Production Risk and Technical Efficiency in Organic and Conventional Agriculture – The Case of Arable Farms in Germany

This paper quantifies the importance of production risk and technical efficiency as two possible sources of production variability in German organic and conventional farming. Determinants of production risk and inefficiency are investigated based on a combination of Just and Pope’s stochastic production framework and a Stochastic Frontier Analysis. The empirical analysis is conducted using a balanced panel of farm records from 1999/2000 to 2006/2007 on 37 organic and conventional arable farms, respectively. Euclidian‐Distance‐Matching is used to identify for each organic farm a conventional counterpart with similar structural features. Results indicate that output variability in both production technologies is mainly caused by production risk. Land and labour are identified as risk‐increasing inputs in both farm types whereas higher capital endowment, seed costs and soil quality have risk‐reducing effects.     

Integration of conservation agriculture in smallholder farming systems of southern Africa: identification of key entry points

A component-omission experiment based on the principle of conservation agriculture (CA) was established on smallholder farms for three seasons in Murehwa and Hwedza districts, Zimbabwe; Barue district in Mozambique; Balaka district and Chitedze Research Station in Malawi, and Monze district in Zambia to identify strategies for improving crop productivity and livelihoods for smallholder farmers. The objective of the experiment was to evaluate the effect of tillage, residue retention, fertiliser application and weed control on maize yield. In addition, the study analysed possible combinations of these factors that could provide a sustainable entry point for intensification through CA. Results showed that fertilisation had the strongest effect on crop yield in both tillage systems; adequate fertilisation is therefore key to success in CA. Retention of crop harvest residues increased yield in no-tillage systems; no-tillage without residues depressed yield by 50% when compared with yields of conventional tillage. A step-wise integration of CA into the smallholder farming systems is proposed as a possible strategy to avoid new constraints on smallholder farms. If resources are limiting, farmers may apply all principles on small areas to overcome the initial demand in resources (labour, fertiliser and residues), and once productivity is raised, they can expand.     

Consumption risk,farm characteristics,and soil conservation adoption among low-income farmers in the Philippines

This paper investigates patterns of soil conservation adoption among low-income farmers in the Philippines. A model is presented that focuses attention on the role ot assets and consumption risk in conservation adoption decisions. Results Iron, a reduced-form probit model of adoption are reported. These econometric findings indicate that patterns of soil conservation adoption reflect relative risk considerations in addititon farm and household characteristics. Farm size, tenure security, labor availability, and land quality all exhibit a positive association with soil conservation adoption. In contrast, controlling on these and other household characteristics, the probability of adoption falls as consumption risk rises. These results underscore a need for greater sensitivity among policymakers to the role of consumption risk in influencing soil conservation decisions in low-income settings.     

Economic Comparison of Alternative Tillage Systems under Risk.

