PRODUCTION ECONOMICS AND THE MODERNIZATION OF TRADITIONAL AGRICULTURES

A traditional agriculture operates in a relatively static physical, economic and cultural environment and as a consequence becomes relatively well adjusted to that environment. Modernization of agriculture occurs when substantial and continuing change in the decision-making environment provides incentives to make new farming decisions. Farming then becomes dynamic as farmers attempt to reach constantly shifting points of equilibrium. Agricultural production economics in low income countries has been too much applied to a search for disequilibria within the given static environment and not enough to the possibilities and results of deliberately changing that environment.     

THE ECONOMICS OF - WHEAT PRODUCTION IN MOROCCO

A representative farm policy impact model was developed using linear programming and primary survey data. The model was used to estimate farm-level effects of proposed national government policies aimed at increasing food security through greater bread wheat production. The four policy options analysed included the introduction of a bread wheat variety resistant to an insect pest, an increase in the official bread wheat support price, potentially unlimited availability of nitrogen fertiliser, and rationing of nitrogen fertiliser at 500 kg per farm. The various policies increased farm income between 2.45 and 18 percent, as farmers made trade-offs between the production of bread wheat and the more profitable durum wheat. Adjustments were made by farmers in the model to meet government-targeted levels of bread wheat production in order to support national food self-sufficiency at minimum cost. Simultaneously, the resources freed were used to produce more durum wheat. The results suggest a need to analyse interregional and international comparative advantages in wheat production prior to implementing proposed policies aimed at increasing bread wheat output.     

THE ECONOMICS OF MOVING COVENT GARDEN MARKET*

The decision to move Covent Garden wholesale fruit and vegetable market is evaluated. Trends in the consumption and distribution of fresh fruit and vegetables are assessed and it is argued that the volume of the produce handled by wholesale produce markets is likely to continue to decline. The nature of the costs and benefits of the move are identifed and quantified and their distribution between diferent interest groups discussed. While certain deficiencies in cost benefit techniques are to be borne in mind the conclusion is reached that the net present value of the benefits of the move shows a negative return on investment of 30 per cent or more and therefore the investment in the new market is not justified. It is also argued that in the absence of an adequate compensation mechanism the economic welfare criteria for the move are not satisfied.     

TAXATION,COST OF CAPITAL AND INVESTMENT IN AUSTRALIAN AGRICULTURE*

The concept and measurement of the cost of capital is developed to include particularly the role of taxation in investment behaviour. The relative importance of factors influencing investment in plant and machinery is examined for five sectors which make up the broadacre industry of Australia. It is shown that residual funds are important in determining plant and machinery investment, but not through the normally hypothesised channels. It is not the increased liquidity from increased income which raises investment, but the fall in the cost of capital, which is associated with the marginal rate of tax.     

MARKETING AGENCIES AND THE ECONOMICS OF MARKET SEGMENTATION*

Increasing importance is being attached to market segmentation strategies as a means of increasing producer returns. In this paper, a generalised model of price discrimination without supply control is developed to analyse the implications of optimal segmentation strategies for non-homogeneous products. It is shown that the magnitude of producer returns is dependent on demand and supply conditions, with increases in returns falling as price elasticities of demand and supply increase. The model is applied to the New Zealand sheep meats industry to reveal that returns to producers from market segmentation strategies could be quite low in the long run.     

A NOTE: A CLARIFICATION OF THE ROLE OF YIELD UNCERTAINTY IN INFLUENCING OVER-QUOTA PRODUCTION*

The literature shows that the influence of yield uncertainty on production relative to quota is ambiguous in the case of a single market. This paper uses a two-market framework (quota market and secondary market) with multiplicative yield uncertainty to show that if over-quota production in the absence of yield uncertainty is profitable, then the presence of yield uncertainty is unambiguously a further stimulus to over-quota production. The analysis is discussed in the context of recent changes to the marketing arrangements for Western Australian potatoes.     

