FOOD,TECHNOLOGY AND EMPLOYMENT: THE FARM-LEVEL POST-HARVEST SYSTEM IN DEVELOPING COUNTRIES

The prevention of food loss in the farm-level post-harvest system has become an objective of food policy in many developing countries. This objective is founded on the allegations that food losses are high, that technology is available to prevent or reduce these losses and that, as a consequence, hungry people will be less hungry. This paper first reviews the development of this policy objective. It then goes on to argue that this formulation of post-harvest policy is inaccurate and frequently misleading. Evidence on the levels of food loss under traditional practices, and on the costs and benefits of technical change, show that at farm level cost reduction is the chief influence on technological choice; from a social perspective, employment and hence income distribution considerations are often the decisive factor in evaluating new techniques.     

Piloting a systematic framework for public investment in regional natural resource management: Dryland salinity in Australia

The Salinity Investment Framework (SIF3) is designed to help environmental managers make better policy decisions about protecting key assets under threat of dryland salinity, a major degradation problem in Australia. This study reports results from applying SIF3 in partnership with two regional organizations (in the states of Victoria and Western Australia) with contrasting institutional powers and structures. We also engaged relevant policy makers with a view to influencing national policy. Available knowledge, science, and data were used to develop region-specific recommendations for public investment in salinity management. SIF3 proved easy to apply, requiring minimal changes from its original version. Establishing trust and credibility with stakeholders was extremely important. More time was required to be spent on communicating what SIF3 was and what it would mean for stakeholders than in applying it in the catchments. In both regions, recommendations included making a clear distinction between localized assets (such as a particular wetland) and dispersed assets (such as agricultural land as a whole); more targeted investment in spatially identified localized assets; using a broader range of policy tools; basing recommendations on the levels of public and private net benefits; anticipating the adoptability of sustainable land-management practices; and formally integrating relevant scientific, economic and social information with community values. The differences between current action and recommendations were significant in both regions, particularly in Victoria. As a result of our work both regions have decided to implementing a similar asset-based approach covering various environmental threats in addition to dryland salinity. The research indicates that it is feasible to use decision frameworks such as SIF3 to improve the rigour of decision making by community-based environmental management organizations. A broader range of policy tools are needed for dryland salinity, with less reliance on extension and small grants, and more emphasis on intervention around key assets and investment in technology development. We have influenced policy makers to some extent at state level and nationally through discussion of SIF3 in a national inquiry, preparation of a policy paper for peak multi-government policy committees, briefings and provision of advice on policy design. Despite this, achieving significant policy change at the state and national levels remains difficult for a number of reasons. Governments give limited signals to environmental managers to achieve environmental outcomes, being more concerned with community participation objectives and political considerations. We hope for significant policy change with increased scrutiny about sound decision making and public accountability.     

Evaluating combined land conservation benefits from perennial pasture: lucerne (Medicago sativa L.) for management of dryland salinity and herbicide resistance in Western Australia*

The inclusion of perennial pasture phases in cropping rotations has been widely promoted throughout Australia for reducing the incidence of dryland salinity. To a lesser extent, they have also been promoted to enhance the management of herbicide‐resistant weeds. No previous economic analysis of perennial pasture has considered both of these benefits. This study combines a dynamic linear programming model to estimate the magnitude of salinity‐related benefits and a complex simulation model to assess the economics of herbicide‐resistance management. We present a case study of the perennial pasture lucerne (Medicago sativa L.) in the Wheatbelt of Western Australia, where the weed annual ryegrass (Lolium rigidum Gaudin) is resistant to multiple herbicide groups. Sequences incorporating lucerne are the most profitable land use at the standard set of parameter values if (i) annual ryegrass is resistant to all selective herbicides, (ii) the water table is so shallow (approximately < 3.5 m deep) that frequent rotation with perennials is required to avert soil salinisation, (iii) sheep production is highly profitable, or (iv) there is a combination of less extreme cases. The value of perennial pasture is sufficient under these circumstances to overcome its high establishment cost and the displacement of multiple years of crop. Consideration of dryland salinity and herbicide resistance are about equally important in evaluating the economics of lucerne; neither should be neglected.     

