What do Agricultural Income and Productivity Measurements Really Mean?

Statistical data on labour productivity and income in agriculture reveal large discrepancies between various EC member states, both with respect to their absolute levels and in relation to non-farm productivity and income in the respective countries. Insofar as they appear to reflect the failure of markets in allocating agricultural resources efficiently, and seem to be inconsistent with conventional wisdom concerning structural adjustment of agriculture, however, it can be seen that those data are misleading to a large extent. Based on a simple model of optimal time allocation between farm and non-farm activities of members of farm households, it is demonstrated that farm labour productivity and income must be different according to differences in the relation of farm to non-farm labour supply. The implications concerning international, interregional, intersectoral and intertemporal comparisons of income and productivity are discussed as well as the relevance of market failure in agriculture.     

Effect of changes in population density and crop productivity on farm households in Malawi

This study examines the ex‐ante farm‐household effects of changes in family size, yield potential, and yield gaps using a farm‐household simulation model that reflects the economic and biophysical conditions of central Malawi. Disparities between growth in human population and crop yields present challenges for farm‐household crop production and income in sub‐Saharan Africa. We focus on the effect of growth in yield potential and a more efficient use of livestock manure as approaches to improving crop production and incomes in the face of looming population pressures. Our results suggest that, even without considering climate change, expected changes in population density and crop prices in 2050 mean that per person crop production and income may fall by 21% compared to 2013 values if yield potential and yield gaps remain constant. However, per person crop production and income could increase in 2050 by 8% compared to 2013 values if (1) growth rates of yield potential rise for maize by 1.13% each year and for legumes rise by at least 0.4% each year, and (2) farmers use livestock manure more efficiently. Our foresight approach to considering crop production at the farm‐household scale supplements macro‐scale analyses of the production dimension of food security.     

Input Substitution,Productivity Performance and Farm Size

This paper develops a theoretical model to examine the relationship between the input elasticity of (technical) substitution and both farm total factor productivity and size. In the presence of ongoing technical change and its factor bias, the ‘income effect’ arising from farms' cost minimising behaviour enables them to increase productivity by saving inputs or, through the dual equivalent, enlarging farm size. As such, farms with higher elasticities of substitution tend to grow larger and become more productive, which provides a new mechanism through which farm heterogeneity in productivity growth can be examined. Empirical evidence from Australian broadacre agriculture supports this theory and points to important policy implications.     

Analysing Farm‐specific Payments for Norway using the Agrispace Model

Norway maintains a complex system of activity or type specific coupled payments which account for a large share of farm income. Most of the payment rates are negatively related to farm size and are higher in remote areas compared to central regions. We present and use a newly developed recursive‐dynamic multi‐commodity model (Agrispace) with CES production functions depicting regional farm clusters derived from the full farm population. Using this model, we simulate impacts of current and alternative subsidy policies on production, prices, input use, income and farm structural change. Mapping cluster results to each farm along with behavioural rules allows estimation of individual profits and farm exits. Our results indicate that, in the short run, the current policy regime seems to support the policy objective of maintaining a variety of farms in all parts of Norway. In the long run, farm structural change is less affected by a policy reform that leaves total support levels unchanged.     

Examining the relationship between farm size and productive efficiency: a Bayesian directional distance function approach

Achieving sustainable food security and increased farm income will depend on how efficient production systems are in converting available inputs to produce outputs. Using data from Malawi, we estimate a Bayesian directional technology distance function to examine the relationship between farm size and technical efficiency. Our results support the existence of an inverse relationship between farm size and productive efficiency, where small farms are more efficient than large farms. On average, farms exhibit inefficiency levels of 60%, suggesting that productivity could be improved substantially. Improving productive efficiency and food security will require farms to operate in ways where the size of cultivated area is matched by nonland production inputs such as labor, fertilizer, and improved seeds. The results highlight the need for policies that could incentivize farmers to adopt productivity‐enhancing technologies and, where possible, to allocate excess land to lease markets.     

