Changes In Output Prices Research Articles

Estimating perennial crop supply response: A methodology literature review

AbstractPerennial crops are important both economically and as a component of a healthy and nutritious diet (e.g., many fruits and nuts). However, the study of perennial crop production and farmer response to output price changes (i.e., supply response) is complex thanks to the dynamic nature of investment and decision making in these industries. The body of literature relevant to perennial crop supply response is also small relative to that of annual commodity crops. In this article, we contribute the first literature review on perennial crop supply response modeling in more than 30 years. We catalog advancements in estimating perennial crop supply response and discuss the application of these methods and trade‐offs economists should be aware of when using them. In addition, we highlight future modeling developments that may be valuable to the field, with the hope this research will encourage additional economic research on this interesting and important topic and in turn provide new insights for perennial crop producers and policymakers.

Impact of Access to Agricultural Credit on Agricultural Productivity in Iowa, USA.

Agriculture is a critical component for nations' growth and development due to its significant contribution to economic growth. Microcredits are designed to assist rural inhabitants in increasing the productivity of their agriculture, so alleviating issues of hunger and poverty. Country's economic development is aided by agricultural productivity in a variety of ways including increasing the domestic food supply, supplying raw materials for industry and opening up new domestic markets. Improving agricultural productivity is important in order to meet the growing demand for food, reducing poverty, and promoting economic growth in rural areas. The study used the descriptive research design. The target population was 180 farmers.  The study did sampling of 140 respondents that were selected from the target population of 180 in USA. Questionnaires were used to collect the data. It was concluded that better credit access allows for increased agricultural investment, particularly among small farmers, resulting in increased output and value addition. More access to finance is related to higher agricultural output in the United States. In low-income countries the sector not only creates employment but it also contributes to the GDP. Credit enables poor rural farmers to diversify their economic activities, diversify their sources of capital, and manage the inevitable shocks and stress. The study recommended that credit availability should be increased in order to lead to an improvement in the agricultural productivity in the United States. This will make it possible to embrace new technologies and sophisticated inputs, increase efficiency, and modify the input and product mix in reaction to weather unpredictability, climate change, and/or changes in input and output prices. The rural communities should have access to financial institutions to boost productivity since agriculture is the cornerstone of any significant economic progress in emerging countries. Keywords: Agricultural Credit, Agricultural Productivity, USA

Smallholder rice farmers profitability in Agricultural Marketing Co-operative Societies in Tanzania: A case of Mvomero and Mbarali districts

Smallholder rice farming in Tanzania is an important economic activity that has the potential to livelihood improvement of smallholder farmers, yet their profitability remains low due to several challenges they face. This study analyzed costs and benefits associated with smallholder rice farming, determined profit distribution among farmers and assessed risk bearing ability of smallholder rice farmers under changing circumstances of total variable costs, price and yields. The study was conducted in Mvomero and Mbarali districts and adopted a cross-sectional research design, the sample size was 382 smallholder rice farmers selected from three Agricultural Marketing Co-operative Societies during 2021 cropping season. Data were collected through a questionnaire-based survey and key informant interviews. Data were analyzed using Statistical Package for Social Sciences (SPSS) and excel whereby Enterprise Budgetary Technique and Sensitivity Analysis were performed. The study found an average Return on Investment of 0.42, Benefit Cost Ratio of 1.42 and Profit Margin of 24%. The level of profitability differed among co-operatives where ‘Umoja wa Wakulima Dakawa’ (UWAWAKUDA) had the highest return per acre (524 417 TZS) followed by Kapunga (414 111 TZS) and Madibira (316 638 TZS). Furthermore, smallholder rice farmers' Gross Margins were significantly affected by changes in Total Variable Costs, output price and yield per acre. The study concludes that rice production is a profitable business in the study area. Therefore, the local government, co-operatives and other stakeholders should improve drivers that lead to increased profitability such as the water infrastructures, organize markets and build farmers’ capacities to improve yields and profitability among smallholder rice farmers.

