Cost-price Squeeze Research Articles

Cotton Cultivation in Greece under Sustainable Utilization of Inputs

Cotton, a high-value crop of primary financial importance for Greece, is directly affected by a wide range of environmental parameters, and water scarcity threatens the sustainability of irrigated cotton production in many regions around the world. Reducing inputs with an appropriate cultivar may not decrease cotton production and fiber quality while improving sustainability. To investigate cotton varietal responses to water stress and lack of nutrients, in the climate of north Greece, a three-year experiment was conducted in Thessaloniki, Greece. Four cotton cultivars (three of Greek origin and one from Africa) were cultivated under four irrigation (normal and reduced by 75%, 50%, and 25%) and two fertilization levels (normal and 50%). The effect of these treatments on productivity and quality were estimated, with the final objective being the reduction of inputs and more sustainable cotton production. Cotton producers are dealing with a cost price squeeze and the present study demonstrates that reducing the fertilization inputs even by half and the reduction of irrigation by 25% has no significant effect neither on yield nor on the main technological characteristics. This highlights the fact that a more sustainable use of inputs, contrary to common management, will have almost the same yield and even increase the farmer’s income.

Fighting for Farmers

Fighting for Farmers

Inflation: The problems for aquaculture

Inflation: The problems for aquaculture

Farming on the margins: Just transition and the resilience of peripheral farms

Sustainability transition demands fundamental changes taking place at the farm system level. At the same time, many farms are operating on the verge of financial profitability, especially in geographically disadvantaged peripheral regions with a limited range of production opportunities. These observations raise concerns about the transition's justice aspects. Using the concept of resilience, we analysed farmers’ capacities for transformation in a peripheral context in Finland. The results from our farmer survey (n = 577) indicated that the regime exerts a strong cost-price squeeze on farmers, escaping of which is difficult also for farmers deliberately seeking new pathways beyond it. Due to farmers’ dependence on the regime, drastic changes to ‘the rules of the game’ could undermine their resilience. We argue that for transition processes to be both sustainable and just, proactive restorative justice should aim at promoting resilience at the farm level by deliberately building inclusive and accessible transition pathways.

Beyond ‘get big or get out’: Female farmers' responses to the cost-price squeeze of Australian agriculture

This research examines how female agricultural producers are responding to the cost-price squeeze of Australian agriculture. Thirty-six in-depth interviews were conducted with female producers in a variety of sectors from across Australia. In order to maintain viability female producers are seeking alternative methods of production and marketing, rather than pursing economies of scale. Female producers are seeking alternatives to hegemonic agriculture due to its gendered financial and social constraints. This involves the sustainable production of niche products on smaller plots of land and direct marketing to capture more of the economic value of their products and to reduce risk. This research highlights ways in which producers can stay on farm and contribute to the creation of alternate food systems. It represents an alternative to the competitive productivist agricultural approach of “get big or get out” and improves the visibility of women farmers and a shift in the masculinist construction of farming. These alternative production and marketing methods have the potential to benefit Australian agriculture, rural communities, to create more equal gender regimes and to improve environmental sustainability. • Female producers are responding to the cost-price squeeze of Australian agriculture by turning to the production of niche, sustainable produce. • This produce is marketed directly or through short supply chains. • Sustainable agriculture provides female producers with greater access to resources and acceptance. • Values driven production and emerging consumer activism is driving the creation of an alternate food system in Australia.

Economic and Management Tool for Assessing Wild Blueberry Production Costs and Financial Feasibility

Abstract. The wild blueberry industry is facing record low berry prices that has resulted in major concerns for growers, especially in Atlantic Canada and the United States. Farm input and other costs to produce wild blueberries continue to increase, while farmers face record low blueberry prices (in 2016 and 2017). The cost-price squeeze has prompted growers to look for innovative methods to remain financially viable and sustainable. To ensure profitable farm operations, farmers should keep detailed production, management, and financial records that can be used to estimate production, harvest, and marketing costs, but such data and records are not typically compiled by wild blueberry farmers. Spreadsheet-based enterprise budgeting tools have been developed for specific crops by provincial and state extension specialists in Canada and the United States. However, currently there is no such decision tool that accounts for the unique two-year production cycle of wild blueberries, which farmers can use to compile and evaluate input use and rates, and assess production costs and farm economic performance. Keywords: Click here to enter keywords and key phrases, separated by commas, with a period at the end

