔业“生产—加工”两阶段效率均较低，生产阶段效率远高于加工阶段效率。（2）福建省渔业生产阶段效率呈现“大分散、小集聚”的分布特征，沿海和西北地区较高，闽西南地区较低；加工业主要分布在沿海地区，效率普遍较低。（3）工业化和城镇化对渔业生产阶段效率主要起负作用，消费水平、渔业经济规模、集约化和捕捞强度对生产和加工阶段效率均起正作用，沿海和内陆地区的影响机理存在一定差异。结论 福建省渔业“生产—加工”两阶段效率均具有较大的提升空间，需重点提升加工阶段效率，以拉动渔业价值链整体效率提升。     

Restructuring of traditional farms and new land relations in Ukraine

This paper reports the results of a 1993/1994 survey of 2500 farm managers, farm employees, and private farmers in Ukraine, highlighting changes at the farm level in response to programs of land reform and farm restructuring. As of early 1994, Ukrainian reform had moved to the first stage, which involves privatization of much of the agricultural land and creation of shareholding farms. Over 60% of agricultural land in Ukraine has been transferred from state to collective ownership; among the collective and state farms surveyed, nearly 75% have reorganized and most of them have allocated land and asset shares to members. The number of independent private farmers in Ukraine exceeds 30 000, but with an average farm size of 20 ha they cultivate less than 2% of farmland. Reform at the farm level in Ukraine has thus begun, but at present is at a very early stage.     

Impacts of climate change on lower Murray irrigation*

This article evaluates irrigated agriculture sector response and resultant economic impacts of climate change for a part of the Murray Darling Basin in Australia. A water balance model is used to predict reduced basin inflows for mild, moderate and severe climate change scenarios involving 1, 2 and 4°C warming, and predict 13, 38 and 63% reduced inflows. Impact on irrigated agricultural production and profitability are estimated with a mathematical programming model using a two‐stage approach that simultaneously estimates short and long‐run adjustments. The model accounts for a range of adaptive responses including: deficit irrigation, temporarily following of some areas, permanently reducing the irrigated area and changing the mix of crops. The results suggest that relatively low cost adaptation strategies are available for a moderate reduction in water availability and thus costs of such a reduction are likely to be relatively small. In more severe climate change scenarios greater costs are estimated. Adaptations predicted include a reduction in total area irrigated and investments in efficient irrigation. A shift away from perennial to annual crops is also predicted as the latter can be managed more profitably when water allocations in some years are very low.     

Cost-effective nitrogen leaching reduction as influenced by linkages between farm-level decisions

This article focuses on how the linkages between various farm‐level decisions affect the choice of measures to reduce nitrogen leaching from crop production. A mathematical programming model is developed. The model considers not only management decisions that affect nitrogen leaching directly, but also other decision variables such as scheduling of field operations and machinery investments. A simplified analysis that ignores the latter management decisions, and the linkages between the various decisions, may result in abatement policies that are not cost‐effective because the policies will have other effects than expected. As an example, the empirical results show that subsidies to catch crops and spring ploughing may contribute to increased nitrogen load, quite contrary to the purpose of these subsidies. Further, it is noted that the characteristics of the production system make it costly to change land use, tillage practices, or fertilizer use drastically. Instead, cost‐effective nitrogen abatement includes a mix of various adjustments of farm‐level production practices. The EU set‐aside payment appears to reduce abatement costs.     

Determinants and impact of sustainable land management (SLM) investments: A systems evaluation in the Blue Nile Basin,Ethiopia

Ongoing debate over water management along the Blue Nile and land degradation in Ethiopia emphasizes the need for efficiency gains in agricultural production through sustainable land management (SLM). However, previous SLM studies overlook the tradeoffs involved in maintaining SLM investments over time. We address this limitation by combining a household survey that evaluates the economic impacts of SLM investments and maintenance, with a hydrological model that explores location‐specific infrastructure effects. We then use a multi‐market model to evaluate the impacts of alternative SLM investments on agricultural production, prices, and incomes over time. Analysis suggests SLM investments must be maintained for at least seven years to show significant increases in value of production, and that terraces on moderate and steep slopes are most effective in increasing agricultural yields. However, the benefits of terracing do not outweigh the cost of foregone off‐farm labor opportunities, nor compensate for lower agricultural prices from increased supply. Thus, SLM investments must be paired with other input and infrastructure investments, as well as subsidies for initial labor costs, in order to incentivize adoption and long‐term SLM maintenance.     

