Price premiums for ecolabelled seafood: MSC certification in Germany

Whether ecolabelled seafood actually provides incentives to improve the management of fisheries remains a controversial issue. A number of stated preference studies indicate a substantial willingness to pay for ecolabelled seafood. Early evidence from actual market data supports the existence of a premium, while more recent papers provide a more nuanced picture. In this paper, a hedonic price model for whitefish species on the German market is estimated that includes information on Marine Stewardship Council (MSC) labelling, the leading seafood ecolabel in Germany. The model also allows the potential premium to vary by species. Results indicate that MSC premiums in Germany vary substantially between species, from a hefty 30.6 per cent for the high‐end species cod, to a 4 per cent premium for Alaska pollock, and no premiums for saithe.     

SUPPLY RESPONSE WITH STOCHASTIC TECHNOLOGY AND PRICES IN AUSTRALIA'S RURAL EXPORT INDUSTRIES

Risky output prices and production characterise Australian agriculture. Exports are vitally important, sometimes relying heavily on a particular market. In this study a model is developed to include explicitly both output price and technological risks as well as multiple output relationships. It is used to show that changes in US beef import policy generating a 10 per cent beef price fall could reduce Australian beef supply by 3.5 per cent and grazing industry net revenue by 8.4 per cent, despite some switching from beef production to other enterprises.     

Measurement of greenhouse gas emissions from agriculture: economic implications for policy and agricultural producers*

If agriculture were to be included in Australia’s carbon price scheme, a key decision for government would be how to estimate greenhouse gas emissions. We explore the consequences of three different methods for measuring on‐farm emissions: national accounting methods, an amended version of those methods and use of best‐available local data. Estimated emissions under the three methods can vary widely; for example, on a case study farm in Western Australia, local data indicated 44 per cent lower emissions than did the national accounts method. If on‐farm emissions are subject to an emissions price, the impact on farm profit is large and varies considerably with different measurement methods. For instance, if a price of $23/t of CO2‐e applies then farm profit falls by 14.4–30.8 per cent depending on the measurement method. Thus, the choice of measurement method can have large distributional consequences. On the other hand, inaccurate measurement results in relatively minor deadweight losses. On‐farm sequestration through reafforestation may lessen the impact of an emissions price on farm businesses, although it will require a high carbon price to be viable, especially if sequestration rates are underestimated or low.     

THE EFFECT OF PRICE SUPPORT POLICIES ON AGRICULTURAL INVESTMENT,EMPLOYMENT, FARM INCOMES AND LAND VALUES IN THE U.K.

Agricultural price policy has a major impact on the input markets as well as the output markets and a model is developed to analyse the effects of changes in support levels on U.K. agricultural employment, earnings, investment and land prices. This paper describes the specification, estimation and evaluation of the model and simulates the effects of a one per cent increase in support prices. The main conclusions are that net investment would increase in the years following the rise by a maximum in the second year of £12m and by a cumulative total of £44m (representing an increase of about 0.4 per cent in the capital stock). Employment on the other hand, while rising at first, would subsequently fall to almost one per cent below its original level, and earnings of hired labour also fall slightly. Net farm income increases by around 10 per cent and this is capitalised into a similar increase in land values.     

DYNAMIC INTERRELATED DEMAND FUNCTIONS FOR FACTORS OF PRODUCTION AND THE AGGREGATE PRODUCTION FUNCTION IN UNITED KINGDOM AGRICULTURE

Taking the price situation as given in product and factor markets, a non-linear differential equation model of gross output, employment, capital accumulation, and gross input for united Kingdom agriculture is derived by incorporating internal adjustment cost functions into the representative decision-maker's objective function, and estimated using a discrete approximation. The results are consistent with efficient use of resources, but further incentives for capital investment and a greater exodus of labour could upset this. Adjustment costs as estimated account for 2.6 per cent of the value of output; those associated with net investment for 1.8 per cent, and those associated with employment and gross input for 0.57 and 0.23 per cent respectively.     