Stochastic dominance efficiency criteria are used to rank the net farm return distributions for four different tillage systems under six different farm scenarios. Pairwise comparisons of tillage systems are carried over incremental upper and lower risk-aversion coefficient (RAC) bounds identified for each farm scenario, based on the size and spread of the outcome distributions to identify regions where dominance may switch between tillage systems. Ridge-till systems are generally the dominant tillage system for all farm scenarios considered. No-till systems on clay loam soils are more dominant in the risk-preferring range and less dominant in the risk-averse range, which relates to the relatively larger range of net return values and smaller mean net return values generated by this tillage system. Conversely, the moldboard plow and chisel plow systems are more dominant in risk-aversion intervals and less dominant in the risk-preferring intervals for clay loam soils. In sandy soil scenarios, the ridge-till and no-till systems are dominant over the two fall tillage systems for all farm sizes, indicating that these tillage systems are more competitive with conventional tillage systems in lighter soil type situations. A sensitivity analysis between moldboard plow and no-till systems indicates that no-till would dominate in risk-preferring intervals, and an increase in no-till net farm returns of 16 per acre would change dominance in favor of no-till in risk-averse interval space. On a utilisé les critères d'efficacitéà dominance stochastique pour classer les divers niveaux de recettes agricoles nettes dans quatre systèmes différents de travail du sol, selon six scénarios d'exploitation. Des comparaisons en paires des systèmes de travail ont été faites en regard de tranches croissantes des limites supérieures et inférieures du coefficient d'aversion du risque (CER), établies pour chaque scénario d'après l'importance et l'étendue des distributions du rendement, dans le but d'identifier les régions où la dominance serait susceptible de passer d'un système de travail à l'autre. Le système de travail sur billons était en général le système dominant dans tous les scénarios d'exploitation examinés. La culture sans travail du sol sur loam argileux était plus dominante dans les intervalles d'acceptation du resque et moins dominante dans les intervalles d'aversion du resque, cequi s'explique au fait que ce système de travail donne lieu à une fourchette relativement plus large, mais aussi à une moyenne plus faible du revenu net. À l'inverse, le labour à la charrue classique et au chisel dominait davantage dans les intervalles d'aversion du risque. Dans les sols sableux, le travail sur billons et la culture sans labour l'emportaient sur les deux autres régimes dans toutes les tailles d'exploitation, ce qui porte à croire que, dans les sols plus légers, ces régimes sont plus concurrentiels avec les systèmes classiques. L'analyse de sensibilité entre le labour à la charrue et les systèmes sans travail du sol montre que ces derniers dominent dans les intervalles d'acceptation du risque et qu'un accroissement du revenu agricole net de 16 /acre ferait glisser la dominance vers les intervalles d'aversion du risque.     

Conservation Practices and the Growth of US Cash Rent Leases

Over the past 20 years the ratio of cash rent to cropshare land leases across the US has more than doubled. We test different theories that might explain this, and conclude that the shift is mostly the result of revolutionary changes in cultivation practices. The switch from conventional to conservation tillage brought about by changes in herbicide technologies, genetically modified seeds, increased fuel costs, and knowledge of the benefits of soil micro‐organisms, has reduced a tenant‐farmer's ability to exploit a landowner's soil. This removes a major incentive to cropshare and makes cash renting more attractive. Using USDA field‐level data from across the US, we find strong support for this hypothesis, and some evidence that increased corporate structure also influences cash renting. Alternatively, we cannot find evidence that changes in risk, risk‐aversion or insurance coverage explain the growth in cash renting.     

Analysing Production Technology and Risk in Organic and Conventional Dutch Arable Farming using Panel Data

This paper compares the production technology and production risk of organic and conventional arable farms in the Netherlands. Just–Pope production functions that explicitly account for output variability are estimated using panel data of Dutch organic and conventional farms. Prior investigation of the data indicates that within variation of output is significantly higher for organic farms, indicating that organic farms face more output variation than conventional farms. The estimation results indicate that in both types of farms, unobserved farm‐specific factors like management skills and soil quality are important in explaining output variability and production risk. The results further indicate that land has the highest elasticity of production for both farm types. Labour and other variable inputs have significant production elasticities in the case of conventional farms and other variable inputs in the case of organic farms. Manure and fertilisers are risk‐increasing inputs on organic farms and risk‐reducing inputs on conventional farms. Other variable inputs and labour are risk increasing on both farm types; capital and land are risk‐reducing inputs.     

Should farmers invest in financial assets as a risk management strategy? Some evidence from New Zealand*

This study explores the potential for risk reduction by New Zealand farmers through the diversification of their farm asset portfolios to include financial investments such as ordinary industrial shares, government bonds and bank bills. Low correlations between rates of return on farm and these financial assets suggest that significant reduction of income variability might follow their inclusion in farmers’ portfolios. Stochastic efficiency analysis is used to analyse alternative portfolios of ordinary shares, government bonds and bank bills and New Zealand farmland, using coefficients of absolute risk aversion derived from a negative exponential utility function. The results suggest that those farmers showing high degrees of risk aversion would gain utility by including financial assets in their portfolios. Deregulation of the New Zealand economy in the 1980s appeared to reduce the potential gains from diversification. Bonds rather than ordinary shares are the main contributors to portfolios which maximise utility for individuals classified as ‘somewhat’ risk averse.     