Nonfarm employment,agricultural intensification,and productivity change: empirical findings from Uganda

This article uses panel data from the Living Standards Measurement Study‐Integrated Surveys on Agriculture for Uganda to assess the farm‐level effects of nonfarm employment on agricultural intensification and productivity change. A sample selection model is used to account for both unobserved heterogeneity and potential simultaneity between agricultural production and nonfarm income. Results show that nonfarm employment can have differential impacts on farm technology intensity and productivity. Nonfarm income is found to have a positive impact on farm hired labor and improved seed intensity; a negative effect on on‐farm family labor use; and no significant impact on fertilizer, soil water management, and joint use of farm technologies. The econometric evidence also indicates that agricultural productivity declines as nonfarm income increases. Taken together, our findings reveal important trade‐offs between nonfarm employment and income and farm productivity growth under smallholder agriculture. The results indicated that targeted policies are required to reduce these potential trade‐offs between nonfarm employment and agricultural intensification and productivity change.     

Does population pressure induce farm intensification? Empirical evidence from Tigrai Region,Ethiopia

The scarcity of land for crop and livestock production is critical in countries with growing populations. The idea that increasing population density leads to natural resource depletion and economic failure, as predicted by Malthus, or rather to farm intensification, as hypothesized by Boserup, motivates this research. This article examines how high population pressure in northern Ethiopia influences smallholders’ farm intensification by applying recursive estimation with a control function approach using data from 518 randomly selected farmers. Although our empirical results are more in favor of the Boserupian hypothesis, the findings also reveal that both Malthusian and Boserupian forces coexist. Consistent with Malthus theory, high population pressure is found to be associated with small farm size and herd size. Population pressure affected both technology use (breed cow, stall feeding, and modern cattle feed) and output supply (milk yield, milk income, and straw output). As predicted by Boserup's theory, the use of modern input and output supply initially increases with increasing population pressure but declines again when population densities pass a critical threshold (800 persons/km²), supporting Malthus’ hypothesis. The estimation results also revealed that both milk and straw supply responded positively to prices. Free grazing and stall feeding are found to be complementary activities. Likewise, crop farm income and off‐farm job have a nonlinear relation with population pressure, implying that both initially increase and then decrease with rising population pressure.     

Modern rice technology and regional wage differentials in the Philippines

Fear has been widely expressed that the modern rice varieties have created large disparities in regional income distribution, as the productivity gap between favorable and unfavorable rice-production environments widened due to differential technology adoption throughout South and Southeast Asia over the last two decades. Technology affects the income of farm population directly through its effects on productivity and factor use, and indirectly through its effect on factor prices. In particular, the ultimate distributional impact of modern varieties will critically depend on the interregional labor-market adjustments through migration in response to regional wage differentials created by the differential technology adoption, since labor is the main resource of the majority of the rural population. We studied favorable and unfavorable rice-growing villages in the Philippines, and found that adoption of modern varieties during the 1970s was positively related to population growth rate. Contrary to popular belief, no association was observed between wage rates and adoption of modern varieties as of 1986. These findings support the hypothesis that the differential adoption of modern rice varieties induced interregional labor migration toward equalization of wage income across different production environments.     

基于耕地保护的中国城镇化发展战略研究

研究目的：研究中国城市位序 — 规模规律的演化和城市建成区人口密度同城市规模关系的变化,预测未来城镇化发展占用耕地情况,提出基于耕地保护的中国城镇化发展对策建议。研究方法：文献资料法、回归分析法和函数模型预测法。研究结果：中国城市建成区人口密度随城市人口规模的增加而增加,但正在快速下降,中国城镇化同耕地保护之间的矛盾日益突出。研究结论：为更加有效地保护耕地,中国应加快制定以发展大城市为主导,各级城市城镇全面发展的城镇化战略,推行高人口密度的城镇化发展政策措施,走紧凑型城镇化道路。     

Farm households’ risk perception,attitude and adaptation strategies in dealing with climate change: Promise and perils from rural Pakistan