Price‐endogenous technology, producer welfare, and ex ante impact assessment: The case of industrial hemp

AbstractThe emerging hemp industry is an example of an important class of agricultural products where the market extent is limited, in hemp's case by laws and regulations, causing technology adoption to interact through prices with market‐level equilibrium. In this paper, we show that the equilibrium adoption rate and producer welfare impact of new technology, such as improved hemp genetics and management, are determined by the interaction between market prices and the spatial distribution of returns of both current and new technologies in the farm population. Price changes affect adoption and welfare through shifts in both the location (mean) and dispersion (variance and higher moments) of the spatial distribution of gains to the new technology. We show that an output price change may either increase or decrease the adoption rate of a new technology and in turn impact the elasticity of the market supply function. Additionally, we derive market‐equilibrium measures of welfare change for both adopters and non‐adopters and show how these welfare measures are affected by the spatial distribution of returns to a new technology. Our finding suggests that the interplay between new technologies and price changes is likely to have empirically important effects on regional supply and farm welfare.

Farm households’ input demand and output supply response to price shocks in Nigeria

Panel data on farm household output for a full range of commodities are scarce, and as a consequence, only a few other studies have considered estimating farm household output supply and input demand response to price changes in Nigeria using panel data within the multiple inputs and multiple outputs frameworks. This study examined the extent to which farm households' respond to production inputs and output price changes using panel data covering the period 2010-2016. Specifically, to determine whether a commodity output's price positively affects its supply and other output categories; and whether an input price negatively affects its usage in Nigeria within the multiple input and multiple output (MI-MO) framework. The translog profit function was used to simultaneously examine the production response of farm households' in terms of the factor demand and produce supply. Seven output supply and four input demand equations were estimated. The results indicated that the response of output supply to own price ranged from 0.59 for animal products and 1.24 for cereals. The own-price demand elasticities of farm input range from -0.82 for mechanisation to -1.46 for intermediate inputs. Also, a substantial degree of farm households' response to input price shocks. Farm inputs and outputs were economic complements to price changes. Therefore, price policy issues aimed at improving the production response of farm households' to both input and output price shocks should be developed with a particular focus on farm inputs.

Decomposing profit change: Konüs, Bennet and Luenberger indicators

We introduce complementary decompositions of profit change that, relying on the duality between the profit function and the directional distance function, shed light on the different sources of profit growth including measures of technical efficiency, allocative efficiency and technological change. Our decompositions extend the literature on Konüs and Bennet quantity and price indicators to profit change. The first decomposition is ‘exact’ in the sense of Diewert, by completely exhausting the sources of profit change into profit inefficiency change (including technical and allocative inefficiency change), technological change, and output and input price change. The second decomposition equates the Bennet quantity indicator to a productivity measure represented by the Luenberger indicator plus allocative inefficiency change. We deem it ‘complete’ because in contrast to the existing literature, it retains the information on allocative inefficiency change while preventing the existence of residual terms capturing price variations, whose meaningful interpretation has not been addressed until now. Our proposed solution takes advantage of the flexibility of the directional distance function when choosing a suitable directional vector. All decompositions have the same structural form and therefore their components can be compared to each other vis-à-vis, providing alternative measures of equivalent sources of profit growth.

Testing a profit margin hedging model as a price risk-management solution for crop farmers in South Africa

Risks inherent in the agricultural environment are often complex and include a combination of risks such as production risk (weather), market risk (uncertain prices), technological risks (new production techniques), price risk (changes in input and output prices) and institutional risk (changes in policies). Also, farmers experience personal and financial risks, which relate to cash flow and the ability of the business to generate sufficient profit. Literature shows that crop farmers manage price risk to fulfil the end-values of security, feeling good and operating a viable and competitive business. A profit margin hedging approach could effectively be used as a price risk management strategy. Although certain other agricultural industries are using profit margin hedging as a risk management strategy, not much is known of the usage and success of this strategy in crop farming. A gap in research exists where an effective plan combines the various components into an effective crop risk management strategy. It is also evident that a gap in practice exists where all the components identified in the literature are not combined into a working model to do better price risk management on a daily basis. Consequently, this study aimed to test the performance of such a new profit margin hedging (PMH) model, with and without using put options as a pre-harvest strategy, against the performance of a control group. The study was conducted in the Free State Province in South Africa. Data for eight (8) seasons of a group of ten farmers were obtained from a bureau service. The data was analysed using the software suite Jamovi 1.0.7.0. Independent t-tests were used to compare the profitability of the new PMH model to the control group. Statistically, significant differences were reported between the groups. The study found both a significant improvement in profitability and a stabilising effect on profitability when using a profit margin hedging approach. This study proposes that crop farmers can operate more viable and secure businesses by utilising a profit margin hedging model. Key words: agriculture marketing, crop farmers, price risk management, profit margin hedging

