Agricultural Household Model Research Articles

Household Well-Being, Environment and Health in the Peripheries of the Metropolitan Area of Oaxaca City

Objective: The economy of poor urban households is analyzed using a well-being function that also considers incomes, sociodemographic characteristics (CS), housing and the environment. Theoretical structure: The dependent variable is household well-being (BF) and the explanatory variables are all incomes obtained from the market economy, as well as government transfers (TG). The CS represent resources that facilitate obtaining income; housing provides income indicators; and the environment are the physical conditions that determine the state of health. Methodology: A probabilistic survey was applied to a sample of households in four poor peripheral neighborhoods. The equations were constructed using ordinary least squares regression and the beta coefficients measure the contribution of the variables from the four categories above to the BF. The effects of these variables on health expenditure (GS) are also measured. Discoveries: The main incomes that contribute to the BF were determined and these make a contribution equivalent to that of the set of variables of the CS, housing and family businesses. Likewise, the environment and diseases increase GS. Practical and social implications: Research shows that poor peripheral urban households participate in the market economy and that an increase in average age contracts their level of BF. Originality/value: The tested model turned out to be versatile and accurate in analyzing the economies of poor urban households and has greater explanatory power than the agricultural household models and the applied general equilibrium model.

Price and Non‐Price Factors in Development of Rice Cultivation: Case Studies From Southern India and Mekong‐Delta Vietnam

ABSTRACTThe high rice prices of 2023 have highlighted the need for increasing rice productivity. But improving productivity, especially in low‐performing rice‐producing regions, should also improve incomes for the numerous smallholder cultivators. This article examines what we can learn from the experience of high‐performing rice‐growing regions, which have both high rice yields and incomes. We focus on two best‐performing villages from Kerala, southern India and Mekong Delta, Vietnam. Using a detailed case study approach combining farm budget analysis, counterfactual simulations using agricultural household models, and qualitative insights, our analysis shows the contribution of price support, irrigation, and agricultural research in these two regions to the current situation. While price support was the prominent factor in Keralaʼs village, irrigation and extending the cropping intensity was important for farm incomes in the Mekong Delta village. This comparative analysis demonstrates the need for an ongoing evaluation of price and non‐price factors and supplementing farm incomes through specific interventions for developing low‐performing rice‐producing regions.

Place-based rural development programs and the labor allocation of farm households

PurposeRural development programs are widely used policy instruments mitigating rural-urban economic disparities. Yet, little research has examined their effect on rural labor. This study fills this knowledge gap by quantifying the causal impact of such programs on the labor allocation of farm households in Taiwan.Design/methodology/approachA theoretical framework based on the agricultural household model is constructed to guide the empirical specification. A unique dataset compiles administrative data on the program’s subsidies with farm household surveys across seven years. To cope with endogeneity bias, an instrumental variables model is applied. The eligibility rule for a township to participate in the program is used as the instrument.FindingsWe find that the program increases the labor supply of farm household members. These effects are more pronounced for off-farm work, particularly non-heads of farm households. The program’s subsidies supporting culture and promotion-related activities have larger effects. Finally, females benefited more from the program.Originality/valueWe focus on farm households since this group is the target of place-based rural development programs. In addition, we identify the causal impact of place-based development programs on rural labor. Finally, this study is relevant to the literature on intra-household models by demonstrating that place-based rural development programs can affect the labor supply of farm household members.

Does fuel price subsidy work? Household energy transition under imperfect labor market in rural China

Dependence on traditional biomass energy, such as crop residues and firewood, has a number of negative impacts on sustainable rural livelihoods in many developing countries. Subsidizing modern fuels has been adopted by many governments and development agencies to increase the adoption of modern clean fuels, however, its effectiveness on rural energy transition away from traditional biomass energy is rarely investigated. This paper seeks to understand the effectiveness of fuel price subsidies based on a non-separable agricultural household model. We developed a theoretical framework explaining household behavioral responses to price incentives in the presence of labor market imperfections and tested this framework with rural household data in China. We found that the policy interventions focusing on fuel pricing are largely ineffective in promoting household energy transition partly due to imperfect rural labor markets. This finding has important policy implications for accelerating energy transitions. Based on our findings, we recommend that more attention needs to be paid to non-price mechanisms, such as providing technical support (e.g. increasing R&D investment in exploring new energy technologies and providing demonstration projects), constructing accompanying modern energy infrastructures, providing off-farm employment opportunities, and establishing a sound and effective social safety.