基于分布式认知理论的农户保护性耕作技术采纳行为及其影响因素研究

研究目的：基于分布式认知理论，揭示影响农户保护性耕作技术采纳行为的因素及其规律，为制定促进和推广保护性耕作技术的政策提供参考依据。研究方法：从“个人力、地域力、文化力”三个层次构建影响农户保护性耕作技术采纳决策行为理论分析框架，利用辽宁省典型地区农户调查数据构建Heckman两阶段选择模型，定量分析各因素在农户是否采纳保护性耕作技术和采纳程度两个阶段中的影响机制。研究结果：（1）较多农户已采纳保护性耕作技术，但在采纳程度上差异明显；（2）农户的家庭资源禀赋条件即务农人数、耕地资源、收入来源在一定程度上制约了保护性耕作技术采纳行为，而农户的从众心理、信息获取渠道、政策满意度能够在物质与精神“双重”补偿，使其获得“安全感”，克服风险规避心理，从而促使技术采纳行为；（3）与第一阶段不同，农户保护性耕作技术采纳程度受“个人力”影响效应减弱，而受到“地域力”和“文化力”影响更加显著。研究结论：政府应从制定最优技术组合、加快推进农村教育、加强配套设施建设和完善政策扶持机制等方面采取措施，促进和推广农户采纳保护性耕作技术。     

Net Greenhouse Gas Emissions and the Economics of Annual Crop Management Systems

The aim of this study was to evaluate the relative economic profitability and net greenhouse gas (GHG) abatement potential of alternative tillage and cropping systems. A simulation model was parameterized using biophysical and economic data representing different crop rotations under conventional, minimum, and zero tillage cropping systems, in the Black soil zone of Saskatchewan. This model was used to estimate the relative potential of each of the management practices to sequester carbon and to emit GHG including, nitrous oxide and carbon dioxide. The model also provided estimates of the relative profitability of each of the management practices over time horizons of 30 years. These simulation results were used to develop trade-off functions reflecting net income and net GHG abatement for each cropping system. An income risk measure was incorporated to facilitate an analysis of the relative economic attractiveness of the simulated cropping systems. Furthermore, sensitivity analysis was performed on nitrous oxide emission coefficients (an area of significant uncertainty in the literature) and on weather patterns to reflect uncertain future climate change impacts. Results indicated that net GHG emissions were relatively lower for reduced tillage management, while conventional tillage may be relatively more attractive from an economic perspective. However, results also indicated that such economic factors as risk and economies of size may have a significant influence on this latter result.     

A Composed-Error Model for Estimating Pest-Damage Functions and the Impact of the Western Corn Rootworm Soybean Variant in Illinois

We describe a composed-error model for estimating pest-damage functions. The composed-error model, originally developed to account for statistical noise when estimating technical efficiency, removes the effect of experimental errors when estimating the variance of yield loss from pest damage. As a result, the estimated variance of yield loss is often less than for a conventional model, which has economic implications when the analysis incorporates risk aversion. We find that, depending on the level of risk aversion, the western corn rootworm soybean variant reduces farmer certainty-equivalent returns 16–26% more with a conventional model than with the composed-error model.     

Factors influencing adoption of conservation tillage in Australian cropping regions*

The purpose of this research is to improve understanding of conservation tillage adoption decisions by identifying key biophysical and socio‐economic factors influencing no‐till adoption by grain growers across four Australian cropping regions. The study is based on interviews with 384 grain growers using a questionnaire aimed at eliciting perceptions relating to a range of possible long‐ and short‐term agronomic interactions associated with the relative economic advantage of shifting to a no‐tillage cropping system. Together with other farm and farmer‐specific variables, a dichotomous logistic regression analysis was used to identify opportunities for research and extension to facilitate more rapid adoption decisions. The broader systems approach to considering conservation tillage adoption identified important determinants of adoption not associated with soil conservation and erosion prevention benefits. Most growers recognised the erosion‐reducing benefits of no‐till but it was not an important factor in explaining whether a grower was an adopter or non‐adopter. Perceptions associated with shorter‐term crop production benefits under no‐till, such as the relative effectiveness of pre‐emergent herbicides and the ability to sow crops earlier on less rainfall were influential. Employment of a consultant and increased attendance of cropping extension activities were strongly associated with no‐till adoption, confirming the information and learning‐intensive nature of adopting no‐till cropping systems.     