Daya Saing Ikan Kerapu Bebek (Cromileptes altevelis) di Desa Painan Selatan, Kabupaten Pesisir Selatan

South Painan Village is a production center of humpback grouper aquaculture in Pesisir Selatan Regency, West Sumatra Province. The humpback grouper produced has entered the export market, however the high costs of humpback grouper of aquaculture, unstable output and input prices and the relatively small area of floating net cages are considered to be obstacles for humpback grouper farmers to develop their business. This condition affects the competitiveness of humpback grouper in South Painan Village. The objectives of this research are to:(1) analyze the competitive and comparative advantages of humpback grouper in South Painan Village; (2) analyze the effect of changes in output and input prices on the competitive and comparative advantage of humpback grouper in South Painan Village. The analytical method used in this research are Policy Analysis Matrix (PAM) and sensitivity analysis on PAM. The results of the PAM analysis showed that the humpback grouper farming business in South Painan Village has competitive and comparative advantages, because the PCR and DRCR values are smaller than one. The results of the sensitivity analysis showed that changes in output and input prices reduce the competitive advantage of humpback grouper, but still has competitiveness because the PCR value is smaller than one.

An investigation of productivity, profitability, and regulation in the Chilean water industry using stochastic frontier analysis

The firms’ performance assessment for regulation requires estimating profit change and its drivers. This study estimates and decomposes profit changes into components such as output and input price changes, output growth, and markups. Using the stochastic frontier analysis, we compute the drivers of productivity change, such as technical change, returns to scale, and efficiency change. We apply the profit decomposition to several full private water companies (FPWCs), concessionary water companies (CWCs), and a public water company (PWC) in Chile over two years. Results showed that profit and total factor productivity levels increased over time at 1.967% and 1.062% per annum, respectively. Technical change, gains in efficiency, and a reduction in input prices were the main drivers contributing to positive profit growth. We also found that the PWC was more productive and profitable than private companies, with FPWCs outperforming CWCs. The results of our study can aid policymakers in understanding how resources are used, why some companies in the water industry perform better than others, and how these changes impact productivity over time.

Daya Saing Bawang Putih di Indonesia

Demand for garlic in Indonesia tends to increase, but only a little (< 5 percent) of it was met by national production. This study aims to analyze the competitiveness of Indonesian garlic and identify its determinants. Data used on garlic farming was obtained from the Agricultural Census 2013-Central Bureau of Statistics (BPS), consisting of 121 sample farmers in West Nusa Tenggara province and 98 farmers in Central Java province. The Policy Analysis Matrix (PAM) method was used to measure comparative and competitive advantages which were grouped according to the technical efficiency of production. Efficiency is estimated by the Data Envelopment Analysis (DEA) method. The results showed that garlic has a comparative and competitive advantage in only 55 percent of the total sample. The comparative and competitive advantages of garlic were significantly determined by the technical efficiency of production. Further analysis showed that the competitiveness of Indonesian garlic was sensitive to changes in productivity and output prices. Productivity is the most decisive factor in the competitiveness of Indonesian garlic. Government policies related to input prices and output prices caused farmers to pay lower input prices and accepted output prices higher than their social prices. From this study can be concluded that in general Indonesian garlic was not competitive being produced domestically. Garlic can be produced domestically as an import substitution if it is produced with high productivity and efficiency. It is recommended to improve the technical efficiency of production by utilizing the potential land and technology production optimally.