Interrogating sustainable productivism: Lessons from the ‘Almerían miracle’

Many have suggested that a new form of sustainable agricultural productivism is needed in response to the challenges to food security posed by climate change and population growth. This paper employs elements of ecological modernisation theory and focusses on sustainability challenges and solutions, as well as the knowledge networks and production rationale to assess whether the intensive horticultural industry located in the Spanish province of Almería represents sustainable productivism. The Almerían horticultural industry, lauded as an example of neo-endogenous growth, manifests a range of sustainable technologies addressing environmental impacts. Yet, we argue that Almerían horticulture represents ‘weak ecological modernisation’ and its main sustainability challenges are posed by water scarcity, a demand led production rationale and the precarious situation of family farms that at present provide a degree of economic embeddedness in this highly industrialised production model. A competitive imperative yields marketing organisations huge sway in production decision-making, and while a cost-price squeeze has driven efficiency in the use of farm inputs and product innovation, it has paradoxically made further advances in sustainable water management very difficult to achieve. Transforming the Almerían horticultural industry into a truly sustainable model of productivism would require the concerted efforts of individual farmers and marketing organisations as well as regional and local water governance institutions and land use planning. A significant obstacle to this remains the dominant normative perception that justifies groundwater abstraction on the grounds of its high economic returns and the perceived inability of small farmers to invest in desalinated water or further technological solutions.

Competitiveness of Small Farms and Innovative Food Supply Chains: The Role of Food Hubs in Creating Sustainable Regional and Local Food Systems

Over the last decades, the economic, social and environmental sustainability of the conventional agri-food system has and continues to be contested within both academic and public institutions. For small farms, the unsustainability of the food system is even more serious; farms’ declining share of profit and the cost-price squeeze of commodity production has increased barriers to market access with the inevitable effect of agricultural abandonment. One way forward to respond to the existing conventional agri-food systems and to create a competitive or survival strategy for small family farms is the re-construction of regional and local agri-food systems, aligning with Kramer and Porter’s concept of shared value strategy. Through a critical literature review, this paper presents “regional and local food hubs” as innovative organizational arrangements capable of bridging structural holes in the agri-food markets between small producers and the consumers—individuals and families as well as big buyers. Food hubs respond to a supply chain (or supply network) organizational strategy aiming at re-territorialising the agri-food systems through the construction of what in the economic literature are defined as values-based food supply chains.

Dynamics of decline in small-scale sugarcane production in South Africa: Evidence from two ‘rural’ wards in the Umfolozi region

Using evidence from two rural wards in the Umfolozi region, this paper critically investigates the dynamics and constraints of small-scale sugarcane production under conditions of decline. The rapid decline in small-scale sugarcane production was historically underwritten by regulatory reforms that paired processes of enhanced representational inclusion with measures of rationalisation, resulting in deteriorating terms of exchange and the retraction of intensive interventions in production by sugar millers (Dubb, 2015). It is argued that, together with drought, these changes severely undermined the efficiency of capital services offered by local tractor-owning contractors and the productivity of small growers as a whole, while social grants have acted as a barrier to intensifying the exploitation of neighbours. The resultant cost-price squeeze has rendered cane an increasingly unattractive site of investment of labour and wages, and witnessed the severe decline or exit of most growers. For some, social grants have nonetheless provided a consumptive base from which to commit homestead labour without drawing down on cane proceeds, and hence enabled them to ‘hang in’ or marginally ‘creep-back’ into production. Only contractor-growers have managed to increase production, but this in turn is premised on the precarious cross-subsidization of their dual enterprises.

Resilience and the industrial food system: analyzing the impacts of agricultural industrialization on food system vulnerability

