15 pages, Increasing popularity of economic experiments for policy impact analysis has led to an on-going debate about the suitability of students to substitute professionals as experimental subjects. To date, subject pool effects in agricultural and resource economics experiments have not been sufficiently studied. In order to identify differences and similarities between students and non-students, we carry out an experiment in the form of a multi-period business management game that is adapted to an agri-environmental context. We compare the compliance behaviour of German agricultural students and German farmers with regard to water protection rules and analyse their responses to two different green nudge interventions. The experimental results reveal that the direction of the response to the policy treatments is similar. Even unexpected behaviour could be reproduced by the student sample. Nevertheless, the magnitude of the treatment effects differed between the two samples. This implies that experimenters in the field of agricultural and resource economics could use the subject pool of students to analyse the direction of nudge policies. If predictions should be made about the magnitude effects, we suggest using a professional subject pool.
24 pages, We present a systematic review of the extensive body of research on farmer risk preference measurement across Europe. We capture the methodological developments over time and discuss remaining challenges and potential areas for further research. Given the constantly evolving policy environment in Europe, and increasing climate-change related risks and uncertainties, there is large value to be gained from enhancing our understanding of this fundamental aspect of farmers’ decision-making processes and consequent actions.
21 pages, In this study we explain the concepts, determinants and imperatives of boundary in smallholder producers’ cooperatives both conceptually and empirically. The conceptual framework indicates the importance of the type of goods (being a club good or not) and range of activities that a cooperative provides to its members in defining a competitive boundary. Using unique organisational and market level data from Ethiopia, we then test empirically whether the observed (weak) performance of producers’ cooperatives in Africa is explained by their organisational boundary – the type and range of goods or services they provide to members. The empirical results confirm that the competitiveness of producers’ cooperatives is significantly correlated with the type and number of services – i.e. cooperatives that provide club goods and a limited range of services are found to be more competitive. The results also suggest that a considerable number of cooperatives in Ethiopia engage in markets where they do not have competitive advantage. Overall, we demonstrate the importance of properly defining a viable boundary – proper selection of services (or markets) and limiting the range of services – for improving the competitiveness of membership-based producer cooperatives in Africa.
18 pages, Recent studies cast doubt on the ability of abstract experiments to predict decision-making in the field. Thus, scholars have argued for more ‘realism’ by introducing context to field experiments. Yet, such realism may work against the induced values of monetary incentives in economic experiments. It is an open question whether contextual framing works best with or without inducing values, through methods such as the use of monetary incentives. Using a sample of 146 German farmers, we compare experimentally the predictive power of a framed lottery in an agricultural context vs. using an abstract version. For one half of the sample, lotteries are incentivised; for the other half, they are hypothetical. Although risk preferences differ between treatments, all four lottery tasks correlate poorly with farmers’ real-world use of risk management instruments such as harvest or hail insurance. Subjects who start with an agricultural framing are willing to take significantly greater risks in the lotteries. More generally, our findings cast doubt on the ability of lottery tasks to predict risk-taking in the field.
20 pgs, Off-farm employment opportunities are thought to have an effect on farm exit rates, though evidence on the sign of this effect has been mixed. Examining this issue in the context of Japanese agriculture, we find that farm exits are related to off-farm income as a share of household income, and more specifically to the nature of off-farm work. Two econometric models are developed: a hierarchical Bayesian linear model and a hierarchical Bayesian Poisson model. Both models perform well in predicting exit rates across the towns and prefectures of Japan.
11 pages, While cow's milk and plant-based milk are often hypothesized to be substitutes, much remains unknown about the impacts that plant-based milks have on the retail price for cow's milk, if any. We explore the individual retail price relationship between two plant-based milks, almond and soy, with cow's milk. If the markets are cointegrated, and shocks in the plant-based markets affect the cow's milk market, it can add volatility to cow's milk prices, which could have implications for costs and benefits of the USDA Dairy Margin Coverage Program and price calculations by the Federal Milk Marketing Orders (FMMO). However, while we find evidence that plant-based milk prices react to shocks in cow's milk prices, we do not find evidence that cow's milk prices respond to changes in plant-based milk prices.
16 pages, There is growing evidence that religiosity affects important socio-economic outcomes. A potential channel through which religiosity affects these outcomes is by shaping individuals’ risk preferences. We combine a lab-in-the-field experiment, survey, and focus-group discussions to investigate the effect of religiosity on risk-taking among rural people in Ethiopia. We find evidence that religious farmers are more risk-taking. The effect is likely driven by the trust/belief in God as the omniscient and just power in determining outcomes under uncertainty. This is further corroborated by results from follow-up focus-group discussions.