Breeding objectives for dairy cattle under low, medium and high production systems in the tropics

A deterministic bio-economic model was developed to estimate economic weights for genetic improvement of lactation milk yield, fat yield, age at first calving, calving interval, mature weight and survival under low, medium and high production systems in the Tropics. Input parameters were obtained from dairy production systems in Kenya which has a tropical environment. The highest proportion of revenue is from the sale of milk followed by sale of heifers, cull cows and sale of male calves under all production systems. On the other hand, feed cost is the most important production cost followed by labour, marketing, reproduction and health costs, respectively. Economic values for the six traits were derived from a profit equation using revenue and production costs per cow per year. The economic values were then discounted using diffusion coefficients which account for differences between traits in the time when the improvement is expressed. Economic weights were robust to changes in input and output prices, changes in feeding strategies, and changes in milk and surplus heifer marketing strategies. Genetic standard deviations were multiplied by economic values to standardise the economic value of traits and to compare their potential for economic response. When expressed as proportion of their sum, these relative economic weights under the low, medium and high production systems for lactation milk yield were 51.36, 59.79 and 63.98%; for fat yield 4.50, 10.69 and 9.05%; for age at first calving 3.16, 2.66 and 0.55%; for calving interval 33.59, 19.88 and 20.05%; for mature weight 1.55, 1.34 and 1.19% and for survival rate 5.84, 5.64 and 5.18%, respectively. The predicted responses followed the same pattern as the relative economic weights. This shows that milk yield and calving interval were most important in all production systems but the value of response for traits differed between production systems with more emphasis on milk yield and less on calving interval in the high production systems. Moderate correlations were estimated between the breeding objective for the low, medium and high production systems. To maximise response in the overall breeding objective, different selection criteria are required for the three production systems.

Estimating the Supply Response of Cured Tobacco at Barn Level in Khyber Pakhtunkhwa, Pakistan

Various aspects of tobacco have been examined through different studies. However, input demand and supply response of tobacco at the barn level remains unknown. This study examines profitability, input demand, and supply response of tobacco in Khyber Pakhtunkhwa by employing a normalized restricted trans log profit function. The findings indicate that tobacco production is profitable, and barn owners in the province are responsive to changes in output and input market prices. The use of labor and fuel wood in the processing of green leaves is very important in resource allocation decisions. The demand for labor and fuel wood increases as the price of tobacco output rises at the barn level. Furthermore, higher input prices have anegative effect on the province's tobacco supply. This study suggests that the government should seek an alternative to fuel wood that wouldn't only help in reducing costs but also be beneficial to the environment and prevent deforestation.

THE ANALYSIS OF REPLANTING MODEL ON SMALLHOLDERS OIL PALM IN MUARO JAMBI DISTRICT JAMBI PROVINCE

The traditions and planting techniques of oil palm cultivation by smallholders in the Muaro Jambi region, and the yields of fresh fruit bunches from smallholders vary. This result is because the plant’s number and the age of plant affects the amount of oil palm production and the farmer’s profit. The objective of research is to (1) analyze the smallholder replanting oil palm plantations’ feasibility evaluated from the financial point of views using investment criteria, (2) analyze his, her, their, etc. smallholder. Sensitivity of replanting oil palm plantations to changes in input and output prices. The study was conducted in Muaro Jambi district. The data analysis method usages investment criteria using NPV, IRR, BCR, PBP and BEP. Research data used data obtained from questionnaires. In the Muaro Jambi region, up to 60 pure independent smallholder farmers replanted, oil palm samples were obtained through snowball sampling. The results of the study show that smallholder oil palm planting is feasible through conventional replanting and understory replanting. The results of the sensitivity analysis showed that when the price of production factors increases by 15% and the selling price of FFB is considered constant, and the selling price of FFB decreased by 15% and the price of production factors remains, both types of replanting of oil palm plantations are still feasible. Changes in FFB prices are more sensitive to changes in the value of investment criteria than changes in production factor prices.