The purpose of this paper is to explore how socioeconomic and technological shifts in Canadian and American food production, processing, and distribution have impacted resilience in the food system. First, we use the social ecological systems literature to define food system resilience as a function of that system’s ability to absorb external shocks while maintaining core functions, such as food production and distribution. We then use the literature to argue that we can infer food system resilience by exploring three key dimensions: (1) the diversity of the food system’s components, (2) the degree to which the components are connected, and (3) the degree of decision-making autonomy within the food system. Next, we discuss the impacts of industrialization on these three factors within Canada and the USA. Specifically, we show how processes of corporate concentration, farm-scale intensification, mechanization, and the “cost-price squeeze” have led to a decrease in ecological and economic diversity, a high degree of spatial and organizational connectivity, and a diminished decision-making capacity for individual farmers. While this analysis is qualitative and heuristic, the evidence reviewed here leads us to postulate that our food system is becoming less resilient to external shocks such as climate change. We conclude by discussing four possible strategies to restore resilience and suggest a more transformational shift in food system politics and practice. Specifically, we argue that publicly led multifunctional policies may support more diversified production while programs to promote food system localization can increase farmer autonomy. However, these shifts will not be possible without social-structural corrections of current power imbalances in the food system. This policy discussion reinforces the value of the social ecological framework and, specifically, its capacity to produce an analysis that interweaves ecology, economy, and power.

Cost-Price Squeeze in Export Oriented Crop Production: Welfare Implication for Commercialized Smallholder Tea Producers in Kenya

Tea production, a leading export crop in Kenya and produced largely by smallholders was analyzed to determine how the input and output prices adjust to both inflation and exchange rates. It was hypothesized that prices received and prices paid by farmers are not cointegrated and that a costprice squeeze could not be rejected in the long-run. Based on cointegration analysis results, we could not reject the null hypothesis of no cointegration between prices paid and prices received in the long run. Macroeconomic variables impacts unevenly on the tea sector with probable negative effects on the welfare of smallholders. The livelihood of export oriented cash crop producers in less developed countries, therefore, becomes integrally vulnerable to market forces. Price volatility coupled with constant market shocks could impact negatively on the general livelihoods of the smallholder export farmers particularly food access at the household level.

Recent Changes in the Bioeconomic of Finfish Mariculture in Vietnam

Finfish mariculture farmers in Vietnam are making careful practice change decisions in reaction to a number of economic drivers. These economic drivers are centred on trends of increasing input costs and decreasing output prices. In general, mariculture farmers are adapting to the cost-price squeeze in a number of ways, including increasing stocking densities and area, and by adopting risk-reducing strategies (decreasing grow-out periods and using a larger number of smaller ponds to spread mortality risk). However, there is still a shortage of good quality low-cost fingerlings which is constraining farmers’ ability to adapt to the cost-price squeeze. The dominant input cost source is feed. Most farmers are still reliant on trash-fish feeds. With low and decreasing feed conversion ratios for trash-fish, there is decreasing incentive for these farmers to change to pelleted diets. Southern Asian seabass farmers have made the practice change to pellets, but feed conversion ratios are high preventing significant economic gains from making the change. This research highlights two key areas where policy, research and extension initiatives can have a significant impact on the long-term economic and environmental viability of mariculture operations in Vietnam while protecting fish stocks: firstly, ensuring the widespread availability of low-cost hatchery-produced fingerlings, and secondly, encouraging practice change from trash-fish diets to the well-managed use of manufactured pelleted diets.

Performance, return and risk of different dairy systems in Australia and New Zealand

Changes in the farm operating and policy environments and a need to remain profitable under a cost-price squeeze have contributed to dairy systems in Australia and New Zealand becoming more intensive and complex in recent decades. Farm systems in both countries are now diverse, varying from being based predominantly on pasture with little purchased supplements, to those dependent on high levels of feed supplements and even having zero grazing. Dairy farm performance (defined in this paper as production or technical performance), return (return on assets or profit) and risk (variation in economic performance over time), and intensity of dairy systems was examined using farm survey data, case studies and existing published studies. The level of single technical performance measures, such as milk production, feed conversion efficiency and pasture consumption, prevailing in a business are not guides to the operating profit and return on assets of a business. In addition, when survey data of farm performance was grouped by return on assets, few farms were in the top 25% in successive years. Farms that performed consistently well were characterised by good, but not extreme, technical performance in a range of key areas, which translated to favourable business return (return on asset and profit). The knowledge and skills of farm managers are critical, and means that many different dairy systems can perform well physically and financially and successfully meet farmer goals. The relation between risk and the intensity of dairy systems was also investigated. Options that intensified systems generally resulted in higher net wealth for the farm owner, but almost always at increased risk. The best system for any farmer to operate is one which best meets their multifaceted preferences and goals, regardless of system type.

