Farm Household Model Research Articles

Farm types as an interface between an agroeconomical model and CLUE-Naban land change model: Application for scenario modelling

Land use planning has to consider different development goals, for instance, economic profit, biodiversity conservation, and the protection of traditional land use techniques. To evaluate different land use change scenarios for sustainable development, land use managers in the study area in southwest of China were provided with an integrated modelling approach. We applied the CLUE-Naban land-change model and a GAMS-based village farm household model (VFHM) to model a business as usual scenario (BAU) at the regional scale. The scenario was driven by the demand for different land cover types, as given by the VFHM model. In our approach, this aggregated demand was disaggregated to grid cells of 0.09ha size with the help of the CLUE-Naban land-change model and the farm types were defined as interface between the two models. Two farm types with characteristic land management regimes and public land type were identified using cluster analysis. The results of the BAU-scenario show that the area of rubber plantation in the lowlands more likely to increase until the year 2025. Hemp was introduced as a cash crop in the highlands of the study area. Areas with the most land use changes were where land was converted from extensively-used cropland to intensively-used rubber plantations. In this paper, an organizational heuristic with two conceptual models for linking land change with driving forces and actors is presented. Therefore, the CLUE-Naban approach can contribute to improve land use planning, because this approach creates spatially explicit land use change scenarios at the regional scale and also considers the socioeconomic driving factors that influence land management issues as considered in the VFHM model.

To which extent are counter-cyclical payments more distorting than single farm payments? Evidence from a farm household model

The distinction between single farm payments (SFP) and counter-cyclical payments (CCPs) is mainly based on theory. Due to a lack of empirical comparative studies between these payments, it is difficult to confirm the claim that CCPs are more distorting. This paper provides a comparative analysis of these payments and quantifies the impact of such payments in the presence of debt constraints. The main findings are that CCPs are more distorting than SFP. However, the magnitude of the impact estimates is not as large as suggested by the different treatment received by both support programmes in the WTO negotiations.

Modelling and interpreting the impact of policy and price scenarios on farm-household sustainability: Farming systems vs. result-driven clustering

The Common Agricultural Policy of the European Union is subject to a continuous process of reform. The objective of this paper is to evaluate the effect of decoupling and related policy and market scenarios, as introduced in the 2003 CAP reform, by way of selected agriculture sustainability indicators and through the aggregation of individual farm-household simulated behaviour. The approach is based on the use of a Net Present Value-maximising dynamic farm-household model. The model is implemented on 80 farm-households to simulate the reaction to scenarios of different agricultural systems in 8 EU countries. The results are measured through three main indicators – represented by farm income, labour use and nitrogen use – evaluated over a period of 14 years. The results of individual farm-households are aggregated first using the concept of farming system and then based on a cluster analysis using the results in different scenarios as discriminant variables. The results show that the CAP as a whole is crucial for the sustainability of farming systems in terms of income and employment, but also provides incentives for higher use of inputs, suggesting a trade-off between social and environmental sustainability concerns. In the range of variation considered, nitrogen and labour use appear much more reactive than income and indicate much higher variability across farms and scenarios. The aggregation by agricultural system denotes rather different behaviour among systems. However, the cluster analysis shows that results appear to be better interpreted by patterns of individual characteristics (location in the plain, structure, asset endowment, labour, etc.) than by country, specialisation or technology.

Market imperfections, liquidity, and farm household labor allocation: the case of rural South Africa

AbstractAsset endowments and market imperfections shape households’ labor allocation decisions and lead to different production regimes within rural farm households in South Africa. This article uses a farm household model to explain the presence of three main household groups determined on the basis of the labor regime adopted: small peasants (working both on and off farm), self‐cultivators (autarkic in labor) and hiring‐in households. A partial generalized ordered logit is used to test the main predictions of the model and a Brant test on threshold constancy is performed to identify the household‐specific factors affecting labor market participation. The results show that liquidity constraints and market imperfections matter in the choice of the labor strategy adopted. Liquidity‐constrained households are more likely to sell labor off farm while access to information facilitates the hiring in of workers.