Farmer behavior towards pesticide use for reduction production risk: A Theory of Planned Behavior

Agriculture plays a critical role in economic growth, food security, poverty reduction, and rural development; however, it is a volatile business because of inherent production risks. In developing countries, farmers face bad weather, pests and disease outbreaks, and input supply and input–output price changes. We investigated the intentions of 320 rice farmers in Bangladesh with the aim of influencing their actions is as to reduce production risks and the application of pesticides. Descriptive statistics, the Delphi method, the Theory of Planned Behavior (TPB), and a Structural Equation Model (SEM) were used to achieve the research objectives. Pesticides are a vital technology and play an important role in increasing productivity, but have harmful effects on populations’ health and the environment when used in an excessive and widespread manner. Our results showed that three TPB constructs and one psychological construct mediated the relationship between production risk reduction and behavioral intentions regarding pesticide use. The results also showed that Perceived Behavioral Control (PBC), Behavioral Goals (BGs), Behavioral Attitude (BA), and Subjective Norms (SN) positively influenced the farmers’ intentions to use pesticides to minimize production risk and maximize profits. Interventions aimed at farmers' behavioral change should concentrate on growing awareness and encouraging farmers to assess their control beliefs and improve their capacity to cope with social expectations and circumstances that compete with pesticide use.

Tsunami Impact Assessment and Vulnerability Index Development using Computable General Equilibrium (CGE) Model and Geographic Information System (GIS) – A Study on Mie Prefecture, Japan

Japan is highly prone to multiple natural hazards, such as typhoons, earthquakes, and tsunamis in general. However, the compound disaster that entailed earthquake, tsunami, and a nuclear crisis, along with disruption of the global supply chain triggered by the Great East Japan Earthquake in 2011, highlighted the need for a holistic risk assessment of impacts amplified by multiple disasters. According to the Cabinet Office of Japan, the occurrence probability of a Nankai Trough Earthquake and Tsunami is 70% within the next 30 years. It suggests the need for comprehensive impact assessment to enhance the disaster risk reduction strategies of the region. This study conducts a tsunami impact assessment using quantitative analysis to identify vulnerable industries in Mie Prefecture, Japan, famous for tourism, value-added sectors of aquaculture, food processing, and petroleum refining tanks situated in at-risk areas. To create a tsunami shock scenario, we apply a computable general equilibrium (CGE) model using an input-output table of the Mie Prefecture (2015 version) and geographic information system (GIS). The street-level business entity data enable us to incorporate with the disaster scenario to provide evidence-based damage estimates of capital and labor loss due to a tsunami. We present the simulation results of output change, price change, external trade, and welfare analysis and propose creating a vulnerability index (VI) for disaster impact. These quantified and visualized indicators would provide informative implications for ex-ante policymaking and risk financing to cope with fragile sectors effectively.

Adaptation to Climate Change by Australian Farmers

Climate change in the form of higher temperatures, changes of rainfall patterns, and for some, more natural disasters will reduce the returns from current farming choices on what to produce and the production methods. Variation of climate change across regions and uncertainty about the magnitudes of change call for a diverse mix of adaptations to climate change across different regions and individual farms. This paper considers the institutional structure for effective climate change adaptation by Australian farms. It is argued that a rerun of the history of successful adaptation of farms to new technology, changes in output and input prices, natural climate variation, and other circumstances can be repeated for climate change adaptation. Individual farms can benefit from incentives and rewards to revise their decisions, which will combine with better individual outcomes. Complementary support by the government includes the provision of climate change and weather forecast information, support for research into new technology, help to evaluate the pros and cons of alternative choices, and provision of a social safety net for those unable to adapt.

The role of fixed cost and non-discretionary variables in fisheries: The case of South Australian rock lobster

Fishing industry sustainability matters for policy-makers and communities as well as the industry itself and understanding profitability is an important component of long-run viability. Our analysis investigates the effects of key fixed and non-discretionary inputs, vessel size and biomass, on profits. We first set up a theoretical model with an input that is fixed in the short-run but that can be used with a variable input at sub-optimal capacity. We use this model to get theoretical insights and predictions for the impact of exogenous changes in biomass, output price and vessel size on profits. We subsequently conduct an empirical investigation to gain an understanding of the effects of these non-discretionary factors on profit efficiency. In particular, we apply a truncated regression with bootstrap methodology to data on individual fisher profit efficiency from the South Australian Rock Lobster Fishery. The non-discretionary variables we consider are biomass, fishing zone, quota management, vessel age, vessel length, engine age, electrical equipment age, and exchange rate. We find evidence that increased biomass and quota management are associated with higher profit efficiency, exchange rate appreciation is associated with lower profit efficiency, and vessel characteristics have limited effects.