A gendered analysis of wine export value chains from South Africa to Sweden

ABSTRACT This article is based on research conducted in early 2012 in the Cape Winelands municipality in South Africa. It considers the gendered dynamics of employment in two wine export value chains. In one of the chains, produce is packaged and branded in South Africa for export and in the other, bulk wine is sold for packaging and branding in Europe. The research draws on a survey of workers and in-depth interviews with managers, industry and farm worker support organisations. It considers the possible impact of the adoption of a Code of Conduct on labour standards by the Swedish alcohol retail monopoly, Systembolaget. The research reinforces findings over more than a decade that female workers are concentrated in lower paid, more fragmented and insecure employment. The findings reveal that processors are more or less compliant with national labour standards, but supplier farms are less so, especially in bulk chains. Monitoring at the individual farm level is missing. This makes it difficult to track compliance of codes down to farm level. The study queries the sustainability of initiatives to improve labour standards on farms, should costs be borne entirely by producers who are already facing a cost-price squeeze.

Explaining declining agricultural total factor productivity in the Karoo districts of the Western Cape, 1952 to 2002

ABSTRACT Conradie et al. (2009a and 2009b) identified the Central Karoo as the worst performing area in the Western Cape, but left the reasons for the region's declining total factor productivity (TFP) unexplained. The current paper uses a combination of literature review and analysis of anecdotal evidence to evaluate a set of hypothetical reasons for the decline. The world wool price clearly affected farm-level profitability, putting up to 50% of sheep farms out of business in some parts of the Central Karoo. If census data were properly collected, this in itself should not have affected TFP. The evidence for overgrazing and increasingly ineffective predator control was less convincing. For example, there is no conclusive evidence yet on whether game and lifestyle farms exert any negative externalities on remaining sheep operations. The cost-price squeeze resulting from falling prices and rising input costs has led to an extension of production systems and poor maintenance which will no doubt lead to a further decline in productivity. We concluded that the rate at which the Central Karoo is shedding sheep farming, and the reasons for and effects of it, should be investigated further.

The impact of system changes to a dairy farm in south-west Victoria: risk and increasing profitability

A case study modelling approach was used to examine changes to a dairy farm in south-west Victoria to maintain or increase profit in the future 5–10 years in the face of some ‘cost-price squeeze’, emphasising impacts on both returns and risk. Five changes to the status quo system were analysed. Each involved increasing pasture consumption on the milking area and non-milking leased area (where appropriate). The five changes were: (1) reducing leased non-milking area by 100 ha; (2) converting 60 ha of non-milking leased area to milking area, reducing leased non-milking area by 100 ha and reducing stocking rate on the milking area; (3) converting 187 ha of leased non-milking area to milking area, increasing herd size to 800 cows and reducing stocking rate on the milking area; (4) discarding all leased area, reducing herd size to 370 cows and reducing stocking rate; and (5) converting 127 ha of non-milking leased area to milking area, discarding all other lease arrangements and reducing stocking rate. Mean ± standard deviation of nominal owner’s equity at the end of Year 10 was $2.59M ± $1.33M, $5.42M ± $1.26M, $5.76M ± $1.21M, $7.47M ± $1.64M, $6.01M ± $0.78M and $6.10M ± $1.19M for the status quo and development options 1–5, respectively. For most but not all of the development options, the risk associated with the profit, cash and equity as measured by a range of indicators improved markedly over the performance of the farm system under the status quo. Both substantial increases and decreases in herd size were attractive. Irrespective of the direction of change in herd size, the most profitable options involved reducing stocking rate per ha and reducing purchased supplementary feed compared with the status quo. Significantly, changing to increase productivity greatly reduced the risk of having less equity at the end of Year 10 than the starting equity. Optimising the amount of home-grown grazed feed, and using purchased supplements efficiently are important, particularly if the milk being sold is subject to export market prices and variation. The most appropriate changes to dairy farm businesses in response to changes in the operating environment will vary from farm to farm – but maintaining the status quo in the face of change is not an option that meets farm family goals.