Pakistan is highly vulnerable to extreme climatic events, such as floods and droughts. This study determines the farmers’ risk perception, risk attitude, adaptation measures and various aspects of vulnerability to climate change (e.g. floods, droughts, heavy rainfalls, pests and disease) at farm level in rural Pakistan. The risk perception and attitude of farm households are crucial factors that influence farm productivity, investment and management decisions at this level. A well-designed questionnaire was used to interview 720 farm households from six districts of the Khyber Pakhtunkhwa province. A binary logit model was used to determine the main factors that affect the choice of adaptation strategies of the farm household. The findings revealed that crop diversification, changing crop varieties, altering the crop calendar, varying the fertilizer used, mulching and farm insurance were the main adaptation strategies followed by farm households. The results of the binary logit model revealed that age, education, farm size, household size, credit accessibility, annual income and the perception on the increase in temperature and decrease in rainfall had significant influence on the selection of the adaption strategies. The findings of this study can provide guidance, policy recommendations and reference for future researchers.     

Productivity and farm size in Australian agriculture: reinvestigating the returns to scale

A positive relationship between farm size and farm productivity is often considered to be largely due to increasing returns to scale in farm production. However, using farm‐level data for the Australian broadacre industry, we found that constant or mildly decreasing returns to scale is the more typical scenario. In this study, the marginal returns to various farm inputs are compared across farms with different sizes. We found that large farms achieved higher productivity by changing production technology rather than increasing scale alone. The results highlight the disparity between ‘returns to scale’ and ‘returns to size’ in the industry, suggesting that productivity improvement among smaller farms can be made through increasing their ability to access advanced technologies, rather than simply expanding their scale.     

Do housing prices promote total factor productivity? Evidence from spatial panel data models in explaining the mediating role of population density

The issue of what to promote in total factor productivity (TFP) in urban areas has been widely discussed in academia and housing prices and population density are confirmed to be two of the most essential driving factors. However, research into the interaction of housing prices and population density with TFP has been neglected, with no previous studies taking spatial factors into consideration, which may bias the results. From this perspective, using spatial panel data models and employing instrumental variables to solve the endogenous problem, this study examines the impact of housing prices on TFP through the mediating effect of population density for 283 Chinese cities during the period 2000–2013, and confirms that the mediating effect accounts for 18.70 % of the total effect. The results show the positive and significant association of housing prices with TFP and the inverted U-shape of population density. The underlying logic is that housing prices change population density by attracting people with high purchasing power and discouraging those unable to afford housing, whereas increased density helps to promote productivity since the settled inhabitants always have highly developed work skills and are well educated. The influencing mechanism of housing prices on TFP through population density is analyzed, namely the spillover effect. We find that the spillover effect exists in the eastern and central regions, as well as first, second, and third tier cities, while for western regions and fifth tier cities, population mobility and increased in housing prices slows their economic development. There is no evidence of any spillover effect in fourth tier cities. A discussion and suggested policy implications are also provided.     

中国城市土地供给错配：特征事实及对 全要素生产率的影响效应

研究目的：探究城市土地供给错配的典型特征,明晰城市土地供给错配对全要素生产率的影响,为提升土地配置效率和全要素生产率提供经验证据。研究方法：从土地供给过度与供给不足视角解析城市土地错配对全要素生产率的影响机制,通过空间一般均衡模型构建城市土地供给错配指数,利用面板计量模型和中介效应模型进行实证分析及中介效应检验。研究结果：（1）中国城市土地供给错配表现出明显的差异性：不同地区、城市规模、人口流动方向分别呈现出“东少西多”“阶梯递减”“逆向配置”特征。（2）城市土地供给错配对全要素生产率产生负向影响,影响效应在不同类型城市存在异质性,城市土地供给过度对全要素生产率的负向作用强于土地供给不足。（3）城市土地供给过度通过创新创业发展和产业结构优化双重路径显著抑制了城市全要素生产率,土地供给不足主要通过产业结构优化对城市效率产生显著的负向影响。研究结论：应警惕土地配置过度的“经济效率”陷阱,强化建设用地指标分配的人地挂钩机制,因城施策提升土地资源配置效率。     