An integer programming dynamic farm-household model to evaluate the impact of agricultural policy reforms on farm investment behaviour

We develop a multi-objective farm-household dynamic integer programming model to simulate investment behaviour in different policy and price scenarios, with a particular focus on the decoupling of the Common Agricultural Policy (CAP). The model takes into account the characteristics of individual assets, including ageing and fixity through the explicit consideration of transaction costs. A case study application in the context of arable farming in Northern Italy is provided as an example. The results emphasise different patterns of reaction of different farm-household types over time, as an effect of the varying opportunity costs of resources and initial asset endowments. Overall, this application highlights the potentialities and limits of the methodology. In particular, the approach proved to be effective in providing a variety of results depending on the individual features of each farm-household, such as the differences between: (a) a ‘no reaction’ attitude; (b) an adaptation of farm activity and assets; and (c) a radical reaction pattern guided by high-income alternatives to farming. This highlights the potential of this tool as a generator of ideas and working hypotheses. We argue that, in view of the further developments of the CAP, the use of instruments able to account for multiple objectives, dynamics and investment choices will become even more relevant in the analysis of EU agricultural policy.

Farm-household investment behaviour and the CAP decoupling: Methodological issues in assessing policy impacts

The objective of this paper is to compare and discuss the role of farm-household surveys and farm-household models in assessing the impact of the Common Agricultural Policy reforms, focusing in particular on the effects of 2003 decoupling on farm investment behaviour. The paper compares two specific approaches: (i) in-depth face-to-face interviews with farm-householders and (ii) mathematical programming models of individual farm-households. The effects of decoupling estimated by these two approaches coincide in a majority of cases, while the differences suggest relevant complementarities. Altogether the paper suggests a wider scope for using mixed methodologies in assessing CAP policy impacts.

Farmers' welfare, food production and the environment: a model-based assessment of the effects of new technologies in the northern Philippines

Policy objectives of attaining food self-sufficiency and improving the well-being of subsistence farmers while protecting the environment have stimulated the development of many improved agricultural production technologies. With a choice of technologies, farm household decisions are governed not only by productivity and profitability considerations but also by factors such as available resources and their quality, family consumption preferences and attitudes towards risks, and prevailing policies. It is therefore necessary to analyse the adoption of such technologies from a whole-farm perspective. In this paper, a farm household model is used to assess possible technology adoption behaviour of farmers in Ilocos Norte Province, Philippines. Four alternative technologies were evaluated: hybrid rice production (HYR), balanced fertilization strategy (BFS), site-specific nutrient management (SSNM) and integrated pest management (IPM). Possible impacts of price policies and infrastructure improvements on technology adoption were assessed. The results show that all four alternative technologies considered are attractive to farmers, although simulations show differential adoption rates for poor, average and better-off households. IPM and HYR appear the most attractive amongst all technologies considered. In all technology simulations, relative profitability and risks, labour and capital requirements and availabilities are decisive factors in the adoption of alternative technologies. Adoption of alternative technologies would result in higher discretionary income, higher rice production and lower biocide use and nitrogen loss. Amongst policy simulations considered, availability of low-cost credit shows the largest improvements in farmer welfare for poor and average households, but its effect on simulated adoption of alternative technologies was variable. We argue that the methodology and results presented can contribute to ex ante assessments of policies targeted at stimulating technology adoption by farmers.

Modeling Farm Households' Price Responses in the Presence of Transaction Costs and Heterogeneity in Labor Markets

We develop a farm household model to analyze price responses of farm households. This model incorporates various types of transaction costs as well as labor heterogeneity. Nonproportional variable transaction costs or labor heterogeneity imply that production and consumption decisions become nonseparable, even when the household buys or sells labor. An empirical model is estimated using data from Midwest Poland. The results show that nonproportional variable transaction costs and labor heterogeneity significantly influence household behavior. Not all price elasticities, however, change significantly if these are neglected.

Food-for-Work for Poverty Reduction and the Promotion of Sustainable Land Use: Can it Work?

