Changes In Agricultural Prices Research Articles

Income Shocks and Conflict: Evidence from Nigeria

Abstract This paper examines the relationship between income shocks and conflict across Nigerian states over the 2000s. By matching consumption, production, commodity prices and conflict data, the analysis captures two opposite channels linking agricultural price changes to conflict. Consistently with the opportunity cost mechanism of conflict, price increases of commodities produced by the households have a conflict-reducing effect, while the opposite is true for prices of consumed commodities. The net impact turns out to be conflict inducing in contrast with most of the related literature that focuses on the production side of agricultural price shocks. These results underscore the importance of modelling both production and consumption effects to get consistent estimates of the impact of price changes on conflict.

What Drives Intensification of Land Use at Agricultural Frontiers in the Brazilian Amazon? Evidence from a Decision Game

Land-use change results from the decisions of diverse actors in response to economic and political contexts. Identification of underlying decision-making processes is key to understanding land-use patterns, anticipating trends, and designing effective environmental governance mechanisms. Here, we use a scenario-based decision game to examine hypothetical land-use decisions among four groups of rural producers in the municipalities of Sinop, Guarantã do Norte and Novo Progresso in the Brazilian Amazon. We simulate changes in agricultural prices, production cost, and frequency of environmental monitoring (in situ inspections) to understand how land-use decisions are made and change with shifts in economic and governance incentives. Hypothetical land-use decisions vary across scenarios, but not across study sites; environmental law enforcement influence land decisions, but not to the extent of dominating market factors and not for all types of producers. Decision games cannot substitute approaches to explain behavioral responses from observational data. However, they can provide immediate feedback on behavioral hypotheses before comprehensive observational data becomes available and support the development of models for land-use policy planning at local and regional scales.

An Empirical Structural Model of Productivity and Conservation Reserve Program Participation

The Conservation Reserve Program (CRP), which provides incentives for landowners to idle erodible and marginal farmland, faced new challenges as record-high commodity prices significantly affected landowners' interests in the program in recent years. We develop and estimate an empirical structural model to examine the manner in which productivity, market conditions, and CRP payment affect landowners' land use decisions. The model carefully controls for the endogeneity of CRP payment and landowners' self-selection into the program. The parameter estimates are used to simulate how changes in agricultural prices and CRP payment influence program enrollment and cost across the Corn Belt states.

REDD policy impacts on the agri-food sector and food security

Recent research shows that the combined contributions of deforestation, forest degradation and peat land emissions account for about 15% of greenhouse gas emissions. The REDD policy which preserves forests and values standing forests, enables substantial emission reductions. Since agricultural production and area expansion is a primary driver of tropical deforestation, REDD policies might limit the expansion possibilities of agricultural land use and therefore influence competitiveness of the agricultural sector, agricultural prices, trade patterns, agricultural production and therefore food security in the world. This paper studies the impact of REDD policies on the agri-food sector and food security with a global CGE model called MAGNET using a scenario approach. It focuses on the restrictions on agricultural land expansion within the REDD policy package. Simulation results show that REDD policies start to affect the agri-food sector in some lower developed countries if more than 15% of potentially available agricultural areas are protected from deforestation. A stringent REDD policy that protects 90% of land reserves that could potentially be used for agriculture production results in a global real agricultural price increase of almost 7.6%, and a worldwide agricultural production decrease of 1.7%. Regional differences are large, with real agricultural price changes ranging from 4% in North America to about 24% in Sub-Saharan Africa and South-East Asia. Food access rapidly deteriorates for low-income population in these regions in the case of high forest protection levels. Compensatory payments are necessary from a food security point of view if the level of forest protection increases. Our results indicate that from a food security perspective REDD policy should stop short of trying to protect more than 40% of global carbon if the compensation mechanism is not effectively implemented within REDD.

Pathways Out of Poverty During an Economic Crisis: An Empirical Assessment of Rural Indonesia

Most poor people in developing countries still live in rural areas and are primarily engaged in low productivity farming activities. Thus pathways out of poverty are likely to be strongly connected to productivity increases in the rural economy, whether they are realised in farming, rural non-farm enterprises or via rural-urban migration. We use cross-sectional data from the Central Statistical Board (BPS) for 1993 and 2002, as well as a panel data set from the Indonesia Family Life Survey (IFLS) for 1993 and 2000, to show which pathways out of poverty were most successful over this period. Our findings suggest that increased engagement of farmers in rural non-farm enterprises is an important route out of rural poverty, but that most of the rural agricultural poor that exit poverty still do so while remaining rural and agricultural. Thus changes in agricultural prices, wages and productivity still play a critical role in moving people out of poverty.