Farm-Level Modeling for Bigger Issues

The purpose of this paper is to discuss how farm-level modelers can best extend their research to address issues broader than just farm income. The paper describes how trade-off curves are a valuable tool for summarizing the missing information to policy makers on economic problems related to sustainability issues and agriculture. We outline steps an economic researcher could follow in developing an integrated farm-level model that successfully links changes in environmental quality with agricultural practices so that the relevant trade-offs for policy analysis can be quantified.     

Carbon offsets and agriculture: Options,obstacles, and opinions

While carbon offsets in agriculture can play a role in addressing climate change, they are not a perfect substitute for direct emission reductions. As shown in this paper through various arguments and case studies, climate policies in Canada have avoided the use of offsets to be sold in carbon markets, preferring instead to incentivize adoption of best management practices (BMPs) that provide environmental benefits along with climate mitigation benefits. We argue that this is a preferred policy option due to the perils and pitfalls inherent in the measurement and monitoring required to identify offset credits. While an appropriate approach might be to penalize Canadian farmers for any emissions their activities cause, this may do more harm than good. Canadian agricultural production is highly efficient and technologically advanced; therefore, reductions in Canada's contribution to the global food supply will result in less-efficient production occurring elsewhere (i.e., leakage) that increases global greenhouse gas emissions.     

Forest management plan as a policy instrument: Carrot, stick or sermon?

Technical aspects of forest management planning as decision-support have been addressed in numerous scientific studies. However, forest management plans (FMPs) also play a significant, but largely neglected, role as forest policy instruments. We have examined the policy context and planning practices in two contrasting case countries, revealing striking differences in policy instrumentation. In Sweden, FMPs mainly serve for informational steering, with under-utilised potential for providing individualised advice. In Lithuania, the plans are primarily regulatory, serving for effective control but with several deficiencies, notably excessive costs and institutionalised corruption. The study demonstrates that policy analyses can be fruitfully grounded in the empirics of planning practices.     

Rural Development Programmes and Transaction Effects: Reflections on Maltese and English Experience

New institutional economics, and transaction effects in particular, are highly relevant to public policy performance. The evolution of EU rural development policy has generated both increasing complexity and increased transaction costs. However, this policy evolution also creates opportunities for improvement of policy process management. The paper considers these opportunities in the case of Rural Development Programmes (RDPs) under Pillar 2 of the CAP. We examine the influence of transaction effects on RDP performance, based on direct experience of RDP review and planning in England and Malta, where qualitative evidence of ‘transaction benefits’ is identified. Benefits occur when exchange processes are designed in ways that generate positive returns beyond the immediate transaction, which can outweigh short‐term costs. We conclude that more attention to these aspects of policy design is warranted in future rural development programming and evaluation.     

Farmers’ intrinsic motivations,barriers to the adoption of conservation practices and effectiveness of policy instruments: Empirical evidence from northern Australia

The rate and extent of adoption of conservation practices by farmers is influenced, in principle, by characteristics of the practices and those of the farmers. Governments use policy instruments to increase the rate of adoption of practices which generate public benefits if it is deemed that privately optimal adoption rates will not lead to publicly optimal conservation outcomes. Recent nation-wide conservation programs in Australia have attracted criticism for low levels of effectiveness and efficiency. Could it be that program design has ignored key adoption factors, in particular characteristics of the target audience? If adoption is subject to personal factors, such as the motivations for farming, then it is likely that so are farmers’ responses to policy approaches and instruments. In this case study, surveys were conducted of farmers in three regions within the tropical savannas of northern Australia, where land-use systems are characterized by large-scale broad-acre beef grazing enterprises. Inter alia, these surveys collected data on graziers’ motivations, impediments to adoption of conservation practices, and perceived effectiveness of policy instruments in overcoming impediments. The research found that graziers had a very high level of conservation and lifestyle motivation and were motivated to lesser extents by financial/economic and social considerations, pointing to a strong stewardship ethic of graziers, or altruistic motif. Motivational profiles were significantly correlated with farmers’ perceptions about what constrained them from implementing conservation based management systems. Motivational profiles also explained differences in farmers’ perceptions of and stated propensity to interact with policy instruments, particularly at a regional scale and in the context of historical government interventions. On the basis of the empirical evidence presented, governments would be well advised to harness the diverse set of aspirations and motivations of farmers when designing conservation programs rather than. In particular, conservation programs need to take advantage of farmers’ stewardship ethic for maximum effectiveness and efficiency, and minimize the risk of crowding out intrinsic motivation and altruistic behaviours.     