Measuring and causes of inequality in farm sizes in the United States

This article examines the notion of farm size inequality expressed as sales inequality in the United States. The farm size index (FSI) is developed as a measure of farm size inequality. FSIs are calculated for the farming sector in all 50 states and large variation in farm size across the states and over time is determined. The largest FSIs are calculated for a number of Southern, Southwestern, and Pacific states. Increasing FSIs over time are observed in all states as well. The spatial and temporal (between 1987 and 1997) differences in FSIs are explained by running a pooled, cross‐sectional time‐series model. The most influential variables accounting for the differences have to do with the ownership structure, where a larger presence of individual and family farms relative to corporate farms and cooperatives leads to a lower degree of farm size inequality. Also, states and regions having relatively larger number of farms owned by minorities have higher FSIs. Shrinking opportunities in the agricultural sector relative to the rest of the economy, primarily services, are reflected in a declining share of agricultural sector state income in total gross state product (GSP). This in turn leads to an increase in the farming sector's FSI suggesting that only larger, more profitable operations are the likely candidates to pursue farming activities. Finally, grains farming regions have all lower degree of farm size inequality than livestock or fruits and vegetables regions. Profitable grains farming requires relatively large farm size and equipment investments, which leads to a relatively homogeneous structure of grains farms. A larger variation in the size of profitable farm operations is possible in fruits and vegetables and livestock. This leads to the existence of a large number of very small but still sustainable farms, and a relatively small number of large farms that capture most of market sales share.     

Determinants of efficiency of vegetable production in smallholder farms: The case of Ethiopia

Improving production efficiency remains as a plausible means of increasing productivity when resource reallocation, and the creation and adoption of new technologies are limited. Technical, allocative and economic efficiencies are derived from a sample of smallholder vegetable farmers in Ethiopia using parametric and non-parametric methods. The results reveal that the two methods yield similar estimates and the existence of substantial inefficiencies in production as well as efficiency differentials among farmers. The analysis of the determinants of efficiency of vegetable production using regression models show that low asset ownership, illiteracy, large family size, inadequate extension contacts, small farm size, age, low off/non-farm income and high consumer spending are the major socio-economic factors causing inefficiency of vegetable production in the study areas. A comparison of the market-driven (vegetables) with the whole-farm (crops and livestock) production efficiency indicates that lower economic efficiency scores for the former might be related to the limited access to capital markets, high consumer spending, and large family size.     

Agritourism and off‐farm work: survival strategies for small farms

This study considers agritourism and off‐farm work as income diversification choices simultaneously and analyzes factors influencing such choices. Further, the study assesses the impact of agritourism, off‐farm work, and both on gross cash farm income and total farm household income. We utilized large set of nationwide farm survey data and selectivity‐based multinomial choice model. An important finding of our study is that small farms have higher household income if they choose both income diversification strategies rather than a single strategy. Results suggest that education, age of the operator, financial condition, and location of the farm are important factors driving income diversification alternatives. Finally, our study indicates that accounting for selectivity is essential to ensure unbiased and consistent estimates.     

Income Mobility and Income Inequality in Scottish Agriculture

The paper explores the distributional consequences of farm income mobility in Scotland, focusing on the extent to which farm income inequality is a chronic as opposed to a temporary phenomenon and on the nature of the dynamic processes driving changes in farm income inequality over time. The empirical results reveal that the majority of farm income inequality was long‐run or structural in nature, reflecting differences in both farm business size and farm‐specific factors such as land quality, managerial ability and business structures. Evidence of absolute convergence in farm incomes is explained by short‐run adjustments towards equilibrium or target incomes conditional upon prices, technology and farm business size, with farm business growth conditional upon survival found to have had no significant redistributive effect.     