ANALISIS KEUNGGULAN KOMPARATIF DAN KOMPETITIF USAHATANI UBI KAYU DI KECAMATAN BLAMBANGAN PAGAR KABUPATEN LAMPUNG UTARA

This study aims to analyze the comparative and competitive advantages of two varieties of cassava, and determine the sensitivity due to changes in output prices, production volumes, and input prices to the comparative and competitive advantages of cassava farming in Blambangan Pagar Sub-district of North Lampung Regency. This research is a survey research involving 50 cassava farmers who were selected intentionally consisting of 25 farmers of Cassesart varieties and 25 farmers of Thailand varieties. To answer these objectives, the study uses PAM analysis (Policy Analysis Matrix). The results showed that Cassesart variety (UJ-5) cassava farming had a DRCR value of 0,15 and PCR of 0,46 so it was more competitive than Thailand variety (UJ-3) cassava farming which had a DRCR value 0f 0,18 and PCR of 0,57. If there is a decrease in the output price for Cassesart variety (UJ-5) cassava by 4,93% and Thailand variety (UJ-3) cassava by 5,32%, a decrease in production volume is 4,70%, and an increase in input prices (Urea fertilizer 21,32%, SP-36 fertilizer 34,40%, and NPK Phonska fertilizer 54,01%) due to the removal of fertilizer subsidies by the government, cassava farming is insensitive, therefore, despite changes in output prices, production volume, and the price of these inputs, cassava farming still has a competitive edge. Keywords : cassava, comparative, competitive, PAM

Analisis finansial peremajaan perkebunan sawit rakyat di Kabupaten Muaro Jambi

This study aims to (1) determine the feasibility of smallholder oil palm plantations assessed from a financial perspective using investment criteria, (2) determine the sensitivity of smallholder oil palm plantations to changes in input and output prices. This research was conducted in Muaro Jambi Regency. The method of analysis used an analysis of investment criteria consisting of NPV, IRR, BCR, PBP, and BEP. The data used were primary data obtained through interviews using questionnaires. Samples were taken by snowball sampling of 40 small independent smallholders of Muaro Jambi Regency. The results showed that smallholder oil palm plantations, conventional rejuvenation, and underplanting rejuvenation were feasible to be cultivated. The results of the sensitivity analysis on the increase in the price of production factors by 15% and the selling price of FFB is considered constant, and the selling price of FFB has decreased by 15% and the price of production factors is fixed, both types of oil palm plantation rejuvenation are still feasible to carry out. Changes in FFB prices are more sensitive to changes in the value of investment criteria than changes in the price of production factors.

How to deal with global concept of Risk in Agriculture? Comparative overview of the literature

Research background: Risk is an important aspect of the agriculture business. The uncertainties inherent in the changes in input and output prices, climate and biological variables, agricultural policies and government decisions, global markets and the volatility, sales, world trends in the consumption, environmental legislation and other factors that impact agriculture can cause big differences in farm production and in general in farm income. Purpose of the article: The aim of the paper is twofold. The first task is to survey and classify the main types of risks in agriculture, risk evaluation methods, approaches for estimation and to present the applications of these methods across the literature. The second aim is to point out how to measure the risk in agriculture enterprises. Methods: In the recent years, there was an increase in the number of risk studies with potential to further deepen and develop the previous studies. This study provides a literature overview of risk studies in agriculture. More specifically, this paper discusses the sources of risk in agriculture, summarizes the literature and methods of measuring the risk and comments the problems with risk evaluation in agriculture. Findings & Value added: The objective of this paper is to provide the methodological conclusions for further research about risks in agriculture and opportunities of risk evaluation. This review is expected to prompt researchers to perform new theoretical studies and stimulate to analyse and measure risks in agriculture.