Commodity Prices and Unit Root Tests

Price theory suggests that commodity prices should be stationary series. Yet, tests for unit roots rather frequently imply that these prices are not stationary. This seeming inconsistency is investigated by applying alternative specifications of unit root tests to prices of corn, soybeans, barrows and gilts, and milk. The preponderance of evidence suggests that nominal prices do not have unit roots, but the results are sensitive to the specification of the test equation. Accounting for a structural change that shifts the mean appears to be an important issue in unit root tests.     

The Commodity Terms of Trade, Unit Roots, and Nonlinear Alternatives: A Smooth Transition Approach

This article extends the recent literature on the Prebisch–Singer hypothesis of a long-run decline in the relative prices of primary commodities. Our main innovation is testing for and estimating nonlinear alternatives to a secular deterioration. Specifically, we use bootstrap procedures to test the linear unit root model against models belonging to the family of smooth transition autoregressions (STARs) for twenty-four commodities, 1900–2003. In nineteen cases we reject the linear null at usual significance levels. In sixteen cases we are able to successfully fit STAR-type models. Simulation results show there is little support for the Prebisch–Singer hypothesis.     

Tracing the Effects of Agricultural Commodity Prices and Food Costs

We estimate a system of product and input-demand equations for food-processing industries to trace the links among farm commodity prices, food-processing costs, and food prices. Disembodied technical change, which likely reflects increasing consumer demand for convenience and product variety, has sharply reduced agricultural materials demand relative to most other food-processing inputs. This implies weakening impacts of farm price shocks on food prices. But improving quality and falling relative prices for agricultural inputs, in combination with increasing factor substitution, has counteracted these forces to encourage greater usage of agricultural inputs in food processing, and limit these trends.     

Innovation and Competitiveness: Trends in Unit Prices in Global Trade

This paper seeks to build on theory, to develop new methods for understanding the nature and basis of sectoral and national competitive advantage, and to do so with a temporal perspective. Neo-Schumpeterian and evolutionary economics perspectives (which place innovation at the forefront of accumulation) highlight the importance of economic rents, barriers to entry and core competencies. There is no one measure that adequately reflects these barriers to entry, and much of the research has been concerned to generate proxies, each of which is in itself partial, but which together provide a comprehensive picture. During the late 1970s, preliminary work was undertaken on the unit price of UK trade as an indicator of relative technological competence. However, this approach has largely been neglected since then, receiving only sporadic attention in US literature, and at high levels of product aggregation. This paper utilizes this approach to try and reflect the dynamic process of shifting competitive advantage in the global economy. Its distinctive feature is the level of detail—six-digit trade classifications—and its breadth of coverage, being applied to seven sets of sectoral classifications involving more than 12 000 product groups. The data set relates to EU imports of manufactured goods between 1988 and 2001. It concludes that there is a strong correlation between unit price performance and innovation intensity, and provides data to show that low-income economies tend to be located in low-innovation niches in sectoral groupings. This has important implications for the conventional wisdom that high incomes will result from a specialization in manufactures.     

Long‐Run Drift,Co‐Movement and Persistence in Real Wheat and Maize Prices

Trends in real prices for food commodities are both important and controversial. Paying particular attention to issues of methodology, this paper assesses the evidence for a downward drift in the real prices of wheat and maize. It is found that the apparent strength of that evidence depends substantially on whether the time series generating models are taken to be trend‐stationary or difference‐stationary, and on whether allowance is made, through incorporation of dummy variables in the models, for events in one or two extreme years. Once dummy variables are incorporated, we find little evidence against difference‐stationarity. The analysis then proceeds, through tests for cointegration, to the construction of error‐correction models linking the two prices and to the estimation of persistence of shocks in this bivariate framework. The paper presents modest evidence for downward drift in real grain prices of about 1 to 1.5 per cent per annum, shows that wheat and maize prices cointegrate and estimates that direct and cross‐persistence measures take values of less than unity.     

U.S. Farm Policy and the Volatility of Commodity Prices and Farm Revenues

A dynamic three-commodity rational-expectations storage model is used to compare the impact of the Federal Agricultural Improvement and Reform (FAIR) Act of 1996 with a free-market policy, and with pre-FAIR policies. Results suggest that FAIR did not lead to significant increases in long-run price volatility or revenue volatility. The main impact of pre-FAIR, relative to the free-market regime, was to substitute government storage for private storage in a way that did little to support prices or to stabilize farm incomes. Results also indicate that U.S. grain market volatility in 1995–2000 was due to fundamental market forces and not to FAIR.     

