Grain price stabilization in India: Evaluation of policy alternatives

Stabilization of prices is an important element of food policy in India as in most other countries — both developing and eveloped. However, since the magnitude of grain stocks held for this purpose as well as the costs of physical storage have become prohibitively high, there is now a need for finding cost-effective alternatives including non interventionist and market-oriented methods for price stabilization. In this paper we consider the case of rice and wheat which are staple foodgrains in India. We make a comparison between alternative price stabilization policies including that of holding buffer stocks in terms of their impact on domestic price stability, producer and consumer welfare and government costs. A multi-market equilibrium framework is used where private storage, consumption, supply and prices of rice and wheat are determined simultaneously. Indian exports and imports are assumed to affect world prices. The alternative price stabilizing mechanisms are ranked according to both the criteria, welfare and price stability achieved. The main findings are as follows. The ranking of alternatives varies with the criterion used. Greater price stability need not necessarily imply greater welfare. The option of variable levies on private external trade turns out to be the most inexpensive and that of domestic buffer stocks the costliest in achieving price stability. Further, the efficacy of buffer stocks and subsidy to private storage in stabilizing prices is lower under free trade as compared to the case where the economy is closed to private external trade.     

Evaluating Alternative Mortgage Instruments for Low-equity Ontario Dairy Farms

The current debt repayment problems facing many farmers have led to requests for changes in farm financing mechanisms for the sector. Two such debt repayment instruments, namely the shared risk mortgage and commodity-based loan mortgage, were recently introduced by the Farm Credit Corporation. This study is a comparative evaluation of their potential to adjust the cash flow repayment requirements of these mortgages, compared with a floating-interest-rate conventional mortgage, using an average Ontario dairy farm as a case study. The results of the analysis show that the changes in the mortgage interest and principal repayment conditions improved the cash flow positions of the farms relative to the conventional mortgage. The study thus concludes that the changed mortgages offer some prospect for improving farm net cash flows when interest rate levels are reduced at least for a short period and when fluctuations in interest rates are limited. However, the major impact of these changes in mortgage conditions is related to this level of interest rate charged, and other methods of reducing or delaying interest charges on farm mortgages may be equally successful in improving net cash flows of farmers with relatively large debts. Les problèmes financiers dont font face actuellement les producteurs agricoles ont amenés une remise en cause des mécanismes de financement du secteur agricole. Deux instruments de paiement de la dette, l'hypothèque à risque partagé (SRM) et le prêt basé sur les prix (CBLM), ont été récemment introduits par la Société du Crédit Agricole. Cette étude évalue le potentiel de ces deux instruments à ajuster les remboursements requis, comparativement à l'hypothèque conventionnelle à taux d'intérêt variable, en utilisant comme étude de cas, une ferme laitière moyenne type de l'Ontario. Les résultats de l'analyse montrent que les changements dans le remboursement en capital et intérêt améliorent la position de cashflow des fennes comparativement à l'hypothèque conventionnelle. L'étude conclue que les deux nouveaux instruments étudiés offrent des espoirs d'amélioration des cashflows nets des fermes lorsque le niveau des taux d'intréêts est réduit pour au moins une courte période et que les fluctuations de ceux-ci sont limitées. Cependant, l'impact majeur des changements dans les conditions de l'hypothèque est relié au niveau du taux d'intérêt demandé et d'autres méthodes de réduction ou de retarement des frais d'intérêts sur les hypothèques agricoles peuvent être également bénéfique dans l'amélioration du cashflow net des producteurs relativement endettés.     

A NOTE ON VICTORIAN WHEAT YIELD DISTRIBUTIONS

An analysis of wheat yield series from ten localities in Victoria was undertaken to investigate for independence of observations and to test for normality of the distributions. The conclusion was reached that Victorian wheat yield series are composed of random observations and form frequency distributions which display slight negative skewness. The situation may be different for other crops or for wheat in other areas.     

A NOTE ON DISTRIBUTED LAG MODELS OF MAIZE AND WHEAT PRODUCTION RESPONSE: THE KENYAN CASE*

In this note the supply responses in maize and wheat production are estimated from distributed lag models. The Nerlove model and the Fisher distributed lag model fit Kenyan data but more complicated models, like the polynomial lag model, do not. The calculated price elasticities suggest that Kenyan large-scale farmers are highly responsive to price changes. Some policy implications are drawn from the analysis.     

TOWARDS PRACTICAL GUIDELINES FOR MULTIPLE USE MANAGEMENT*

The general acceptance of multiple use as a desirable management goal has not been matched by practical guidelines to implement and achieve that goal. As Pearse [5] rightly noted, the most serious obstacles to applying multiple use principles are usually the lack of appropriate data and lack of established methodology. This study did not face prohibitive problems in valuing extra-market goods, but as with all multiple use studies, it did face the problem of applying the standard economic model of the multi-product firm. It is hoped this particular empirical application of the model contributes generally to the provision of guidelines for multiple use management.     

Macroeconomic Policy Design in the European Monetary Union: A Numerical Game Approach

Optimal economic reactions of European policy-makers on exogenous shocks are determined by simulating a global macroeconomic model under different institutional arrangements. In particular, it is investigated whether discretionary or rule-based policies and whether non-cooperative or cooperative policies for Europe result in a better performance as measured by intertemporal objective functions. The results show that the answers to these questions depend strongly on the nature of the shock to which European economies are exposed. For a negative supply shock, rule-based policies dominate, whereas for a negative demand shock, cooperative fiscal policy-making within the European Monetary Union gives the best results.     

MEASUREMENT OF THE DISTRIBUTION OF WEALTH IN CANADA

The only periodic data available in Canada on the asset holdings and net worth of the household sector are data collected through a series of household surveys originally initiated in 1954. Some limited data on the holdings of financial claims by the personal and unincorporated business sector are available from flow of funds work. Data are unavailable for estimation from estate tax returns.
The scope of the surveys has been expanded substantially so that the most recent survey obtained a very comprehensive list of asset holdings. The experience with Canadian surveys has been similar to that of other countries; surveys appear to underestimate asset holdings although the estimates are more reliable for widely held assets than for assets with a very skewed distribution. Nevertheless, the surveys appear to trace the accumulated distribution of personal savings over time to a considerable degree and provide useful cross-sectional trend data.
Canadian data show that wealth is more unequally distributed among family units than is income although wealth appears to be more equally distributed between income groups than is income. Wealth is also very unequally distributed within the same income group. Over time, there appears to have been some movement towards a more equal distribution of asset holdings between income groups.