Worth the Risk? The Behavioural Path to Well‐Being

There is increasing interest in the ‘economics of happiness’, reflected in the volume of articles appearing in mainstream economics journals exploring the major determinants of self‐reported well‐being. We contribute by exploring the factors influencing how satisfied farmers are with their quality of life. We find that farm income, subjective perceptions relating to the adequacy of household income, debt, health and personal characteristics such as age and relationship status are significantly associated with farmers’ self‐reported life satisfaction. While significantly associated with farm income, farm structural variables such as farm size, farm type and the presence of a farm successor were not found to be significantly related with life satisfaction. Our results also suggest that farmers who are more risk averse enjoy significantly lower levels of both life satisfaction and farm income than their more risk seeking or risk neutral counterparts. We suggest that, in the same way that risk aversion inhibits farmers from making choices that could lead to an increase in their income, it may also constrain farmers (and the wider public at large) from engaging in certain types of behaviours that could lead to an increase in their self‐reported quality of life. Finally, we find that while farm income is significantly related to self‐reported life satisfaction, the direct correlation between these variables is weak, suggesting that farmer life satisfaction can be distinct from business success.     

Evolution of the Amazonian frontier: Land values in Rondônia, Brazil

Patterns in property values provide strong signals about the future and sustainability of land use. This paper analyzes the determinants of land value in an Amazonian frontier settlement. We estimate hedonic price functions to identify factors that affect the value of farm properties in the western Brazilian Amazon. Distance to market explains nearly one-third of the variation in farm value, as predicted by the von Thünen model. After controlling for location relative to the central market and for municipality, we find that investment in the farms (as reflected in the stocking rate of pastures and the establishment of home gardens) has the next largest impact on land value. The value per hectare of land is negatively related to total lot size, suggesting that any economies of scale are outweighed by the cost of accessing remote corners of large properties. We do not find that land values are related to available measures of biophysical factors or to historic or current land use. Our results do not identify any premium for forest cover or for land uses considered to be more sustainable than pasture on the property itself. However, farm values are affected by neighboring land cover, specifically, the extent of barren land. Thus, local knowledge of factors contributing to future productivity, as summarized in land values, confirms that soil exhaustion can lead to a general decline in property values, while investments in a property both as a homestead and as a farm can help sustain frontier settlements.     

Off-farm Labor Decisions by Ontario Swine Producers

The off-farm employment decisions of Ontario swine producers are examined using household production theory. It is determined that human capital and farm characteristics have the largest impact on off-farm labor participation. Increases in education are found to have a larger effect on market earnings than on the marginal value productivity of farm labor, thereby increasing the probability of off-farm employment. The chances are also found to increase with an increase in relative financial obligations as measured by the debt-to-equity ratio. Years of farming experience and farm size have a negative impact on the probability of working off-farm due to their positive relationship with marginal farm labor productivity. The results indicate that the trend to a bimodal farm size distribution will likely continue in the Ontario hog industry. Economic policies designed to increase family farm income may help weather fluctuations in farm income but will have little impact on off-farm employment decisions. Les décisions de rechercher un emploi à l'extérieur chez les producteurs de porcs de l'Ontario ont été examinées selon la théorie de la production des ménages. On a constaté que c'est le capital humain et les caractéristiques de l'explotation qui exercent l'effet le plus fort sur le recours au travail extérieur. L'élévation du niveau de scolarité avait plus d'effet sur les gains obtenus à l'extérieur que sur la productivité de la main-d'oeuvre de l'exploitation, augmentant ainsi d'autant la probabilité de rechercher un emploi extérieur. Ces chances augmentaient aussi avec l'accroissement des obligations financières relatives, mesurées par le ratio dette-avoir propre. Le nombre d'années d'expérience en exploitation et la taille de l'entreprise avaient uneffet négatif sur la probabilité de travailler à l'extérieur, à cause de leur association positive avec la productivité marginale de la maind'oeuvre de l'exploitation. Ces résultats indiquent que la tendance à une distribution bimodale de la taille des exploitations devrait se poursuivre dans le secteur de l'élevage du porc en Ontario. Les politiques économiques destinées à améliorer le revenu des fermes familiales devraient les aider à surmonter les périodes de creux, mais elles n'auront que peu d'influence sur la décision de chercher un emploi à l'extérieur.