World Commodity Prices and Domestic Retail Food Price Inflation: Some Insights from the UK

We focus on two aspects of the links between world commodity prices and retail food price inflation: first, the effects of exchange rates and other input costs, and second; the effects of the duration of shocks on world commodity markets, not just the magnitude of price spikes (the latter often commanding most attention). The UK offers a natural and rather unexplored setting for the analysis. Applying time series methods to a sample of 259 monthly observations over the 1990(9)–2012(3) period we find substantial and significant long‐term partial elasticities for domestic food price inflation with respect to world food commodity prices, the exchange rate and oil prices (the latter indirectly via a relationship with world food commodity prices). Domestic demand pressures and food chain costs are found to be less substantial and significant over our data period. Interactions between the main driving variables in the system tend to moderate rather than exacerbate these partial effects. Furthermore, the persistence of shocks to these variables markedly affects their effects on domestic food prices.     

High Commodity Prices and the EU's Single Payment Scheme: Some Consequences of Double‐Dipping

When negotiating agricultural policies, decisions are generally based on historical net farm income figures, which are derived from the then current price and production data. In 2003, when the Single Payment Scheme (SPS) was introduced in the EU, agricultural commodity prices were “low.” As a result the SPS is very generous when viewed in light of today's “high” agricultural commodities prices: farmers are double‐dipping. We provide an empirical assessment of the implications for compensatory payments under the SPS in combination with high commodity prices for two major EU crops: wheat and barley. Yearly compensatory payments for these two crops alone exceed $10 billion. The lesson of this result for agricultural policy reform is that the payments under the SPS should have been made more flexible and tied to future (farm gate) prices, i.e., so payouts would usually vary with changing market conditions, while still being decoupled from production decisions. Au moment de négocier des politiques agricoles, les décisions sont généralement fondées sur les données historiques sur le revenu agricole net, lesquelles sont dérivées des prix et des données de production d'alors. En 2003, année où l'UE a mis en place le régime de paiement unique (RPU), les prix des produits agricoles étaient ≪faibles≫. Actuellement, le RPU est très généreux en raison des prix ≪élevés≫ des produits agricoles: les producteurs cumulent les avantages. Nous présentons une estimation empirique des répercussions sur les paiements compensatoires du RPU combinées aux prix élevés des produits de base pour deux grandes cultures de l'UE, à savoir le blé et l'orge. Pour ces deux cultures seulement, les paiements compensatoires annuels dépassent les dix milliards de dollars. La leçon est que les paiements versés dans le cadre du RPU auraient dûêtre plus souples et liés aux prix (à la ferme) futurs, de sorte que les versements varieraient généralement en fonction des conditions changeantes du marché tout en demeurant indépendants de la production.     

Agro-Manufactured Export Prices, Wages and Unemployment

This article estimates the impacts of world agricultural trade liberalization on wages and unemployment in Argentina in the presence of individual labor supply responses and adjustment costs in labor demand. After a 10% increase in agro-manufactured export prices, I find that: ( a ) the employment probability would increase by 1.36 percentage points, matched by a decline in the unemployment probability of 0.75 percentage points and an increase in labor market participation of 0.61 percentage points; ( b ) the unemployment rate would decline by 1.23 percentage points; ( c ) expected wages would increase by 10.3%, mostly due to higher employment probabilities.     

Food Aid, Food Prices, and Producer Disincentives in Ethiopia

Although the short-term aims of food aid are well conceived, strong concerns have been voiced regarding the long-term impacts of such aid on incentives for agricultural producers in recipient countries. This article examines the statistical link between food aid shipments and food prices in Ethiopia over the period 1996–2006. Monthly data from three markets and three commodities are used to estimate a system of seemingly unrelated regression models for food prices. Results indicate that previous year food aid shipments reduce prices in all producer and consumer markets. These effects, however, appear to be limited to the set of internationally traded commodities that are domestically marketed. A recursive regression procedure is used to identify the food aid threshold at which a negative aid effect emerges. Food aid shipments that constitute less than 10% of domestic production appear to be benign, but shipments above this level show signs of being disruptive to local markets. We use a simple policy simulation to argue that production-sensitive targeting, e.g., conditioning food aid on local food production, would help to circumvent disincentive effects.     

Prices,institutions, and determinants of supply in the Malian cotton sector

Cotton, both a source of livelihood for millions of poor rural households and a major source of export revenues, is a vital commodity for the economic and social development of Mali. Inefficiencies in the Malian cotton system at the ginnery and producers’ cooperative levels (e.g., late payment to farmers and poorly functioning credit schemes) have recently led to an important decline in supply, threatening the sustainability of the sector. Using regional data from 1998/1999 to 2008/2009, this study aims to quantitatively assess the contribution of key determinants, such as cotton prices and timely payment, toward the downward trend in cotton area. A dynamic supply model, based on adaptive expectations and partial adjustment, is employed to estimate the effects of prices and institutional factors, such as credit recovery rates and date of payment to farmers, on the Malian cotton supply. Results show that supply responds significantly to cotton prices relative to cereal and fertilizer prices. Date of payment varies across agricultural cycles and late payment negatively influences land devoted to cotton. Low credit repayment rates create disincentives to grow cotton. Therefore, the revitalization of the Malian cotton sector depends upon getting both prices and institutions right.     