Farmer perspectives of the on-farm and off-farm pros and cons of planted multifunctional riparian margins

The planting of riparian margins is a policy option for pastoral farmers in response to land use induced environmental issues such as declining water quality, stream bank erosion, and loss of aquatic and terrestrial habitat. We elicited the views and experiences as to pros and cons of planting riparian margins from two sets of dairy farmers from Taranaki, New Zealand: those who are or have planted riparian margins, and those who have not yet done so. Those farmers who have planted riparian margins identified 21 positive aspects of riparian margin plantings and 11 negative aspects of riparian margin plantings. Perceived benefits identified by this group include water quality, increased biodiversity, the provision of cultural ecosystem services, immediate direct benefits to farm management and the farm system, and in some instances increased productivity on-farm. In contrast, those farmers that had fenced but not planted their riparian margins did not consider that riparian margin plantings could add further benefits to that which could be achieved by excluding stock from waterways, and associated only negative perceptions with riparian margin plantings. Planting riparian margins is not cost neutral and will not deliver anticipated environmental benefits in every situation. However, we argue that riparian margin plantings are an important ecological infrastructure investment that needs to be captured within a wider policy framework, the benefits of which extend beyond the mitigation of a single negative externality generated by land use practices, such as nutrient loss, and contribute to a multifunctional landscape.     

A Selective Review of the Economic Analysis of Animal Health Management

Economists and veterinarians use similar approaches to analyse animal health threats, but veterinarians are concerned primarily with providing practical guidelines to peers and/or policy‐makers, while economists focus more on understanding the benefits to society as a whole and often provide only general guidelines to policy‐makers and little specific direction to practicing veterinarians. Despite the benefits of working together, differences in perspective and analytical approach often cause economists and veterinarians to struggle in dialogue and to lose some of the mutual gains that could be achieved through collaboration. This article discusses the use of economics in animal health management, identifies several useful literature reviews, and analyses a number of recent studies to explore the advantages and disadvantages of different conceptual and methodological approaches.     

A note on synthetic data for replication purposes in agricultural economics

Empirical studies in agricultural economics usually involve policy implications. In many cases, such studies rely on proprietary or confidential data that cannot be published along with the article, challenging the replicability and credibility of the results. To overcome this problem, the use of synthetic data—that is, data that do not contain a single unit of the original data—has been proposed. In this note, we illustrate the utility of synthetic data generation methods for replication purposes using a range of methods from agricultural production analysis. More specifically, we compare input elasticities and technical efficiency scores based on different farm-level production data between original data and synthetic data. We generate synthetic data using a non-parametric method of classification and regression trees (CART) and parametric linear regressions. We find synthetic data result in elasticities and technical efficiency distributions that are very similar to the original data, especially when generated with CART, and conclude with implications for the research community.     

