Farm demand for quality potato seed in Indonesia

Seed is the one of the most costly components of potato production in developing countries. Since potato is a vegetatively reproduced crop, diseases such as viruses build up and yield declines as tubers are saved from one harvest for use as seed the next season. Replacing farm‐saved seed with clean seed is one means to increase yield, but information asymmetry between buyers and sellers on seed quality may restrict market supply of this input. In this article we develop a model of the seed market in which clean seed is treated as a capital good providing benefits over several seasons. To determine farm demand for clean seed, we conducted a survey of 182 potato farmers in the major potato growing areas of Indonesia to elicit their perceptions of seed quality from different sources, and derive farmers' “willingness‐to‐pay” for quality potato seed. Results indicate that the effects of information asymmetry on seed supply may be partially offset by the “reputation” of specialized seed producers. Nevertheless, marginal returns to disease‐free seed appear to significantly exceed marginal costs, indicating that improving supply of quality seed will contribute strongly to productivity growth in potato. We discuss several policy options to encourage supply and utilization of quality potato seed.     

Farmers’ Preferences for New Environmental Policy Instruments: Determining the Acceptability of Cross Compliance for Biodiversity Benefits

This paper addresses the issue of farmers’ views concerning the perceived legitimacy of environmental cross compliance as a governance mechanism. Recent work on the theory of regulation emphasises the importance of the legitimacy ascribed to a regulation in determining the effectiveness with which it can be implemented. The current study outlines a rationale for why this motivational question should receive attention in economic studies of policy design and reports the results of a survey of 102 arable farmers in East Anglia, UK, which investigated the level of support for the principle of cross compliance for biodiversity objectives. It was found that two attitudinal factors, referred to as ‘Stewardship Orientation’ and ‘Technological Beliefs’, were by far the most significant in determining the acceptability of cross compliance in the sample, and that structural and socio‐demographic factors were considerably less important. The study also identified clusters of farmers according to their overall attitudinal orientation. Of the five groups thus categorised, four appeared on average likely to reject cross compliance as a general principle, leaving only the most ‘Environmental’ cluster in support. The policy implications are discussed and some conclusions drawn.     

Non‐parametric Modelling of Spatial Price Relationships

We apply non‐parametric methods to a consideration of price transmission processes within US egg markets at the turn of the nineteenth century. Gordon (National Bureau of Economic Research Working Paper 7833, 2000) labelled this as an era of ‘Great Inventions’ which contributed to the subsequent years of significant productivity growth and noted that the development of mechanical refrigeration and transportation technologies played an important role in this growth. Our models present certain advantages relative to parametric models traditionally employed in price transmission analyses. We compare results derived from local polynomial modelling with those obtained using non‐linear threshold models. Both techniques suggest that US egg markets were interrelated at the turn of the nineteenth century. However, non‐parametric techniques often suggest a higher degree of price transmission than that implied by threshold models. Results also suggest that threshold models may have difficulties in adequately capturing price relationship dynamics, especially when these are of a highly nonlinear nature.     

An economic approach to soil fertility management for wheat production in north-eastern Australia

Soil fertility decline and soil management for crop production are important economic issues for grain growers in north-eastern Australia. In that region, there is evidence of soil fertility decline which is attributed to past crop management practices. The questions addressed in this article are first, whether components of soil fertility can be improved by better management and second, by how much soil fertility would change. Soil fertility for crop production is considered in terms of soil organic carbon and nitrogen. A stochastic dynamic economic analysis of soil fertility management for wheat production is presented. A sequential analysis of first deriving the optimal nitrogen stock and application rates is followed by an assessment of tillage, stubble, and fertilizer strategies to obtain an optimal level of soil organic carbon. The recommended management practices are consistent with emerging management trends in the region. The derivation of optimal levels of soil fertility for agricultural purposes has other policy implications, which we discuss.     

Sheep as capital goods and farmers as portfolio managers: a bioeconomic model of Scandinavian sheep farming

A model analyzing the economics of sheep farming is formulated. The basic idea is simple. Sheep are capital and they are held by farmers as long as their capital value exceeds their slaughter, or meat, value. Farmers are therefore portfolio managers aiming to find the optimal combination of different categories of animals. Yields are compared with the yields from other assets. The model is formulated within a Northern Scandinavian economic and biological setting with a crucial distinction between the outdoors grazing season and the indoors season, and with adult sheep and lambs being different categories. In the first step, the management problem is analyzed with only the meat income of the farmers taken into account. In the next step, income from wool production is considered as well. The analysis provides several results that differ from standard harvesting theory.     