Refugee inflows, surplus farm labor, and crop marketization in rural Africa

This paper sheds light on the structure of factor and output market frictions to investigate long-term effects of refugee inflows on host farmers. Combining a canonical agricultural household model, the natural experimental setting of mass refugee inflows into Tanzania in the early 1990s, and longitudinal panel data from the host economy, I show that refugee inflows cause market-specific gains and losses. Refugee inflows tighten the off-farm labor market participation constraint, implying an increase in surplus farm labor and labor market inefficiency. On the other hand, I observe a positive impact on the transition from subsistence to crop marketization. This transition is revealed to be primarily due to a reduction in fixed transaction costs around refugee camps, not due to an increase in consumption demand by refugees. While the overall impact on agricultural labor productivity is negative, the “surplus farm labor effect” and the “crop marketization effect” act in opposite directions.

Gender in agriculture: Determinants of female labor supply decisions among rural households in the context of market imperfections in Pakistan

AbstractWelfare of the household depends on the better understanding of time allocation among different sectors in response to changes in economic conditions. This article estimates labor supply of male and female of rural households regarding activities for own‐farm, agricultural‐wage, and nonfarm sector. The study utilizes the cross‐sectional data of 341 rural households of the Punjab, Pakistan through random sampling technique. In Pakistan, like other developing countries, gender‐based wage data are almost nonexistent, and functioning of labor market is imperfect. Therefore, reservation wages are calculated through production function analysis. Our results reveal that literacy rate, social status, and rural infrastructure are key determinants in the rural labor market. Hypothesis of separability in agricultural household models is tested by applying three tests. Separability hypothesis is rejected on the bases of results indicating the presence of imperfect labor market in rural settings of Pakistan. The findings suggest that policy makers should focus on educational opportunities, infrastructure development, and minimizing entry barriers in labor market, especially for females, regarded as socially backward class in order to raise economic conditions of rural dwellers in Pakistan.

Análisis de equilibrio general aplicado a la economía de una comunidad rural de México

Los hogares agrícolas de pequeñas economías rurales se caracterizan por ser una unidad de producción-consumo, no seguir la lógica del mercado y presentar una estructura productiva heterogénea y diversificada. Esta investigación tuvo como objetivo simular algunos escenarios de política para analizar los efectos de las políticas sectoriales o reformas comerciales sobre la economía de una comunidad rural de 2 500 habitantes o menos. Mediante la parametrización del modelo de hogares agrícolas; a través, de la matriz de contabilidad social de la comunidad de Bajitos de la Laguna, municipio de Tecpan de Galeana, Guerrero, México y en un contexto de equilibrio general, se simularon tres experimentos de política con distintas reglas de cierre del modelo: 1) caída del 5% en el precio de los bienes básicos producidos por los hogares tipo campesino; 2) disminución de un 5% en el precio de los bienes básicos y una transferencia directa al ingreso de los productores; y 3) una transferencia al ingreso de los productores sin caída en los precios de los básicos o cualquier otro bien. Los resultados muestran cómo una política de este tipo impacta a la producción de los bienes producidos en la comunidad, el ingreso de los hogares, la demanda de consumo de los hogares, la oferta y demanda de factores, el excedente comercializado, principalmente. Los resultados también muestran que efectivamente la comunidad se distingue por ser una comunidad típicamente de rasgos campesinos y ser impactada en diferentes magnitudes por las políticas sectoriales o comerciales.

Cash Transfers and Gender Differentials in Child Schooling and Labor: Evidence from the Lesotho Child Grants Programme

Cash Transfers and Gender Differentials in Child Schooling and Labor: Evidence from the Lesotho Child Grants Programme

Are smallholder farmers better or worse off from an increase in the international price of cereals?

The effect of agricultural price shocks on household welfare in low-income countries is a major concern for policymakers attempting to reduce poverty rates. This study estimates the impact of an increase in the world cereal price on rural households in Burkina Faso in an agricultural household model framework. We account for imperfect transmission of global prices to local prices as well as supply and demand response of rural households to price signals. The increase in price during the period from 2006 to 2014 is translated to welfare improvement ranging from 0.02 percent for 2006 to 0.06 percent for 2011 for farmers in Burkina Faso.