Cooperative membership and adoption of green pest control practices: Insights from rice farmers

Reducing the use of chemical pesticide while preserving crop yield is a practical strategy that makes agricultural production economically, socially and environmentally sustainable. Although the adoption of green pest control practices can help achieve such a goal, its adoption rate remains quite low. This study explores whether membership in agricultural cooperatives improves smallholder farmers' adoption of green pest control practices, utilising farm-level data surveyed from rice farmers in China. To enrich our understanding, we also investigate how the adoption of green pest control practices mediates the effects of cooperative membership on chemical pesticide expenditures. An endogenous switching probit model and a bootstrap-based mediation method are employed to achieve these goals. The empirical results show that cooperative membership significantly increases the probability of adopting physical pest control practices (e.g. pest-killing lamps or sticky plate traps) and biological pest control practices (e.g. biopesticides) by 6% and 19%, respectively. Cooperative membership significantly reduces chemical pesticide expenditures through its mediation effect on improving the probability of adopting biological pest control practices. There is also a complementary relationship between physical and biological pest control practices in pest management of rice production. The adoption of physical pest control practices significantly increases rice yield, while the adoption of biological pest control practices does not.     

Data, Information, and Rural Environmental Policy: What Will the Next Ten Years Bring?

The next ten years will see an acceleration of three current trends: (1) the growing use of geographical information systems, (2) increasingly detailed farm-level record keeping, tracking the location and timing of fertilizer, pesticide, and water use, and (3) increased reporting requirements for farm-level chemical use. Combined, these changes will reduce the costs of monitoring and regulating farmer behavior. Yet, they may also allow information to substitute for both inputs and for regulation. Improved linkage of agronomic, economic, and environmental data can help ago-environmental subsidy programs achieve greater environmental benefits at lower budgetary cost and can help in the design of more flexible, less costly environmental regulations.     

Adoption of erosion management practices in New Zealand

Soil erosion is a serious environmental threat to New Zealand’s agricultural sector. Economic costs of soil erosion are significant and the costs of adopting mitigation and management practices, given the targets set by environmetal policy, do not spread uniformly across space, economic activities and types of erosion processes. Management practices have been widely employed by farmers and promoted by several policy programs. Practices are not mutually exclusive and could be jointly adopted by comparing productivity gains against costs of implementation. However, research on the identification of the drivers of adoption is scarce in New Zealand. To identify the determinants of adoption of management practices in New Zealand farms, we combine novel survey information with data on climate and erosion in a multivariate probit framework. This framework allows identification of potential complementarity or substitution between management practices. We find significant and heterogeneous effects from erosion levels, temperature, wind velocity and primary land uses on the adoption of any of the practices. In addition, we also find significant complementarities between management practices. The results of this study are important because the complementarities relate to external effects of erosion mitigation which can help to promote public acceptability of mitigation policies.     

Testing the Empirical Relationship between Best Management Practice Adoption and Farm Profitability

Several "best management practices" (BMPs) aimed at reducing movement of nutrients, pesticides, and sediment into surface water resources have been developed and promoted by Extension and other agencies over the past several years. This study utilizes actual farm-level economic and BMP adoption data to rigorously analyze the relationship between BMP use and farm profitability. Results indicate that adoption of nutrient BMPs has a significant positive effect on net farm income (NFI) for wheat and corn, while herbicide BMP adoption, particularly use of BMPs related to the application of atrazine on corn, has a small (but statistically significant) negative impact on income. Adoption of soil conservation BMPs is not shown to have a statistically significant impact on farm income.     

The effects of EU agricultural policy changes on farmers' risk attitudes

This analysis utilises a model of production under risk estimatedon Finnish farm-level data to measure farmers' risk attitudesin a changing policy environment. We find evidence of heterogeneousrisk preferences among farmers, as well as notable changes overtime in farmers' degree of risk aversion. This result is dueto the increase in the non-random part of farm income generatedby the policy change after Finland's European Union accession.The analysis confirms the assertion that agricultural policiesthat are decoupled from production do affect input use and cropmix through their effect on farmers' risk attitudes.     

Economic Risk and Water Quality Protection in Agriculture

Producers' and consumers' risk perceptions and preferences can affect perceived costs and benefits of agricultural water quality protection. Many studies find that integrated pest management actually reduces economic risks to farmers. Results from crop rotation and conservation tillage studies are mixed, while nutrient management studies indicate a potential for higher risk compared with conventional practices. Uncertainty about pollution damages to water resources is likely also to increase the perceived benefits of a given quantity of water quality protection practices. Public policies to reduce uncertainty about the costs and benefits of water quality protection practices may produce net social benefits.     