黑土地保护性耕作发展的制约瓶颈和突破路径

保护性耕作是东北黑土地保护利用的有效途径,是落实"藏粮于地、藏粮于技"战略的重要抓手。新世纪以来,黑土地保护性耕作经历了从农机主导向农机农艺融合发展的历程,呈现出技术结构集成化、推广主体多元化、应用主体规模化的发展趋势。同时,在黑土地保护性耕作发展过程中,面临着来自于农户认知、技术结构、土地规模、推广体系、补偿机制等方面的现实障碍。因此,需要从提升农户认知水平、加强先进适用的技术研发与集成、推进农业生产经营方式创新、构建新型农技推广体系、加强政策引导与法制建设等方面营造黑土地保护性耕作的发展之路。     

Adoption and Diffusion of Natural-Resource-Conserving Agricultural Technology

A national sample of U.S. farms is used to estimate the long-term trends in adoption and diffusion of conservation tillage, IPM, and soil fertilizer testing, technologies designed to reduce environmental externalities from agriculture. Results from a duration model show that diffusion of these technologies has been relatively slow, with long lags in adoption due to differences in land quality, farm size, farmer education, and regional factors.     

Green Subsidies in Agriculture: Estimating the Adoption Costs of Conservation Tillage from Observed Behavior

Due to payoff uncertainties combined with risk aversion and/or real options, farmers may demand a premium in order to adopt conservation tillage practices, over and above the compensation for the expected profit losses (if any). We propose a method of directly estimating the financial incentives required for adopting conservation tillage and distinguishing between the expected payoff and premium of adoption based on the observed behavior. We find that the premium may play a significant role in farmers' adoption decisions. In an application to the state of Iowa, we find that if a uniform conservation tillage adoption subsidy program were offered in 1992, over 86% of the subsidy program payments would be an income transfer to existing and low‐cost adopters. En raison des incertitudes quant aux gains, combinées à l'aversion pour le risque et/ou aux options réelles, les agriculteurs pourraient réclamer une prime pour l'adoption de méthodes culturales de conservation du sol, une prime qui serait supérieure à l'indemnisation offerte en cas de perte de gains prévue (s'il y a lieu). Nous avons proposé une méthode fondée sur le comportement observé qui permet une estimation directe des incitatifs financiers exigés pour adopter les méthodes culturales de conservation du sol et qui fait une distinction entre les gains prévus et la prime d'adoption. Nous avons constaté qu'une prime pourrait influencer considérablement les décisions des agriculteurs quant à l'adoption de méthodes culturales de conservation du sol. En Iowa par exemple, nous avons trouvé que, si un programme de subventions uniforme pour l'adoption de méthodes de conservation du sol avait été offert en 1992, plus de 86 p. 100 des paiements du programme de subvention aurait constitué un transfert de revenus aux adopteurs existants et à faibles coûts.     

Determination of yield and erosion damage functions using subjectively elicited data: application to smallholder tea in Sri Lanka

Tea has been Sri Lanka's major export earner for several decades. However, soil erosion on tea-producing land has had considerable on-site and off-site effects. This study quantifies soil erosion impacts for smallholder tea farms in Sri Lanka by estimating a yield damage function and an erosion damage function using a subjective elicitation technique. The Mitscherlich-Spillman type of function was found to yield acceptable results. The study indicates that high rates of soil erosion require earlier adoption of soil conservation measures than do low rates of erosion. Sensitivity analysis shows the optimum year to change to a conservation practice is very sensitive to the discount rate but less sensitive to the cost of production and price of tea.     