Financiers in the forests on Vancouver Island,British Columbia: On fixes and colonial enclosures

Starting in the mid 2000s, a financial asset management company and institutional investors began to invest in timberlands in British Columbia, Canada's most western province. In a period of political economic crisis, investors looked to real assets—“dirt and trees” in the words of one research participant—as a means of accumulating capital through securing access to huge parcels of the most productive and valuable forestland in North America. This article analyses these investments as a socioecological fix for finance capital suggesting that investments in land represent a means for capital and the state to negotiate moments of crisis. The article complicates existing accounts of fixes by demonstrating how the survival of capital in a settler context is fully dependent on an ongoing settler‐colonial project of separating Indigenous people from their land base. The article focuses on the explicitly “private” nature of the land under examination and how this is central to the strategies of investors, the state's deregulation of forest policies, and the marginalization of First Nations' claims to land. The article demonstrates that in settler contexts, discussions of fixes need to be much more attentive to the historic and enduring colonial threads woven through investments in land.     

Reallocating sugar beet contracts: can sugar production survive in Denmark?

The reform of the EU sugar regime involves significant pricereductions for sugar and sugar beet. We examine whether theDanish sugar industry can maintain production and profit levelsby reallocating production from less to more efficient farmers.The impact of alternative reallocation mechanisms is estimatedusing a DEA model of sugar beet production, together with informationabout processing capacity at the three Danish plants, beet transportationcosts and alternative crop options. The analysis shows thatthe present allocation is far from efficient. With the new reformfully implemented and the quota efficiently reallocated, actualproduction will fall by only 25 per cent, although profit willbe substantially lower.     

Eco‐efficiency of high‐yielding variety rice cultivation after accounting for on‐farm environmental damage as an undesirable output: an empirical analysis from Bangladesh

This study computes the eco‐efficiency of high‐yielding variety (HYV) rice production by including an on‐farm environmental damage index (OFEDI) as an undesirable output using data envelopment analysis. It then identifies its determinants by applying an interval regression procedure on a sample of 317 farmers from north‐western Bangladesh. Results reveal that the mean level of the OFEDI‐adjusted production efficiency (i.e. eco‐efficiency) is 89 per cent, whereas ignoring OFEDI adjustment (i.e. with OFEDI = 0) reduces the mean level of efficiency to 69 per cent, implying that the production of undesirable output or on‐farm environmental damage induces an efficiency loss of 20 per cent with significant differences across regions. The proportion of farmers’ income from HYV rice agriculture, land ownership, extension services and socio‐environmental living standard are the significant determinants of improving eco‐efficiency. Policy implications include investments in extension services and land reform measures to increase land ownership, which will synergistically improve eco‐efficiency of HYV rice production in Bangladesh.     

Farm‐specific Adjustment Costs in Dutch Pig Farming

This paper develops a dynamic model of investment under rational expectations, assuming farm‐specific production technologies and adjustment cost structures. The model distinguishes regimes of negative, zero and positive investments and maintains that it is optimal for a farmer not to invest for a range of shadow prices, depending on thresholds for positive and negative investments. The model is applied to a rotating sample of Dutch pig farms over the period 1980–1996. Farm‐specific parameters of the adjustment cost function and production technology are obtained using Generalised Maximum Entropy estimation. Cluster analysis using the farm‐specific adjustment cost parameters indicates that five groups of farms with distinct adjustment cost structures can be identified. A tobit regression analysis is used to explain the impact of different socio‐economic factors on the size of the threshold between positive and negative investments.     

Effects of Non‐Farm Employment on Rural Income Inequality in Developing Countries: An Investment Perspective

This paper makes several points based on a review of household survey evidence from Africa, Asia and Latin America. (i) In contrast to conventional wisdom, the evidence is very mixed as to the effect of non‐farm employment on rural income inequality. The non‐farm employment and microenterprise programmes now in vogue will not necessarily resolve rural income inequality problems and attendant social tensions nor automatically benefit the poor. (ii) Policymakers should be worried by substantial evidence of poor people's inability to overcome important entry barriers to many non‐farm activities. (iii) The main determinants of unequal access to non‐farm activities are the distribution of capacity to make investments in non‐farm assets and the relative scarcity of low capital entry barrier activities. Therefore, it is crucial for public investments and policy to favour an increase in the access of the poor to assets that allow them to overcome non‐farm employment entry barriers, (iv) It would be an error to assume that one can address asset‐poverty and inequality in the non‐farm sector without addressing farm‐side problems and vice versa.