Credit constraints and smallholder dairy production in the East African highlands: application of a switching regression model

Accurate assessment of farmers' credit constraint condition is important in order to understand the circumstances under which credit would have its greatest impact. In this study a switching regression model was used to determine the impact of credit on smallholder dairy farms in the East African highlands using farm level data from Ethiopia and Kenya. Farmers were classified as credit constrained or credit non-constrained based on their responses from the farm level surveys. No consistent relationship was found between farmers' credit constraint condition and their borrowing status. Most of the variation in milk output per farm was explained by the number of crossbred milking cows in the dairy herd. As credit is likely to facilitate investment in crossbred dairy cows it will have substantial impacts on smallholder dairy farms especially if it is targeted to credit constrained farms.     

Managerial efficiency under risk for broiler producers in Saudi Arabia

Managerial efficiency for broiler producers m Saudi Arabia is generally difficult lo achieve. High investment costs coupled with relatively high average production costs and the consequent incompetent market prices, have resulted in projects either working at less than full capacity or being shut down completely. The aim here is to determine the most efficient production alternatives (actions) available to managers under business risk considerations. The ordinary stochastic dominance approach was used to solicit the most efficient production alternatives for broilet producing projects of all sizes in the Central Region of Saudi Arabia. For small-and medium-sized projects, the efficient production alternatives concentrated on marketing risk. For large projects, the efficient actions concentrated on both marketing and production risks. For the three sizes of projects, the two production alternatives that proved to be the most efficient, were the one that contains creating morc marketing strategies and the one that adopts good veterinary care systems. On the other hand, the production alternative that deals with selecting good breeds of chicks appeared to be most efficient for small and large projects only.     

Stock Market Reaction to Food Recalls

The costs of food recalls are examined from the perspective of capital markets. A partial event analysis technique is used in this quantitative investigation of firm-specific repercussions of incidents of microbiological contamination of food. These recalls vary by product, company size and scope, and severity. Returns to shareholders fell in some cases, but stock market reaction was not discernible in other incidents. Effects on volatility of returns also are mixed. These findings point out the potentially distinct crisis management tools that would be used for reputation in the stock market versus measures to communicate with the general public.     

Non-market valuation of forest goods and services: Good practice guidelines

The European COST Action E45 on European Forest Externalities (EUROFOREX) participants developed a set of good practice guidelines for the non-market valuation of forests, elaborating on stated and revealed preference methodologies, as well as benefit transfer and meta-analytical procedures. This article presents a summary of the guidelines.     

Rising Food Prices and Household Welfare: Evidence from Brazil in 2008

Food price inflation in Brazil in the 12 months to June 2008 was 18%, whereas overall inflation was 7%. Using spatially disaggregated monthly data on consumer prices and two different household surveys, we estimate the welfare consequences of these food price increases, and their distribution across households. Because Brazil is a large food producer, with a predominantly wage‐earning agricultural labour force, our estimates include general equilibrium effects on market and transfer incomes, as well as the standard estimates of changes in consumer surplus. Although the expenditure (or consumer surplus) effects were large, negative and markedly regressive everywhere, estimates of the market‐income effect were positive and progressive, particularly in rural areas. Because of this effect on the rural poor, and of the partial protection afforded by increases in two large social assistance benefits, the overall impact of higher food prices in Brazil was U‐shaped, with middle‐income groups suffering larger proportional losses than the very poor. Nevertheless, as Brazil is 80% urban, higher food prices still led to a greater incidence and depth of poverty at the national level.     

Imperfect Accounting and Reporting Bias

Errors and bias are both inherent features of accounting. In theory, while errors discourage bias by lowering the value relevance of accounting, they can also facilitate bias by providing camouflage. Consistent with theory, we find a hump‐shaped relation between a firm's propensity to engage in intentional misstatement and the prevalence of unintentional misstatements in the firm's industry for the whole economy and a majority of the industries. The result is robust to using firms’ number of items in financial statements and exposure to complex accounting rules as alternative proxies for errors and to using the restatement amount in net income to quantify the magnitude of bias and errors. To directly test for the two effects of errors, we show that when errors are more prevalent, the market reacts less to firms’ earnings surprises and bias is more difficult to detect. Our results highlight the imperfectness of accounting, advance understanding of firms’ reporting incentives, and shed light on accounting standard setting.