Food-for-work (FFW) programs are commonly used both for short-term relief and long-term development purposes. In the latter capacity, they are increasingly used for natural resources management projects. Barrett, Holden and Clay (forthcoming) assess the suitability of FFW programs as insurance to cushion the poor against short-term, adverse shocks that could, in the absence of a safety net, have permanent repercussions. In this paper we explore the complementary question of FFW programs' potential to reduce poverty and promote sustainable land use in the longer run through induced changes in investment patterns. FFW programs commonly aim to produce or maintain potentially valuable public goods necessary to stimulate productivity and thus income growth. Among the most common projects are road building, reforestation, and the installation of terracing or irrigation. In the abstract, public goods such as these are unambiguously good. There is a danger, however, that such programs could discourage private soil and water conservation and crowd out private investment. How important are such effects and when are these effects small or large and when and how can they be reduced? How do market characteristics, timing and design of FFW programs affect this? When, where and how can FFW programs more efficiently reduce poverty and promote more sustainable land management? The paper aims to answer these questions. Much recent empirical research has focused on the shorter-term targeting issue of whether FFW and related workfare programs efficiently target the poor (Dev 1995, Von Braun 1995, Webb 1995, Subbarao 1997, Clay et al. 1998, Devereux 1999, Jayne et al. 1999, Ravallion 1999, Teklu and Asefa 1999, Atwood et al. 2000, Gebremedhin and Swinton 2000, Haddad and Adato 2001, Jalan and Ravallion 2001). Much less research has been focused on the longer-term effects of FFW. Yet the large share of hunger worldwide arises due to chronic deprivation and vulnerability, not short-term shocks (Speth 1993, Barrett 2002). Also most of the FFW programs in Ethiopia have long-term development goals and are formally distinguished from the disaster relief FFW programs (Aas and Mellemstrand 2002). It is therefore appropriate to evaluate these programs based on their long-term goals and not only on the basis of short-term targeting. In a case study in Tigray Aas and Mellemstrand (2002) found that the FFW recipients considered the long-term benefits of FFW as more important than the short-term benefits of food provision. FFW programs may produce valuable public goods. For example, Von Braun et al. (1999) report multiplier effects of a FFW-built road in the Ethiopian lowlands. Public provision of public goods may be socially desirable because private investment in soil and water conservation and tree planting may be well below socially optimal levels due to poverty and market imperfections (Holden, Shiferaw and Wik 1998, Holden and Shiferaw 2002, Holden and Yohannes 2002, Pender and Kerr 1998), tenure insecurity (Gebremedhin and Swinton 2000, Holden, Benin, Shiferaw and Pender 2003), lack of technical knowledge and coordination problems across farms (Hagos and Holden 2002). There is, however, also a danger that FFW programs crowd out private investments (Gebremedhin and Swinton 2000). We analyze these issues using multiple methods. First, section II introduces a simple theoretical framework for understanding the analytically ambiguous effects of FFW programs on sustainable land use patterns. We first present the basic intuition in a static framework to illustrate the selection, crowding out and targeting issues, before generalizing it to a dynamic model to illustrate the possible insurance and crowding in effects of FFW. Section III then uses an applied, dynamic bio-economic farm household model applied to a less-favoured area in Ethiopia to investigate via numerical simulation how household welfare and land use patterns vary with changes in environmental and FFW program design parameters. Section IV presents econometric evidence based on survey panel data from northern Ethiopia to assess the relationship between FFW and private investment in conservation. Section V discusses our findings and fleshes them out a bit with further empirical evidence. Section VI concludes.

Combining farm and regional level modelling for Integrated Resource Management in East and South-east Asia

Currently, in many of the highly productive lowland areas of East and South-east Asia a trend to further intensification and diversification of agricultural land use can be observed. Growing economies and urbanization also increase the claims on land and water by non-agricultural uses. As a result, decisions related to the management and planning of scarce resources become increasingly complex. Technological innovations at the field/farm level are necessary but not sufficient – changes in resource use at regional scale will also be essential. To support decision-making in such situations, we advocate a multi-scale modelling approach embedded in a sound participatory process. To this end, the Integrated Resource Management and Land use Analysis (IRMLA) Project is developing an analytical framework and methods for resource use analysis and planning, for four sites in Asia. In the envisaged multi-scale approach, integration of results from field, farm, district and provincial level analysis is based on interactive multiple goal linear programming (IMGLP), farm household modelling (FHM), production ecological concepts and participatory techniques. The approach comprises the following steps: (i) inventory/quantification of current land use systems, resource availability, management practices and policy views, (ii) analysis of alternative, innovative land use systems/technologies, (iii) exploration of the opportunities and limitations to change resource use at regional scale under alternative future scenarios, (iv) modelling decision behaviour of farmers and identification of feasible policy interventions, and (v) synthesis of results from farm to regional level for negotiation of the most promising options by a stakeholder platform. In the current paper, the operationalisation of dual-scale analysis is illustrated by the outputs (development scenarios, promising policy measures and innovative production systems) from various component models for the case study Ilocos Norte, Philippines. An approach is discussed for the integration of results from the different model components at two different decision making levels (farm and province).

Variety Characteristics And Cassava Adoption Among Rural Households In Imo State.