Consumer Willingness to Pay for Low-Pesticide Fresh Produce in Taiwan

Willingness to pay (WTP) for reductions in health risk associated with consuming pesticide residues on vegetables are estimated using the contingent valuation method with in-person interviews of married females in Taiwan. Estimated median WTP for 25 per cent, 50 per cent and 90 per cent reductions in the risk of developing cancer from consuming pesticide residues on a popular Taiwanese vegetable, bok choy, are estimated as 46 per cent, 56 per cent and 75 per cent of the current price of bok choy, respectively. WTP is significantly related to the scope or magnitude of the risk reduction, although it varies less than proportionately to the risk increment. WTP is also significantly related to measures of consumer preferences for health.     

The Impact of Cereal Prices and Policy on Crop Rotations and Supply Response

The impact of cereal prices on rotational decisions and farm‐level and industry cereal supply is considered. It is argued that with the voluntary 50 per cent set‐aside option for cereal producers, there is a large financial incentive to adopt a 50 per cent set‐aside cropping plan as cereal prices fall below an individual producer's ‘indifference’price. For a typical 210‐hectare UK combinable crop farm, adopting a 50 per cent set‐aside cropping plan is optimal when the price of cereals is below £62/tonne (98.50/tonne). If widely adopted, 50 per cent set‐aside will lead to a substantial fall in the supply of cereals and would lead the industry supply curve for cereals to move leftward and become more elastic over a certain price range. The level of reduced cereal supply will be greater than would be predicted from an estimate of industry level supply response that ignored rotational and farm‐level financial incentives.     

OUTLIERS IN AGRICULTURE: AN INTERVENTION ANALYSIS OF AGRICULTURAL LAND VALUES

Intervention analysis offers a framework for the identification and modelling of outlying observations in empirical time series. Within this framework, there are two types of outlier; an additive outlier, representing a one-period blip in the series, and an innovational outlier, whose effect is spread over many time periods. Intervention analysis is used here to study an agricultural land price boom of the early 1970s that is generally believed to have been caused by speculative activity, and the statistical results are consonant with that view. The procedure detects an innovational outlier in the land price series at 1972 with dynamic effects that resemble the life cycle of a speculative bubble. It is inferred from these results that speculation added 52 per cent to the rate of growth of land prices in 1972, 19 per cent in 1973 and caused a fall in the rate of change in land prices of 19 per cent in 1974 and 17 per cent in 1975.     

EU Reform of the Sugar Beet Regime: Implications for UK Agriculture

The purpose of this article is to discuss possible scenarios for UK sugar beet production after the reform of the sugar regime. The analysis is built on an evaluation undertaken by the University of Cambridge and The Royal Agricultural College of the impact that reforming the EU sugar regime may have on UK agriculture. The analysis focuses on the implications of reductions in quota and the support price and on the possible reactions by British Sugar, as the final outcome in terms of production will depend on the interaction between British Sugar and sugar beet farmers. The analysis indicates that British Sugar strategies such as reallocating the available quota to the more efficient producers or paying higher beet prices might mitigate the impacts of the reform. The key factor in limiting the overall impact on production is the extent that the industry can restructure and reduce its cost base. For example, following a 40 per cent reduction in the sugar beet price we estimate that if farmers could reduce their average costs by 20 per cent, about 52 per cent of UK beet production would still be viable, compared to less than 20 per cent if costs were not altered.     

Food policy and poverty in Indonesia: a general equilibrium analysis*

Rice is Indonesia's staple food and accounts for large shares of both consumers' budgets and total employment. Until recently, Indonesia was the world's largest importer, but rice import policy is now highly protectionist. Since early 2004, rice imports have been officially banned. Advocates of this policy say it reduces poverty by assisting poor farmers. Opponents say it increases poverty, stressing negative effects on poor consumers. This paper uses a general equilibrium model of the Indonesian economy to analyse the effects of a ban on rice imports. The analysis recognises 1000 individual households, including all major socioeconomic categories, disaggregated by expenditures per person. It takes account of effects on each household's real expenditure and its income, operating through wages and returns to land and capital. The results indicate that the rice import ban raises the domestic price of rice relative to the import price by an amount equivalent to a 125 per cent tariff, six times the pre‐2004 tariff. Poverty incidence rises by a little under 1 per cent of the population and increases in both rural and urban areas. Among farmers, only the richest gain. These results are qualitatively robust to variations in key parametric assumptions.     