Are agricultural markets more developed around cities? Testing for urban heterogeneity in separability in Tanzania

A key question for policymakers concerned about feeding Sub-Saharan Africa’s (SSA) rapidly growing cities is whether or not nearby farms benefit from improved agricultural markets. Evidence from case studies and agricultural location theory suggest so, but urban heterogeneity has not yet been found in a common economic test of functioning agricultural markets—the separability result. The test is based on a key insight of the agricultural household model, which finds that a farm’s profit should be maximized independently from household utility given perfect factor markets (i.e., separability), but not so if the household faces at least two market failures (i.e., non-separability). In this paper, I test for geographic heterogeneity in separability between rural, peri-urban, and urban districts using 2014-15 data from the World Bank’s Living Standards Measurement Study and Integrated Surveys on Agriculture (LSMS-ISA) from Tanzania. I find strong evidence that the correlation between pre-harvest labor demand and household size implying non-separability in rural areas is significantly weaker in three of Tanzania’s five largest cities: Dar es Salaam, Arusha, and Mbeya. Given certain assumptions, this can be interpreted as evidence of increased agricultural market functionality around these cities relative to rural areas. Overall, these results contribute to the debate on how to achieve urban food security in SSA and give some validity to agricultural location theory and the separability test as tools to help policymakers characterize the nature of agricultural factor markets.

Agricultural technology adoption and child nutrition enhancement: improved maize varieties in rural Ethiopia

Adoption of improved crop varieties can lead to multiple benefits to farm households, including increased productivity, incomes, and food consumption. However, possible impacts of adoption on child nutrition outcomes are rarely explored in the literature. This article helps bridge this gap through an impact assessment of the adoption of improved maize varieties (IMVs) on child nutrition outcomes using a recent household survey from rural Ethiopia. The conceptual linkage between IMV adoption and child nutrition is first established using an agricultural household model. Instrumental variable estimation suggests the overall impacts of adoption on child height-for-age and weight-for-age z-scores to be positive and significant. Quantile instrumental variable regressions further reveal that such impacts are largest among children with poorest nutrition outcomes. Finally, by combining a decomposition procedure with system of equations estimation, it is found that the increase in own-produced maize consumption is the major channel through which IMV adoption affects child nutrition.

Agricultural household effects of fertilizer price changes for smallholder farmers in central Malawi

This simulation study explored the agricultural household effects of changes in the price of inorganic nitrogen fertilizer for farmers in central Malawi. We selected the Dedza district to conduct this study, which is a district reliant on maize production for household livelihoods. This study used data from a household survey to develop and calibrate an agricultural household model for a representative household. The survey focused on socio-economic and agronomic factors. This included plot-level agronomic details for crop inputs and yields. Using our dynamic model, we found a negative association between fertilizer prices and fertilizer use, maize area, and income. Removing fertilizer prices led to an increased use of nitrogen fertilizer at the household scale from 16.8kg to 49.6kg and this helped increase household income by 52%. We calculated an average own-price elasticity of fertilizer demand of −0.92. Although higher fertilizer prices increased legume acreage, which had potential environmental benefits, household income fell. Our benefit-cost ratio calculations suggest that government actions that deliver changes in fertilizer prices are relatively cost effective. Our study highlights the reliance of households on maize production and consumption for their livelihood, and the effects that changes in fertilizer prices can have upon them.

English

This study extended the agricultural household model to explain food storage, consumption and sales behaviors of farming households in northern Uganda using two major staple grains: finger millet and beans. Using secondary data collected by the Uganda Bureau of Statistics from 782 millet and beans producing households (388 households below poverty level and 394 households above poverty level), seemingly unrelated regressions were performed and risk neutrality tests were carried out. It was found that all finger millet and beans producing households in northern Uganda were risk neutral regarding storage and sales decisions with only millet producing households below poverty line being risk averse in their consumption decisions. However, households above poverty line produced and stored more millet and beans implying that they were more food secure than households below poverty level. Therefore, strategies to boost incomes, production and prudent management of millet and beans stocks at the household level are critical for food security alleviation in northern Uganda. Key words: Food security, household, precautionary storage, consumption, sales, price risk, Uganda.

Determinants of on-farm diversification in Bangladesh

On-farm diversification has the potential to reduce income variability, raise revenues, and increase food security in Bangladesh. This study identifies determinants of on-farm diversification using the Agricultural Household Model (AHM) as the theoretical framework. Survey data collected in Bangladesh over June-September 2014 were empirically examined. The Probit model was used to analyse the impact upon on-farm diversification of different household, farm and market characteristics. Data show that the age of the head of the household, farm size, access to credit, technical assistance, regional dummies and access to markets positively influenced the adoption of on-farm diversification. The active participation of women in farming activities was a noteworthy determinant that was found to increase diversification in Bangladesh. The key implication is that addressing these factors in the national agricultural policy of Bangladesh will encourage Bangladeshi farmers to diversify their farming activities. Recommendations for policy guidelines are proposed for consideration.

Food Price Changes and Household Welfare: What Do We Learn from Two Different Approaches?