Managing basis risk with multiscale index insurance

Agricultural index insurance indemnifies a farmer against losses based on an index that is correlated with, but not identical to, her or his individual outcomes. In practice, the level of correlation may be modest, exposing insured farmers to residual, basis risk. In this article, we study the impact of basis risk on the demand for index insurance under risk and compound risk aversion. We simulate the impact of basis risk on the demand for index insurance by Malian cotton farmers using data from field experiments that reveal the distributions of risk and compound risk aversion. The analysis shows that compound risk aversion depresses demand for a conventional index insurance contract some 13 percentage points below what would be predicted based on risk aversion alone. We then analyze an innovative multiscale index insurance contract that reduces basis risk relative to conventional, single‐scale index insurance contract. Simulations indicate that demand for this multiscale contract would be some 40% higher than the demand for an equivalently priced conventional contract in the population of Malian cotton farmers. Finally, we report and discuss the actual uptake of a multiscale contract introduced in Mali.     

Stochastic efficiency analysis with risk aversion bounds: a simplified approach

A method of stochastic dominance analysis with respect to a function (SDRF) is described and illustrated. The method, called stochastic efficiency with respect to a function (SERF), orders a set of risky alternatives in terms of certainty equivalents for a specified range of attitudes to risk. It can be applied for conforming utility functions with risk attitudes defined by corresponding ranges of absolute, relative or partial risk aversion coefficients. Unlike conventional SDRF, SERF involves comparing each alternative with all the other alternatives simultaneously, not pairwise, and hence can produce a smaller efficient set than that found by simple pairwise SDRF over the same range of risk attitudes. Moreover, the method can be implemented in a simple spreadsheet with no special software needed.     

Sustainable agricultural intensification practices and cost efficiency in smallholder maize farms: Evidence from Ethiopia

Sustainable agricultural intensification (SAI) practices have been promoted in developing countries to improve farm productivity and environmental services. However, it is still unclear whether use of a combination of SAI practices has a significant influence on the cost efficiency of smallholder farms. This study investigates whether the cost efficiency of smallholder maize producers in Ethiopia depends on use of input-augmenting and agronomic SAI practices. Stochastic cost frontier models that account for heterogeneity across farms are used for estimation. We find that the use of individual SAI practices increases cost while the combined use of the practices reduces it. The marginal effect on cost reduction is substantial when SAI practices are set at their sample maximum levels. Overall, the results demonstrate the benefit of using a combination of SAI practices in minimizing production cost while addressing the adverse effects of soil degradation and climate variability. To enhance food security, smallholder farm incomes and the sustainability of production in developing countries, policy programs should focus on promoting packages of input-augmenting and agronomic SAI practices.     

Stochastic Production and Heterogeneous Risk Preferences: Commercial Fishers' Gear Choices

We present a model of fishers' gear choice, which allows for heterogeneity both in production technology and risk preferences and apply it on a panel of Swedish trawlers. Stochastic revenue functions are estimated and used to predict the mean and standard deviation of revenue for each trip. In a random-parameters logit model, we test if these predicted values explain gear choice. A majority of fishers respond positively to increased mean and negatively to increased variability of expected landing values, indicating risk aversion, but also show a strong tendency to choose the same gear used on the previous trip.     

ANALYSIS OF RANGELAND DEGRADATION USING STOCHASTIC DYNAMIC PROGRAMMING

Degradation of arid rangeland, and efforts to control that degradation, have become topical issues. However, the inherent characteristics of the rangeland, and the intertemporal nature of the problem, complicate the analysis of degradation issues in the search for more appropriate rangeland policies. Stochastic dynamic programming is examined as one means of allowing for those complexities. Using the case of the Queensland mulga rangelands, optimal stocking rates are shown to rise with lower property sizes, higher discount rates, higher wool prices and declining risk aversion. Importantly, the analysis reveals that a strategy of high stocking rates with the potential for rangeland degradation is an optimal response to the economic and social factors that confront graziers and is not an intertemporal information problem alone.