Integrating Agriculture and Food Policy To Achieve Sustainable Peri-urban Fruit and Vegetable Production in Victoria, Australia

Efforts to increase fruit and vegetable consump­tion are a significant aspect of national approaches to preventive health. However, policy frameworks for increasing fruit and vegetable consumption rarely take an integrated food-systems approach that includes a focus on production. In this policy analysis and commentary we examine fruit and vegetable production in peri-urban areas of Melbourne in Victoria, Australia, and highlight the significance of emerging environmental and eco­nomic pressures on fruit and vegetable production. This examination will be of interest to other locations around the world also experiencing pressure on their peri-urban agriculture. These pressures suggest that the availability and afforda­bility of fruit and vegetable supplies cannot be taken for granted, and that future initiatives to increase fruit and vegetable consumption should include a focus on sustainable production. Threats to production that include environmental pressures, together with the loss and cost of peri-urban agri­cultural land and a cost-price squeeze due to rising input costs and low farm-gate prices, act in combi­nation to threaten the viability of the Victorian fruit and vegetable industries. We pro­pose that policy initiatives to increase fruit and vegetable consumption should include measures to address the pressures facing production, and that the most effective policy responses are likely to be integrated approaches that aim to increase fruit and vegetable availability and affordability through innovative solutions to problems of production and distribu­tion. Some brief examples of potential integrated policy solutions are identified to illu­strate the possibilities and stimulate discussion.

“Effectively organic”: Environmental gains on conventional farms through the market?

Qualitative field research in England identified a cohort of farmers practicing what they self-defined as ‘effectively organic’ or ‘semi-organic’ farming. Utilising Ajzen's theory of planned behaviour as a framework for analysis, reducing inputs was found to be primarily a response to financial pressures, also reflected in changing substantive norms towards balancing risks and potential returns against investment, rather than optimising production. However, despite the apparent ease of converting to organic farming from low input practice, formal conversion to organic farming was not found to be the automatic outcome of this trajectory: instead, organic farming was identified as only one of a number of options for increasing the financial viability of the farming operation, which included other niche markets, pluriactivity and contracting land to and from other farmers. The affiliation of low input farmers with organic production denotes positive attitudes towards both organic farming and environmental practices, but a lack of understanding about organic farming techniques. The author argues that due to declining returns/input ratios, future conversion to organic farming may reflect the value placed on other aspects of organic production, such as increased labour, risk reduction and environmental ideals, and highlights the environmental implications of the ongoing ‘cost price squeeze’ on farming households.

The economic importance of draught oxen on small farms in Namibia's Eastern Caprivi Region.

The main aim of this study was to analyse and document the value of smallholder farmers’ use of Draught Animal Power (DAP) systems in the Eastern Caprivi Region and to test the economic viability of DAP usage versus using tractors. This study applied Rapid Rural Appraisal techniques (RRA), including a survey. Semi-structured interviews were conducted with 312 farmers at their farms and data was gathered on the use of and economics related to the draught animal system. Crop enterprise budgets, project reports, expert opinions and group discussions were analysed. The research found that the use of animal power performs better in terms of physical productivity per ha compared to tractor usage. Furthermore, Sibinda production guided by the oxen farming technique outperformed the other systems when it was evaluated with parametric analysis. From a financial perspective, Sibinda and Linyanti oxen farmers ranked above their counterparts using tractors. Further, the exercise indicated that farmers are facing a multitude of challenges such as damage incurred from wild animals and high input costs. It is difficult for a young generation to take up farming in Caprivi within the current cost-price squeeze environment. Therefore, it is crucial to increase the level of potential new farmers’ production and management proficiencies through training and skills development programmes.

Evaluating development options for a rain-fed dairy farm in Gippsland

A case study and modelling approach was used to examine options for a dairy farm in the high rainfall area of Gippsland (southern Victoria) that would enable it to maintain or increase profit in the future (next 5–10 years) in the face of a continuing ‘cost-price squeeze’. The economic performance of the business under a range of development options, identified by an ‘expert panel’, was analysed for a planning period of 10 years. The options analysed were: (i) increased herd size without purchasing more land, (ii) increased milking area and (iii) purchasing non-milking area for production of conserved fodder. Expanding the milking area by purchasing more land without significantly increasing herd size (reducing stocking rate from 2.5 to 2.1 cows/ha) increased annual operating profit without increasing variability in profit between years compared with the base farm. The increased profit resulted from a reduction in the amount of purchased feed. The purchase of an additional outblock for fodder production reduced risk compared with the base farm system, but did not improve the profitability of the farm system. Other options significantly reduced profit while increasing risk. The most appropriate changes to dairy farm businesses in response to changes in the operating environment will vary from farm to farm. The analysis suggested that there may be an alternate path to the historical trends of larger and more intensive operations. It has also highlighted the importance of home-grown feed and efficient supplement use to increase or maintain profitability in the medium term.