Fat taxes and thin subsidies: Prices, diet, and health outcomes

“Fat taxes” have been proposed as a way of addressing food-related health concerns. In this paper, we investigate the possible effects of “thin subsidies”, consumption subsidies for healthier foods. Empirical simulations, based on data from the Continuing Study of Food Intake by Individuals, are used to calculate the potential health benefits of subsidies on certain classes of fruits and vegetables in the United States. Estimates of the cost per statistical life saved through such subsidies compare favorably with existing U.S. government programs.     

粮食、食品价格和CPI的VAR实证研究

综述了目前国内关于粮食价格、食品价格对CPI的影响机制的研究.选取2001年7月至2012年12月的月度数据,通过VAR进行了粮食冲击效应分析,采用Johansen检验进行了三者因果的验证,合理解释了食品价格和粮食价格、CPI三者之间的影响关系.结论：在研究的时间段中,粮食价格和食品价格的增长都会引起物价水平的增长;物价水平的上涨也会影响到粮食价格.但是,物价水平对食品价格、粮食价格对食品价格的变化却影响不明显.     

Agricultural Commodity Prices: Perspectives and PoliciesLandwirtschaftliche Rohstoffpreise: Perspektiven und PolitikenLes prix des produits de base agricoles : perspectives et politiques

Agricultural Commodity Prices: Perspectives and Policies World prices of wheat, coarse grains, rice and oilseed crops nearly doubled between 2005 and 2007 and continued to rise into 2008, although some of them later started to fall back. The price increases have been a significant factor driving up the price of food to consumers and the cost of feed for cereal-based livestock producers. They have drawn heightened attention to problems of food security and hunger, especially for poorer food consumers in developing countries. A major question is whether these price increases reflect a fundamental change in global food markets and an end to the long-term downward trend in falling real prices of agricultural commodities. Understanding the causes of the recent price increases in the context of long-term trends is vital in order to identify the appropriate policy responses by governments. This article, based on the latest OECD-FAO Agricultural Outlook, 2008–2017, focuses on the factors behind the price increases, the medium-term perspectives, and the appropriate policy responses. Rising food prices is an issue of a truly global nature. A calm, objective response is needed now from individual governments and from international organisations in order to ensure an effective and a coherent global response, and to avoid making a difficult situation worse.     

Potatoes,Petty Commodity Producers and Livelihoods: Contract farming and agrarian change in Maharashtra,India

This paper explores the implications of contract farming for patterns of agrarian change in India. The paper draws on a detailed analysis of primary qualitative data from a case study of potato contract farming in the state of Maharashtra. It argues that debates on contract farming are often ideological in nature, leading to overly simplified narratives of “win–win” or “win–lose.” Instead, by combining the strengths of agrarian political economy and rural livelihood analysis, the paper offers a concrete exploration of the intersections between contract farming, livelihoods, and agrarian change. It finds that contract farming activities in the case study villages are focused on a group of petty commodity producers. However, rather than sparking dynamic new processes of accumulation among contract farmers or leading to new forms of exploitation, the paper argues that contract farming is contributing to processes of agrarian change “already under way.” These processes are intimately connected to livelihood diversification and the struggles of new classes of fragmented labour.     

Prose, Psychopaths and Persistence: Personal Perspectives on Publishing

The process of attempting to publish a paper in a refereed journal can be rather stressful. This paper presents a number of personal reflections on the publishing process, with the aim of helping aspiring journal authors to appreciate the nature of the challenge, and some of the requisites for success. The challenges in dealing with referees include the element of luck involved in securing sympathetic referees, the poor quality of the reports prepared by some referees, and the slowness of the review and editorial process. A number of examples from my experiences in agricultural economics journals are presented. These reveal that one of the most important characteristics that a journal author needs is persistence.
Publier un article dans un périodique scientifique s'avère parfois une tâche éprouvante. L'auteur nous fait part de ses réflexions sur le monde de l'édition, le but étant d'aider les auteurs en herbe à apprécier la nature du défi et de comprendre certaines conditions préalables au succès. Trailer avec un comité de lecture anonyme suppose une certaine intervention du hasard. En effet, il faut non seulement dénicher des lecteurs bienveillants mais aussi composer avec la piètre qualité de certains comptes rendus et la lenteur du processus de lecture et de correction. Suivent maints exemples tirés de périodiques d'économie agricole. Ces exemples révèlent qu'une des principales qualités des auteurs d'articles pour périodique scientifique est la ténacité.