More reasons why farmers have so little interest in futures markets

The use by farmers of futures contracts and other hedging instruments has been observed to be low in many situations, and this has sometimes seemed to be considered surprising or even mysterious. We propose that it is, in fact, readily understandable and consistent with rational decision making. Standard models of the decision about optimal hedging show that it is negatively related to basis risk, to quantity risk, and to transaction costs. Farmers who have less uncertainty about prices and those with a diversified portfolio of investments have lower optimal levels of hedging. If a farmer has optimistic price expectations relative to the futures market, the incentive to hedge can be greatly reduced. And finally, farmers who have low levels of risk aversion have little to gain from hedging in terms of risk reduction, in that the certainty‐equivalent payoff at their optimal hedge may be little different than the certainty equivalent under zero hedging. These reasons are additional to the argument of Simmons (2002) who showed that, if capital markets are efficient, farmers can manage their risk exposure through adjusting their leverage, obviating the need for hedging instruments.     

Forecasting the Adoption of GM Oilseed Rape: Evidence from a Discrete Choice Experiment in Germany

This paper explores farmers’ willingness to adopt genetically modified (GM) oilseed rape prior to its commercial release and estimates the ‘demand’ for the new technology. The analysis is based upon choice experiments with 202 German arable farmers. A multinomial probit estimation reveals that GM attributes such as gross margin, expected liability from cross pollination, or flexibility in returning to conventional oilseed rape significantly affect the likelihood of adoption. Neighbouring farmers’ attitudes towards GM cropping and a number of farmer and farm characteristics were also found to be significant determinants of prospective adoption. Demand simulations suggest that adoption rates are very sensitive to the profit difference between GM and non‐GM rape varieties. A monopolistic seed price would substantially reduce demand for the new technology. A monopolistic seed supplier would reap between 45% and 80% of the GM rent, and the deadweight loss of the monopoly would range between 15% and 30% of that rent. The remaining rent for farmers may be too small to outweigh possible producer price discounts resulting from the costs of segregating GM and non‐GM oilseed rape along the supply chain.     

Exporting raises productivity in sub-Saharan African manufacturing firms

Proponents of trade liberalization argue that exporting helps firms to achieve higher productivity levels. This hypothesis is examined for a panel of manufacturing firms in nine African countries. The results indicate that exporters in these countries are more productive and, more importantly, exporters increase their productivity advantage after entry into the export market. While the first finding can be explained by selection-only the most productive firms engage in exporting-the latter cannot. The results are robust when unobserved productivity differences and self-selection into the export market are controlled for using different econometric methods. Scale economies are shown to be an important channel for the productivity advance. Credit constraints and contract enforcement problems prevent firms that only produce for the domestic market from fully exploiting scale economies.     

Predicting Interest Rate Volatility Using Information on the Yield Curve

This study examines whether information on the yield curve is useful for predicting volatility of the yield curve. The information is used within dynamic models by specifying the covariance matrix of changes in yield factors as nonlinear functions of the factors. Using such models, it is found that the information (i) is useful for predicting volatility of the slope factor, achieving the accuracy comparable with the GARCH model; (ii) has incremental value for predicting volatility of the curvature factor when combined with a volatility‐specific factor; and (iii) does not much improve prediction of volatility of the level factor once the volatility‐specific factor is introduced.     

Climate adaptation in ‘new world’ cultural landscapes: The case of Bay of Fundy agricultural dykelands (Nova Scotia,Canada)

North America has few cultural agricultural landscapes, and often commensurately poor governance arrangements for managing change in such settings. This research uses the Acadian dykelands of Nova Scotia, Canada, as an opportunity to explore the social and governance limits to coastal climate adaptation in ‘new world’ cultural agricultural landscapes, as well as inform local decision-making. Approximately half of Nova Scotia’s coastal wetlands were converted to dykeland in the 1600s, lowering local resilience to the increased frequency and storm severity anticipated with climate change. Today, dykelands protect a diversity of public and private interests, meanings and values, yet are controlled by the agricultural sector, which can no longer afford to maintain them all to 2050 climate projections. We report here on a representative online Q-methodology survey of 183 adult Nova Scotians in the spring of 2015. Respondents sorted 34 statements along a normal distribution about whether they prefer dykeland maintenance or wetland restoration, and under what governance arrangements. Four factors were derived: the dominant discourse was local, female and strongly pro-dykeland, indicating the likelihood for local resistance to dykeland removal on for cultural, recreational and farming reasons. The second factor was supportive of wetland restoration for reasons of efficiency, not wetland affinity, but characterized by those in positions of management power. The two minority viewpoints were less informed about dykelands, characteristic of outsiders, and concerned more with governance. More education is needed about the challenges facing dykelands, the benefits of coastal wetlands, and the management options, but this research shows proposals to change landscape should emphasize flood mitigation over cost-saving. Cultural values and status quo bias are clearly barriers to adaptation planning, even when discussing the removal of man-made structures. The factors were surprisingly polarized, suggesting the forced-normal distribution affects the space available to convey nuanced perspectives. Large p-set Q-method of this kind is likely most useful for characterizing the emergent discourses demographically, and understanding their prevalence; the same discourses had emerged within a much smaller pilot study.