Economic policies and the environment: the case of tree planting on low-income farms in the Philippines

This paper investigates the potential for economic policies to influence environmental outcomes in low-income agriculture. The analysis focuses on how changes in agricultural prices influence land-use decisions and environmental indicators. Tree-planting decisions of low-income farmers in the Philippines are examined using a stochastic dynamic household model. Empirical analysis and dynamic simulations demonstrate that changes in relative prices and relative price risks are important determinants of tree-planting decisions. Results show that small holders are sensitive to risks associated with tree crops, but that price risk is not an insurmountable barrier to tree crop adoption. The relationship between cropping patterns and two environmental indicators - erosion and species diversity - are discussed.

Multi-Task Sharecropping Contracts: The Italian Mezzadria

We use recent developments in the multi-task principal-agent methodology to study a sharecropping contract that was pervasive in central Italy. We distinguish between subsistence crops and cash crops. We analyse the spillover effect from one crop to the other, and we show that this reduces the ability of this sharecropping economy to adjust to a changed environment. We trace the effects of the changes in agricultural prices in the second half of the nineteenth century. Finally, we propose some explanation for the puzzling phenomenon of the reintroduction of many feudal clauses in the sharecropping contract when the rest of the Italian economy was beginning to modernize. Copyright 1996 by The London School of Economics and Political Science.

The Impact of Inflation on the Real Income of U.S. Farmers: Discussion

Starleaf, Meyers, and Womack (SMW) investigate a popular aphorism: is non-neutral with respect to farm prices. Despite the importance of this issue, the shortcomings of their analysis severely limit its contribution to the and agriculture literature. In particular, this paper fails to distinguish between and inflation and omits a mechanism that causes inflation. Moreover, the chosen sample period includes three wars, the Great Depression, several episodes of price controls and major supply disruptions, but none of these factors is dealt with in the statistical tests. The comments that follow are directed to isolate specific analytical shortcomings in most work on and agriculture that persist in the SMW paper. On the basis of these criticisms, it seems clear that none of the results reported by SMW supports their assertion that has non-neutral effects on farm prices and income. Had SMW drawn a necessary analytical distinction between price change and inflation, the content of their paper would have been substantially different. As other authors have stressed (Grennes and Lapp, Walden, Belongia and King, Lombra and Mehra), observed changes in agricultural prices consist of a relative component caused by shifts in supply and/or demand schedules and a nominal component associated with the trend rate of growth of the money stock. SMW explicitly ignore variations in agricultural output, however, and implicitly assume that each observed annual price change is wholly a nominal change unrelated to price controls, real aggregate demand, energy shocks, and other factors that affect relative prices-but have little to do with the causes and effects of inflation. The absence of any variable to control for nonmomentary causes of relative price changes makes the SMW tests for neutrality meaningless except under a limiting-and highly unrealistic-set of assumptions.

Prices, common agricultural price policy and personal distribution of income in West German agriculture

The objective of this study is to analyse the effect of agricultural prices on the personal income distribution within agriculture. After a theoretical analysis the results of an empirical analysis of the shortrun effects of changes in agricultural prices on the income distribution of farms in the southeast of Lower Saxony are presented and the long-run effects are analysed. Under the assumption that changes in agricultural prices do not affect input or output, the effect on income distribution depends on the income ratio, i.e., the ratio of farmers' income to total receipts. It is generally assumed that, because larger farms have higher incomes and a lower income ratio, an increase of prices will lead to an increase of income disparity in agriculture in the short run. In the empirical analysis this is shown not to be true. In the long run, however, due to several factors, a price increase (decrease) will result in an increase (decrease) of the concentration of income. It is, therefore, concluded that, not only because of its social costs but also because of its adverse effect on incomedistribution, price policy as the main instrument for income policy should be replaced by other measures of income policy.

Parity Pricing As An Approach to Price Support Programmes: A Policy Analysis

The responsiveness of farm entrepreneurs to changes in agricultural prices, even in a traditional agrarian setting, is well established. Research on Pakistan's agriculture by Afzal [1], and Gotsch and Falcon, [6] have shown that the response of farm producers to prices is positive and rational, and that they allocate their resources to crop and livestock activities under the influence of prices and other relevant economic parameters instead of being guided by sheer traditions. Desired development objectives in the farm sector can, therefore, be realized through judicious manipulation of the prices of farm pro¬ducts and farm inputs. Policy makers have quite a few options to obtain desired changes in agricultural prices. These options range from direct intervention in the marketing of agricultural produce and supplies, to price fixation, international trade regulation, and the like.