13pgs, This article examines the effects of neighborhood on the farmer's technical efficiency (TE) level, adopting a stochastic frontier and spatial Durbin regression models. Our study exploits a three-wave household-level panel data from the Ethiopian Rural Socioeconomic Survey (ERSS) collected between 2011 and 2015. We find that farmers have an average TE score of 53%, implying a substantial potential for improvement in the production level. We further find that there is a positive and statistically significant spatial interdependence in TE levels between farms in neighboring communities. Input use, education, and other demographic characteristics are found to have significant positive direct and indirect effects. The findings suggest that policies and programs targeting productivity improvements in agriculture need to consider spatial spillover effects.
13 pages, In Ghana, groundwater, accessed through wells and boreholes, is generally unregulated and may be contaminated with pollutants including excess nitrates from agricultural chemical fertilizers. Yet, studies estimating how clean groundwater is valued are not available in Ghana. In addition, some research suggests that the pre-experiment information provided to survey respondents affects their valuation of an identical outcome. This paper estimates smallholder farmers’ preferences for groundwater protection using pre-experiment information focused on one of two outcomes: environment or health. The double-bounded contingent valuation (DBCV) approach is used to estimate willingness to pay (WTP) to protect groundwater quality. The estimation accounts for shift and anchoring effects, which are common issues with the DBCV method. The mean WTP from the health (environmental) information subsample is about US$19 (US$17) per acre, and the values are significantly different between the information conditions. The findings shed light on the importance of using precise information in eliciting WTP in a developing country setting.
15pgs, Research has suggested to not solely include cognitive processes but also affective processes in economic choice modeling. Studying Medjool dates, we conducted a laboratory experiment combining choice experiments and eye-tracking to account for cognitive processes. In addition, participants indicated their level of worry related to production practices to account for affective processes. Our results show that consumers worry more about pesticide residues than genetic modification in foods. They also pay more attention to labels related to these production practices compared to other labels; and the production practice labels received the highest willingness to pay (WTP). Results from linear regressions show that both cognitive and affective processes are associated with WTP. Especially in the full model for WTP for pesticide-free labeling an increase of attention by 1 s increases WTP on average by $0.10 and an increase of the level of worry from one category to the next increases WTP on average by $0.17. Overall, results show that including both cognitive and affective processes as explanatory variables is important when determining factors associated with WTP.
18pgs, This analysis investigates the potential mechanisms and the practical significance of agricultural value chain development in a geographically challenging rural area of a developing country. Using data from a carefully designed primary survey administered in a hill and mountainous region in Western Nepal, we show that linking small-scale producers to regional and local traders can help increase income. Analysis of impact pathways shows that the positive impact on household income emerges through higher agricultural income, driven by higher sale volume at lower prices. Focusing on high value commodities in rural areas, where arable land is not always fully exploited or utilized, appears to lead to acreage expansion and some crop switching, contributing to higher supply albeit at lower prices. The positive impact on household income is practically significant; it helps improve household food security and asset accumulation. These findings are robust to alternative specifications. Targeted value chain interventions that strengthen and stabilize small-scale producers’ access to markets can contribute to rural poverty reduction via increase in agricultural income.
14pgs, As an unobservable attribute, food safety is likely to be under-provided by markets where regulatory enforcement is weak. In such settings, stimulating consumer demand for safer food can potentially encourage market actors to invest in food safety. Through a randomized trial in Kenya, we test the impact of informing consumers about which maize flour brands are most likely to comply with the regulatory standard for aflatoxin, a carcinogenic fungal byproduct. Providing information on safer brands alone does not significantly affect consumption behavior. However, when the same information is combined with a test performed on the maize flour stocked by the household, the likelihood that a safer brand is consumed 2 months later is 76% higher than in the comparison group. Our findings suggest that providing information on the relative riskiness of substitute foods could encourage consumers to make safer choices.
17 pages, Rural households in developing countries often depend on agriculture for their livelihoods. However, many also pursue off-farm economic activities either to complement their farm income or because they lack access to agricultural land. Rural off-farm employment is often informal and temporary. Searching for jobs can be associated with high transaction costs, which may be a constraint on some households’ participation in off-farm employment. The increasing spread of mobile phones may help to reduce these transaction costs. Here, we test the hypothesis that mobile phone ownership increases rural households’ participation in off-farm employment and—through this mechanism—also improves household income. We use nationally representative panel data from rural India and regression models with household fixed effects to control for confounding factors and unobserved heterogeneity. We find that mobile phone ownership is positively associated with the likelihood of participating in various types of off-farm employment, including casual wage labour, salaried employment and non-agricultural self-employment. This association is larger in female-headed than in male-headed households. The estimates also show that mobile phone ownership is positively associated with household income, partly channeled through the off-farm employment mechanism.