AGGREGATION OF MICRO-FUNCTIONS TO OBTAIN A WHOLE-FARM PRODUCTION FUNCTION*

In this paper, a re-assessment of the aggregation problem in farm production functions is attempted. Aggregation starts from measurable farm management entities such as the milking cow, breeding ewe etc., and appropriate whole farm production functions are derived that are consistent with these biological units of farming, or as they will be called, the micro-functions of agriculture. The aggregate function, as derived, is based on the geometric means of micro outputs and inputs and could appropriately be said to 'represent' all the micro-functions. It is thus called, later in the paper, the representative production function for the farm firm.     

THE AUSTRALIAN AGRICULTURAL ECONOMICS PROFESSION: AN APPRAISAL OF SOME CURRENT TRENDS*

Using the results of the first part of their 1994 membership survey, Ahmadi-Esfahani and Brakey (1996) examined the structure, conduct and performance of the Australian Agricultural and Resource Economics Society qualitatively. This paper extends that analysis by appraising some current trends in the Australian agricultural economics profession quantitatively. It concentrates on the second part of the survey to address a number of fundamental questions. A comparison of the US and Australian agricultural economics professions is made. The implications of the analysis for the product mix of the Society are explored.     

A REVIEW OF THREE RESEARCH PROGRAMS IN QUANTITATIVE MODELLING IN THE BUREAU OF AGRICULTURAL ECONOMICS*

Elements of three of the BAE's research programs in economic modelling of the rural sector, namely, the modelling of agricultural production systems, rural commodity markets and agriculture within a general equilibrium framework, are reviewed with emphasis on the use of such models in policy work. Suggestions are made for further modelling in these areas.     

TOWARD A FRAMEWORK FOR EVALUATING AGRICULTURAL ECONOMICS RESEARCH*

Agricultural economists need to evaluate their own research priorities. The main difficulty in doing so is to value the types of information generated by economic research. Bayesian decision theory provides a framework for valuing information, and the results of selected studies using this methodology are collated. Most of the other determinants of research priorities can be encapsulated in a target return ratio measure. How such a framework might be used is illustrated by three 'hypotheticals'.     

THE TAXATION OF COOPERATIVES: SOME ECONOMIC IMPLICATIONS

Although the question of the tax treatment of cooperatives has been approached from the ethical, legal, business and philosophical standpoints, little economic analysis has been used to examine this controversy. This paper offers theoretical arguments in support of existing tax laws covering cooperative institutions. The argument that cooperatives should be taxed as ordinary corporations is countered with an economic analysis of cooperatives and the economic impact of extension of the income tax to cooperative institutions is compared with its impact on ordinary firms. The results of the analysis point to the possibility of a severe misallocation of resources in the cooperative sector if cooperatives are taxed in the same manner as a profit seeking enterprise. The economic models constructed in this paper support the contention of cooperatives that they are significantly different from private firms and thus warrant special tax treatment. Bien que la question de la taxation des coopératives ait été abordée tour à tour du point de vue éthique, légal, commercial el philosophique, peu ?analyse économique a été employé pour examiner ceue polémique. Ce papier offre des arguments théoriques à?appui des lois contribulives existantes qui s'appliquenl aux institutions coopératives. La thèse qui insiste que les coopératives devraienl être comme des sociétés ordinaires est contrecarré par une analyse économique des coopératives et par une comparaison de la portée économique ?une extension des contributions directes sur les institutions coopératives par rapport à ses effels sur les maisons ordinaires. Les résultats de ?analyse indiquent la possibilité de graves erreurs dans ?allocation des ressources dans le domaine coopératif si ces coopératives sont taxées de la même manière que les entreprises à but lucratif à la recherche du profit. Les modèles économiques construits dans ce papier soutiennent ?affirmation des coopératives qu'elles sont sensiblement différenles des maisons privées et qu'elles méritent done une imposition speciale.