The use of a marginal approach can significantly distort the predicted effects of large price variations on monetary welfare over the medium- to longer-term. This paper aims at shedding some light on the differences between a marginal approach and a non-separable agricultural household model with behavioural responses. When behavioural adjustments are allowed, households can adapt their consumption and production patterns by resulting in lower deteriorations in household welfare. The second-order effects introduced in the approach with responses reduce the negative effects due to the first-order consumption effects, with significant differences across quintiles. On average, the second-order effects represent up to roughly 40 per cent of total first-order effects.

Health, Enterprise, and Labor Complementarity in the Household

We study the role of household enterprise as a coping mechanism after health shocks. Using variation in the cost of traveling to formal sector health facilities to predict recovery from acute illness in Tanzania, we show that individuals with prolonged illness switch from farm labor to enterprise activity. This response occurs along both the extensive (entry) and intensive (capital stock and labor supply) margins. Family members who are not ill exhibit exactly the same pattern of responses. Deriving a simple extension to the canonical agricultural household model, we show that our results suggest complementarities in household labor.

Misfortunes never come singly: Structural change, multiple shocks and child malnutrition in rural Senegal

This study considers the two most pronounced shocks Senegalese subsistence farmers struggle with, namely increasing purchase prices and droughts. We assess the relationship of these self-reported shocks with child health in a multi-shock approach to account for concomitance of adverse events from the natural, biological, economic and health sphere. We employ a unique farming household panel dataset containing information on children living in poor, rural households in eight regions of Senegal in 2009 and 2011 and account for structural changes occurring between survey periods due to the large scale, national Nutrition Enhancement Program. By zooming in to the micro level we demonstrate that Senegal as a Sahelian country, mainly reliant on subsistence agriculture, is very vulnerable to climate variability and international price developments: According to our conservative estimates, the occurrence of a drought explains 25% of the pooled weight-for-age standard deviation, income losses 31%. Our multi-shock analysis reveals that the shocks are perceived as more severe in 2011 with droughts explaining up to 44% of the standard deviation of child health, increased prices up to 21%. Yet, the concomitance of droughts and increased prices after the structural change, i.e. the Nutrition Enhancement Program, indicates that the health of children experiencing both shocks in 2011 has improved. We argue that these results are driven by the increase in rural household income as theoretically outlined in the agricultural household model. Thus, adequate policy responses to shocks do not only depend on the nature but also on the concomitance of hazardous events.

Land Acquisition, Labor Allocation, and Income Growth of Farm Households

ABSTRACTThis article investigates how land acquisition during urbanization affects labor allocation decisions of farm households in China. We develop an agricultural household model by including land acquisition to examine its impacts on nonfarm labor participation and income. Two data sets (self-designed household surveys at Xingwen County in 2012 and the China Household Finance Survey (CHFS) data covering 29 provinces in 2013) are adopted for empirical analysis. The results find that land reduction has significantly positive effects on the probability and the share of family nonfarm labor allocation from both data sets. We also find that land acquisition increases the household income of the land acquisition group in CHFS data.

The effects of China's Sloping Land Conversion Program on agricultural households

AbstractIn the late 1990s, China aimed to mitigate environmental degradation from agricultural production activities by introducing the world's largest “Payments for Environmental Servicesˮ program: the Sloping Land Conversion Program (SLCP). We develop a microeconomic Agricultural Household Model, which can model the production, consumption, and nonfarm labor supply decisions of agricultural households in rural China in a theoretically consistent fashion. Based on this theoretical model, we derive an empirical specification, which we econometrically estimate using the Hausman–Taylor method and a large longitudinal farm household data set. The empirical results significantly differ between regions, but are generally consistent with the results of our theoretical comparative static analysis, for example, that the SLCP significantly decreases agricultural production. While the SLCP only increases nonfarm labor supply and total consumption in some regions, these effects could not be observed in others. The recent reduction of the SLCP compensation payment rates generally had negligible effects on agricultural production and off‐farm work and only very small effects on household consumption.

Farm Labor: Key Conceptual and Measurement Issues on the Route to Better Farm Cost and Return Estimate

This paper examines methods frequently used by agricultural economists to measure the cost of farm labor, including operator and other unpaid, and to provide insights for improving them. The tradition is broken of treating labor and management separately, and labor is defined as encompassing all the productive activities of individuals or human agents used in a business, including farming. Conceptual issues are first addressed: 1) the nature of economic cost and the cost of unpaid labor, and 2) time allocation in agricultural household models where an individual's annual time endowment is allocated potentially to leisure, farm work, and off-farm work. Measurement issues are addressed second: 1) specific methods for improving the measurement of the cost of farm labor, and 2) specific procedures for estimating the opportunity cost of operator and unpaid farm labor. The overall goal is to obtain better farm cost and return estimates.