Plot-level technical efficiency accounting for farm-level effects: Evidence from Chilean wine grape producers

This paper applies alternative panel data models to a cross-sectional dataset that contains observations at the plot level for a sample of wine-grape farms in Central Chile. The input–output data as well as key attributes of the production system are at the plot level, at which individualized management exists. However, plots belonging to a particular farm are also subject to overall centralized (farm-level) management. Thus, this data configuration offers the possibility of analyzing technical efficiency (TE) both across plots and across farms. A Generalized True Random Effects model, which permits the separate identification of farm-level and plot-level inefficiency while controlling for unobserved farm-level heterogeneity, shows that TE varies across farms but not among plots within the same farm. Geographical location also affects grape production and agro-climatic conditions influence production levels, with grape farms located on cooler zones producing significantly less than their counterparts in warmer zones, as expected. The analysis underscores the value of using recent methodologies typically applied to panel data when cross-sectional information is available for individual plots within a farm unit or in similar settings.     

Review - Roger A. Sedjo (2003): Economics of Forestry

Ashgate Publishing Limited, Gower House, Croft Road, Aldershot, Hants GU11 3HR, England (www.ashgate.com). 498 p. £ 100.00. ISBN 0-7546-2237-1 (hardback).Being one volume in the series of the International Library of Environmental Economics and Policy (T. Tietenberg and W. Morrison, gen. eds.), this book is a collection of some of the most significant journal essays in forest economics and forest policy. In compiling this volume, Roger Sedjo did a great service to the forest economics profession.This volume includes twenty-five essays originally published between 1849 and 1996 in a dozen journals, and one chapter from the Third Assessment Report of the International Panel on Climate Change (IPCC, 2001) which addresses the biological sequestration of carbon in terrestrial ecosystems. These are organized into four parts: the harvest rotation issue, timber supply, multiple-use and non-timber outputs, and global issues. An introduction essay to this volume, written by the editor, provides an overview of the major issues in forest resource management and discusses some the most important contributions to the forest economics literature.The eleven essays in the first part of the book provide a rather complete coverage of the most important contributions to the literature on optimal rotation age, which is a fundamental issue in forest management and forestry investment. Four of the essays (Faustmann 1849, Ohlin 1921, Bentley and Teeguarden 1965, and Samuelson 1976) address the basic formulation and interpretation of the optimal rotation model. Four essays (Löfgren 1985, Newman, Gilbert and Hyde 1985, Reed 1984, and Brazee and Mendelsohn 1988) extend the basic rotation model to examine the rotation age decision in the presence of deterministic trends and uncertainty in timber yield and price, respectively. Based on the Faustamnn rotation model, Klemperer (1976) and Chang (1982) examine the impacts of taxation on forest value and on the optimal rotation age. Koskela (1989) provides a detailed analysis of the impacts of taxation on timber harvest decisions under price uncertainty. What I feel missing in this part is a comparative statics analysis examining the impacts of changing economic parameters on the optimal rotation age.Part II includes five essays on economic analysis of long-run timber supply. Clawson (1979) reviews the historical development of forest resource and forest utilization in the United States. Vaux (1973) examines the long-run potential supply of timber from forest plantations in California. Berck (1979) investigates the difference in harvesting behavior between private forest owners and public managers. Lyon (1981) and Lyon and Sedjo (1983) examine the optimal exploitation of old-growth natural forests and the transition to steady state. While these essays all focus on the long-run timber supply in the United States, the methods developed and used in these papers could be applied for any other region. The exploitation of old-growth natural forests and the long-term availability of timber have been without doubt two major concerns in the United States. In many parts of the world, however, concerns about timber supply in the short-run have also had great influences on the development of forest policy. It would have been appreciated if a couple of essays addressing the short-run supply of timber had been included.Part III contains three essays dealing with the problem of multiple-use forest management. Gregory (1955) develops an economic framework for multiple-use management based joint production theory. Hartman (1976) examines the multiple-use rotation age decision. Swallow, Parks