ON THE HIDDEN REVENUE EFFECTS OF WOOL PRICE STABILISATION IN AUSTRALIA: INITIAL RESULTS

A preliminary analysis of demand in eight major OECD wool-consuming countries is used to provide up-to-date estimates of price elasticities of demand for wool. Those elasticities are employed to calculate ex ante market prices, assuming no wool price stabilisation in Australia. The computed ex ante prices are used in a dynamic simulation to estimate demand and, hence, revenue from wool sales to the eight countries in the absence of reserve price operations in Australia. Based on the preferred semi-log demand curve, the variability of wool prices is estimated to have been reduced by 44 per cent, due to Australian intervention in the market up to 1977/78. However, price stabilisation is estimated to have lowered the revenue from Australian wool sales to the eight countries by S139m, or by 2 per cent, in the period up to 1977/78.     

Do consumers value nutritional labels?

The European Union is contemplating making the provision ofnutritional labels in food products mandatory. Using data collectedfrom food shoppers, we assessed consumers' valuation of nutritionallabels by analysing their willingness to pay a premium for abox of cookies with a nutritional label. On average, the meanwillingness to pay (WTP) for a box of cookies with a nutritionallabel is estimated to be about 11 per cent above the price ofthe box of cookies without a nutritional label. Consistent withprior expectations, our results also indicate a difference betweenthe WTP of individuals suffering from diet-related health problems(estimated mean 13 per cent) and those who do not suffer anydiet-related health problems (estimated mean 9 per cent).     

Measuring Market Power for Food Retail Activities: French Evidence

In this paper we develop and estimate an empirical model of pricing behaviour for food retail firms in both a quantity‐setting oligopoly engaged in the joint production of demand‐related final goods and a quantity‐setting oligopsony for supply‐unrelated wholesale goods. The procedure consists of estimating an inverse demand system for the final goods, single supply functions for the wholesale goods and the retail industry first‐order profit‐maximisation conditions, from which an estimate of the degree of imperfect competition and of oligopoly‐oligopsony power for the different commodities can be retrieved. The model is applied to the French food retail industry and three commodities are distinguished: dairy products, meat products and other food products. We strongly reject the hypothesis that French food retail firms behave competitively, and more than 20 and 17 per cent of the wholesale‐to‐retail price margins for dairy products and meat products, respectively, can be attributed to oligopoly‐oligopsony distortions.     

Comovement of dairy product futures and firm value: returns and volatility

This study investigates the exposure of dairy firm stock prices to the prices of dairy product futures, in terms of returns and volatility, from May 2013 to April 2018. Stock price returns are regressed against an index of the futures price returns to four dairy products – milk, cheese, butter and dry whey – to isolate the effects of the dairy futures price returns. Dairy product futures price returns are found to be significant in the regression in the first three years of the sample period, with a mean coefficient of ?0.024. Using the Diebold‐Yilmaz volatility spillover method of forecast error variance decomposition, we show that the volatility of the four dairy product futures accounted for an average of 5.49 per cent of the volatility of dairy stock prices. These results suggest that the prices of dairy firms have minimal exposure to dairy product futures prices. This has implications for dairy firms and investors, who seek to understand volatility and returns in the dairy products and the stocks they trade in, and for policymakers, who seek to control or mitigate undesirable dairy product price volatility.     

DISCRETE-CHOICE VALUATION OF RECREATIONAL ANGLING IN NORTHERN IRELAND

A discrete-choice Contingent Valuation approach, whose benefits in reducing certain forms of bias are briefly reviewed, was used to estimate the consumer value ascribed by recreational anglers in Northern Ireland to the access to angling sites afforded by game-season permits and licences. A survey of 700 anglers was carried out during the 1988 season. Respondents were differentiated according to whether or not they had experience of purchasing permits. Those with experience of purchasing game-season permits revealed a median willingness to pay 26 per cent above the prevailing price. The median willingness to pay for licences revealed by anglers who had experience of purchasing licences was 61 per cent above the prevailing price. Some evidence was uncovered that those without experience of purchase were less able to relate to price levels in a consistent manner.     

Two centuries of farmland prices in England

The dissemination of robust asset price data can help improve market efficiency, resource allocation and investment analysis. Land prices influence housing affordability, food security and the carbon infrastructure. Yet price and return histories for farmland in England are fragmented. To provide perspective, a long farmland price series is needed to improve transparency and bring the asset class into line with commercial and residential real estate. After reviewing the historical backdrop and considering methodology, this research uses a chain-linking approach to construct a long-term farmland price series for England. It then adjusts the series for inflation to examine real land prices. The resulting two-century English farmland prices series contributes to farmland market analysis. Notwithstanding some concerns with long-run chain component heterogeneity, the combined series helps us to understand English average farmland price dynamics. As measured by the geometric mean, English land price real capital returns have been positive over more than two centuries. Farmland real price growth was 0.33 per cent annually from 1781 to 2013 and 0.71 per cent from 1801 to 2013. The series contributes to an understanding of land price dynamics.     