This study investigated the factors contributing to low levels of adoption of improved cassava varieties in Imo State. A sample of 120 respondents was randomly selected for the study and interviewed using structured questionnaire. Empirical analysis was based on a farm household model, which explicitly incorporates variety characteristics into the households\' optimization process. A multitude of variety characteristics and some household socio -economic characteristics were considered. Results indicated that certain variety and economic characteristics are important determinants of variety choice, and that inadequate extension information and improved input distribution system may be important limiting factors to adoption of improved cassava varieties. Key words: Variety Characteristics, Cassava Adoption, rural households Journal Of Agriculture And Social Research Vol. 5 (1) 2005: 33-40

The economic determinants of cereal crop diversity on farms in the Ethiopian highlands

AbstractIn less favoured areas such as the highlands of Ethiopia, farmers manage risk through land allocation to crops and varieties since they cannot depend on market mechanisms to cope. They also grow traditional varieties that are genetically diverse and have potential social value. Supporting the maintenance of crop and variety diversity in such locations can address both the current needs of farmers and future needs of society, though it entails numerous policy challenges. We estimate a model of crop and variety choice in a theoretical framework of the farm household model to compare the determinants of crop and variety diversity, revealing some of these policy considerations. Farm physical features and household characteristics such as wealth and labour stocks have large and significant effects on both the diversity among and within cereal crops, varying among crops. Policies designed to encourage variety diversity in one cereal crop may have opposing effects in another crop. Trade‐offs between development‐related factors and diversity in this resource‐poor system are not evident, however. Market‐related variables and population density have ambiguous effects. Education positively influences cereal crop diversity. Growing modern varieties of maize or wheat does not detract from the richness or evenness of these cereals on household farms.

The economic determinants of cereal crop diversity on farms in the Ethiopian highlands

In less favoured areas such as the highlands of Ethiopia, farmers manage risk through land allocation to crops and varieties since they cannot depend on market mechanisms to cope. They also grow traditional varieties that are genetically diverse and have potential social value. Supporting the maintenance of crop and variety diversity in such locations can address both the current needs of farmers and future needs of society, though it entails numerous policy challenges. We estimate a model of crop and variety choice in a theoretical framework of the farm household model to compare the determinants of crop and variety diversity, revealing some of these policy considerations. Farm physical features and household characteristics such as wealth and labour stocks have large and significant effects on both the diversity among and within cereal crops, varying among crops. Policies designed to encourage variety diversity in one cereal crop may have opposing effects in another crop. Trade-offs between development-related factors and diversity in this resource-poor system are not evident, however. Market-related variables and population density have ambiguous effects. Education positively influences cereal crop diversity. Growing modern varieties of maize or wheat does not detract from the richness or evenness of these cereals on household farms.

Integration of Systems Network (SysNet) tools for regional land use scenario analysis in Asia

This paper introduces the approach of the Systems research Network (SysNet) for land use planning in tropical Asia with a focus on its main scientific–technical output: the development of the land use planning and analysis system (LUPAS) and its component models. These include crop simulation models, expert systems, GIS, and multiple goal linear programming (MGLP) models for land evaluation and optimization. LUPAS was designed as a decision support system (DSS) for strategic land use planning. Integration of LUPAS components in four case studies was performed in a network with national research teams and local stakeholders. This network allowed iterative evaluation and refinement of LUPAS for scenario analysis on technical and policy changes. Several interactive sessions with stakeholders led to more detail in scenarios (goals and constraints), model features and databases. To facilitate negotiation among stakeholders, the MGLP user interface (UI) was developed. In interactive sessions, goal restrictions are tightened to quantify trade-offs between conflicting goals. Choice and degree of tightening reflect the specific priorities for sustainable land use. The development of LUPAS is exemplified for one case study, Ilocos Norte, Philippines. Weak points of the system include inadequate spatial differentiation of socio-economic characteristics, scarce database for quantifying perennials and mixed cropping systems, and insufficient consideration of long-term effects of production technologies on resource quality. However, a promising perspective for effective policy support lies in the possible link of the regional LUPAS approach with farm household models.

A microeconometric analysis of credit rationing in the Polish farm sector

The objective of this paper is to investigate credit rationing of Polish farms. The analysis is based on cross-section survey data and motivated by a microeconomic farm household model. The results suggest that more than 40 per cent of borrowers experience pronounced credit rationing by rural banks. Credit-rationed households display an average marginal willingness to pay for short-term credit of 209 per cent net of principal. Furthermore, household variables have a significant effect on output supply. Demographic characteristics and a lack of collateral are major determinants of credit rationing. Public interest rate subsidisation contributes little to alleviate rationing of farms. Copyright 2004, Oxford University Press.