and Wear (1990) investigate the problem of non-convexities involved in multiple-use rotation age decisions. The merits of these essays lie in that they use rather simple models to demonstrate the importance of incorporating non-timber benefits in forestry decisions and the complexities of the multiple-use problem. In his 1976 essay, Hartman points out that in many situations management practices applied to one stand affect the value of non-timber outputs derived from the adjacent stands; such interdependence needs to be incorporated into multiple-use decision analysis. I certainly would like to find in this volume one or two essays examining the impacts of stand interdependence on the optimal decision. Another important issue in multiple-use management, which is not covered in this volume either, is the valuation of non-market priced outputs and services. Yet I believe that this omission is well motivated, for there are two separate volumes in this series devoted to non-market valuation methods (R. T. Carson, ed. Direct Environmental Valuation Methods, Volumes I and II).The seven essays in Part IV deal with a set of forest economic and policy issues related to global warming and biodiversity conservation. Parks and Hardie (1995) examine the cost-effective subsidies to convert marginal agricultural land to forests for the purpose of carbon sequestration. Hoen and Solberg (1993) analyze the potential and cost-effectiveness of increasing carbon sequestration in existing forests by changing forestry practices. van Kooten, Binkley and Delcourt (1995) examine the effect of carbon taxes and subsidies on the optimal rotation age. The chapter from the Third Assessment Report of IPCC (2001) provides a comprehensive review of the literature on the ecological, environmental, social and economic aspects of carbon sequestration in terrestrial ecosystems. While forests and forest management could play an important role in mitigating climate change, increasing level of atmospheric dioxide and climate change would inevitably affect the productivity of forest ecosystems, thereby could have significant impacts on future timber growth, harvest and inventory as well as carbon storage in forest ecosystems. Joyce et al. (1995) present a framework for analyzing the potential effects of climate change on the forest sector. The remaining two essays in this part examine the costs and benefits of biodiversity preservation, respectively. Montgomery, Brown and Adams (1994) estimate the marginal cost of preserving the northern spotted owl. Simpson, Sedjo and Reid (1996) examine the expected value of the marginal species as an input to pharmaceuticals.The editor points out in the introduction chapter that there are many other important contributions that are not included in this volume, some of these are mentioned, others not. In addition to the few omissions noted earlier, several important economic and policy issues such as uneven-aged stand management, deforestation, international trade, sustainable forestry, forest recreation, wildlife management and so on are not discussed. Moreover, none of the journal essays published since 1997 is selected. That there are many other important contributions does not mean the essays included in this volume are less important, however. While each forest economist may present a different list of the most important papers, most (if not all) of the essays in this volume would appear on anyone's list. I strongly recommend this book for research scientists and graduate students of forest economics as an essential addition to their reference library.     

PROBLEMS OF CHANGE IN AUSTRALIAN AGRICULTURAL ECONOMICS

There has been a low level of methodological controversy within the Australian agricultural economics profession. Johnson's 1963 paper is the most significant and in it he passed criticisms on agricultural production economists not unlike those currently being made by political economists of economics in general. These past criticisms have in the main been ignored by the Australian profession but it is suggested that they are now being pushed with renewed vigour and they can no longer be ignored. It is argued that our policy work has by and large been successful and effective except for significant areas where our methodology was of restricted usefulness. In farm management the Johnsonian strictures would seem to apply but a more charitable interpretation is provided which should meet the approval of the political economists. Our almost complete neglect of development economics must soon draw to an end and we will find that the methodologies which we have relied on heavily and fairly successfully must be augmented as we become more involved in this field. The political economics challenge should be recognized and accepted with relish because the nature of our work is changing and will continue to change in the future. We have adapted fairly well as adjustment and equity have become major policy concerns. Meeting the political economics challenge will help this process of adaptation.