Optimal conservation investment for a biodiversity‐rich agricultural landscape*

This study develops a theoretical and empirical framework for optimal conservation planning using satellite land cover data and economic data from a farm survey. A case study is presented for a region within the South‐west Australia Biodiversity Hotspot (Nature 403, 853). This Biodiversity Hotspot is a focus for conservation investment as it combines a relatively high level of biodiversity with severe threat to the biodiversity from agriculture. The conservation planning model developed determines the optimal set of bush fragments for conservation. This model can also be used to assess the trade‐off between the budget and a vegetation species metric. Results from the case study show that, without an effective conservation scheme that at least fences fragments, significant plant biodiversity losses will occur in the North East Wheatbelt Regional Organisation of Councils region of the WA wheatbelt over a 10‐year period. A perfect price discriminating auction scheme could reduce the costs of conservation by around 17 per cent relative to a fixed‐payment scheme; however, a fixed payment on outcome (measured as change in the species metric) scheme represents a viable second‐best alternative, to a conservation auction, where conservation spending is spatially targeted.     

Intra-annual sheep price patterns and factors underlying price variations in the central highlands of Ethiopia

A sheep market survey was undertaken to determine the effects of certain animal and market characteristics on price and the pattern of sheep prices in relation to seasons. Nine key Ethiopian central highlands markets were surveyed for a period of one year in 1989. Each market was surveyed once a week on the main market day. Price, weight, sex, age, colour, condition score, breed type and buyer's purpose were recorded for all completed transactions as well as the numbers offered and sold on each market day. A total of 50062 cases were recorded. Three markets, each representing redistributive, intermediate and terminal markets, as identified by the distribution in buyer's purpose were chosen for further analysis. Considerable weekly price variation was evident in these markets. Prices were also seasonal with higher premiums paid during some religious festivals. Animal characteristics (weight, age, condition, sex, colour) as well as buyer's purpose and seasons were variably important in explaining variation in price among animals within weeks. Variations in the composition of these characteristics from week-to-wcek were among factors underlying changes in weekly mean prices. R² varied from 0.2659 to 0.3583 in the quadratic price per kg model and from 0.7822 to 0.8413 in the quadratic price per head model in the three markets. However, it was found that price per head was predicted equally well overall by estimated price per kg multiplied by actual weights and that because of wide variation in weights, both within and between weeks, price per kg is more useful market information.     

Area Allocation Under Price Uncertainty on Dutch Arable Farms

This paper uses a Mean-Variance utility function to build a dual model that simultaneously determines area allocation and production/input levels under output price uncertainty. Regularity conditions of the indirect utility function (convexity) and producers risk preferences are tested. The framework is applied to a rotating sample of Dutch arable farms. Dutch arable farmers are found to be risk averse, with the size of the risk premium given by 3 per cent of annual profit. A bootstrap resampling method shows that curvature conditions are rejected. Price elasticities are compared for an unrestricted model and for a model with curvature conditions being imposed.     

THE DEVELOPING FRAMEWORK FOR THE ECONOMIC EVALUATION OF FORESTRY IN THE UNITED KINGDOM*

This paper evaluates the economic worth of forestry projects in the United Kingdom by using two different public sector investment appraisal criteria; the traditional discounted cash flows and the recently-established sum of discounted consumption flows. In the latter, in view of the intergenerational distribution aspect of government projects, the conventional rules are modified, enabling the decision-maker to treat all generations, present and future, in an equitable manner. Forestry is an excellent example to highlight the issue that many public sector investment projects re-distribute income between generations. Its long gestation periods make it obvious that there is more than one generation involved in the venture. In this analysis a one hectare plantation of Sitka spruce, class 20, is considered for a single 50-year rotation. Three different interest rates, 10 per cent test rate of discount, 5 per cent required rate of return, and 3 per cent forestry target rate are used under 4 different assumptions regarding the future price of timber.