Farmer education and the weather: evidence from Taiwan (1976–1992)

This paper uses farm household and weather data from 1976 to 1992 in Taiwan to measure the role of unusual weather conditions in explaining time and geographical variation of the return to education in farming. Based on a farm household model, we show that the effect of education measured from an income function is both technical and allocative. For a set of schooling variables, this effect is found to increase with adverse weather. It implies that education provides a higher relative advantage—and therefore has a higher economic value—when the environment is more unstable and more difficult to deal with. This gives empirical support to the notion that education improves the capacity to adapt to change and disequilibria, on top of its static technical effects.

The environmental supply of farm households : a flexible willingness to accept model

The purpose of the paper is toanalyse farmers' participation inenvironmental schemes, which are gaining agrowing importance within the Europeanagricultural policy. These schemes areimplemented through voluntary contracts thatpay farmers for the provision of environmentalservices. The microeconomic model that isdeveloped is a farm household model thatincorporates the producer and consumerbehaviour of the farmer to optimise hisenvironmental supply considering that theenvironmental service that he is supplying alsohas the characteristics of a public good. Defined as the difference between the profitloss in providing the environmental service andthe willingness to pay to consume this service,the household's “willingness to accept” (WTA)is compared with two flexible WTA measures thataccount for the technological flexibility ofthe environmental supply. Data come from asurvey of an agri-environmental schemeimplemented in the Walloon region of Belgiumsince 1995 and intended to protect the nestingof some endangered bird species. Econometricresults show that contingent valuation is areliable method to reveal the behaviours offarmers facing the invitation to participate inthis scheme. They also confirm that farmerbehaviour is also influenced by environmental preference.

Agent-based spatial models applied to agriculture: a simulation tool for technology diffusion, resource use changes and policy analysis

This paper presents a spatial multi-agent programming model, which has been developed for assessing policy options in the diffusion of innovations and resource use changes. Unlike conventional simulation tools used in agricultural economics, the model class described here applies a multi-agent/cellular automata (CA) approach by using heterogeneous farm-household models and capturing their social and spatial interactions explicitly. The individual choice of the farm-household among available production, consumption, investment and marketing alternatives is represented in recursive linear programming models. Adoption constraints are introduced in form of network-threshold values that reflect the cumulative effects of experience and observation of peers’ experiences. The model's economic and hydrologic components are tightly connected into a spatial framework. The integration of economic and hydrologic processes facilitates the consideration of feedback effects in the use of water for irrigation. The simulation runs of the model are carried out with an empirical data set, which has been derived from various data sources on an agricultural region in Chile. Simulation results show that agent-based spatial modelling constitutes a powerful approach to better understanding processes of innovation and resource use change.

Tailoring agricultural extension to different production contexts: a user-friendly farm-household model to improve decision-making for participatory research

Farmers operate within specific natural and socio-economic settings. When those settings are very diverse, as in mountainous areas, agricultural extension services have often failed to tailor interventions to the specific needs of client farmers. In such settings, extensionists need cost-efficient tools or a close link to researchers to evaluate potential strategies and activities to raise farmers' income. This need has become more critical as governments in developing countries downsize expenditure on extension services and donors demand impact from their investments. This paper outlines a flexible computer-based farm-household model designed to assist researchers, extension workers, and policy makers. The model allows the user to define specific production options and resource constraints under different socio-economic and biophysical settings. Model application in different regions has proven its flexibility to capture and analyze a variety of production systems. When used with site-related input data and effective dialogue on the results among researchers, extensionists, and farmers, the model can be a useful tool for participatory research and extension.

Technical coefficients for bio-economic farm household models: a meta-modelling approach with applications for Southern Mali

In recent years, different types of bio-economic models have been developed to support the analysis of the potential impact of agrarian policies on changes in land use, sustainable resource management and farmers' welfare. Most bio-economic models rely on series of discrete input–output coefficients for current and improved cropping and livestock activities, whereas mathematical programming procedures are usually applied to analyse optimum allocative choice. Adequate procedures for the smooth integration of biophysical information into economic decision models are, however, not readily available. This article provides a new and comprehensive framework for the incorporation of technical input–output coefficients derived from agroecological simulation approaches into bio-economic farm household models. Therefore, continuous production functions are estimated for the production side of the farm household model, making use of meta-modelling principles. It is shown that meta-modelling offers considerable scope for improving the specification and behaviour of bio-economic farm household models. This procedure is applied in a farm household model developed for the analysis of farmers’ response to agrarian policies in Southern Mali. Results are presented for the behaviour of a typical household, focusing attention on the trade-offs between farm income and soil nutrient balances under free market conditions and with constraints on labour, capital and animal traction markets. The stability and robustness of the model is analysed through a simulation of the impact of higher input costs for land use and fertiliser applications.