25pgs, We combine farm accounting data with high-resolution meteorological data, and climate scenarios to estimate climate change impacts and adaptation potentials at the farm level. To do so, we adapt the seminal model of Moore and Lobell (2014) who applied panel data econometrics to data aggregated from the farm to the regional (subnational) level. We discuss and empirically investigate the advantages and challenges of applying such models to farm-level data, including issues of endogeneity of explanatory variables, heterogeneity of farm responses to weather shocks, measurement errors in meteorological variables, and aggregation bias. Empirical investigations into these issues reveal that endogeneity due to measurement errors in temperature and precipitation variables, as well as heterogeneous responses of farms toward climate change may be problematic. Moreover, depending on how data are aggregated, results differ substantially compared to farm-level analysis. Based on data from Austria and two climate scenarios (Effective Measures and High Emission) for 2040, we estimate that the profits of farms will decline, on average, by 4.4% (Effective Measures) and 10% (High Emission). Adaptation options help to considerably ameliorate the adverse situation under both scenarios. Our results reinforce the need for mitigation and adaptation to climate change.
Saweda O. Liverpool-Tasie, Lenis (author), Salim Nuhu, Ahmed (author), Awokuse, Titus (author), Jayne, Thomas (author), Muyanga, Milu (author), Aromolaran, Adebayo (author), and Adelaja, Adesoji (author)
Format:
Journal article
Publication Date:
2022-04-19
Published:
United States: Wiley Online
Location:
Agricultural Communications Documentation Center, Funk Library, University of Illinois Box: 205 Document Number: D12576
27pgs, In spite of mounting evidence about the growth of medium-scale farms (MSFs) across Africa, there is limited empirical evidence on their impact on neighbouring small-scale farms (SSFs). We examine the relationships between MSFs and SSFs, with particular focus on the specific mechanisms driving potential spillover effects. First, we develop a theoretical model explaining two propagating mechanisms: learning effects (training) and cost effects (reduced transactions cost). An empirical application to data from Nigeria shows that SSFs with training from MSFs tend to use higher levels of modern inputs (have higher productivity), and receive higher prices and income. The results also show that purchasing inputs from MSFs reduces the costs of accessing modern inputs and is associated with higher inorganic fertiliser use by SSFs. Our results suggest that the benefits of receiving training and purchasing inputs from MSFs are particularly important for very small-scale producers, operating less than 1 hectare of land. This implies that policies which promote the efficient operation of MSFs and encourage their interaction with SSFs can be an effective mechanism for improving the productivity and welfare of smallholder farms, hence reducing their vulnerability to extreme poverty.
31pgs, This article aims at investigating the impact of financial supports from agricultural policy on farm-size dynamics. Since not all farms may behave alike, a non-stationary mixed-Markov chain modelling (M-MCM) approach is applied to capture unobserved heterogeneity in the movements of farms across economic size (ES) classes. A multinomial logit specification is used for transition probabilities and the parameters are estimated by the maximum likelihood method and the Expectation-Maximisation (EM) algorithm. An empirical application to an unbalanced panel from 2000 to 2018 shows that French farming consists of ‘almost stayers’, with a high probability of remaining in the same ES class over time, and ‘likely movers’, which present a higher probability of a change in size. The results also show that the impact of subsidies and other economic factors depends greatly on the type that a farm belongs to. These findings confirm that individual characteristics of farmers may be relevant for policy efficiency and more attention should thus be paid to unobserved farm heterogeneity in both policy design and the assessment of their impacts on farm-size dynamics.
24pgs, Increasingly, the health claims made by food products focus on the marketing of specific molecular enrichments. Research exploring consumers’ willingness to pay (WTP) for health claims assumes that individuals hold perfect information on the benefits of the enrichment, and that their valuations depend solely on whether or not they need to improve their health. While health interventions are aimed at individuals at higher health risk, consumers may be unaware of the health risks that they face, limiting the effectiveness of a generic targeting strategy. Using an orthogonal experimental design, we explore the impact of two factors on the WTP for vitamin D enrichment in eggs: whether the information is person-specific or generic; and the presence of a health claim explaining the vitamin D enrichment. Results indicate that it is the provision of information, not the health claim, that influences WTP. Both generic and personalised information lead to similar increases in the WTP for vitamin D enrichment. While we only observe a direct effect of generic information on the WTP for vitamin D enrichment, personal information may also operate by increasing the perceived risk of vitamin D deficiency. Our results support the use of personalised health information during the choice task as a means of increasing the sales of healthy products.
11pgs, Are farmers better stewards of the land they own than the land they rent from others? We answer this question using a data set that identifies Ontario farmers’ conservation practices on their own land as well as the land they rent. Using a fixed-effects regression approach, we find that the role of tenure varies for different types of conservation practices. Farmers were found to be just as likely to adopt a machinery-related practice such as conservation tillage on their rented land as that land which they own. On the other hand, farmers were found to be less likely to adopt site-specific conservation practices such as planting cover crops on rented land. However, this effect diminishes as the expected length of the rental relationship increases when the landlord has a farming background.
