Journal of Agricultural Economics

Webster, Paul

doi: 10.1111/j.1477-9552.1999.tb00888.xpmid: N/A

The sustainability of farming systems is currently under debate. There is concern that technological and other changes have long‐run consequences, which may compromise future levels of desired outputs from agricultural and other resources. The paper traces developments in the theory of sustainability and discusses their application at the farm level. Findings include firstly, that sustainability should be regarded as an emergent property of an agricultural system. Its operational definition at the farm level thus may not apply at other levels in the hierarchy. Secondly, whilst individual farmers may attach value to “sustainability” goods, they are unlikely to adopt socially optimal levels without regulation or incentive. Finally, since sustainability issues at the farm level are usually long‐run, dynamic and have social dimensions, a central task for farm management researchers lies in investigations which allow tradeoffs between different sustainability criteria to be determined and then optimised according to society's norms.

Jüdez, Lucinio; Chaya, Carolina

doi: 10.1111/j.1477-9552.1999.tb00889.xpmid: N/A

This study analyses the effects on the accuracy of the estimates produced by an additional stratification of a sample, in this case the sample of the Farm Accountancy Data Network (FADN) of Navarra. This is carried out by studying the accuracy of the total standard gross margin estimator. For the analysis, the variances of the estimator were compared for two samples: one stratified according to type of farming and economic size, and the other with the addition of a geographical stratification. The conclusion of the analysis is that for samples whose size is similar to that of the FADN of Navarra (400 farms), accuracy is not improved by a geographical stratification. This result, a particular case in which stratification does not improve the accuracy of the estimates, may be clarified by the theoretical considerations expounded in this paper.

Blake, A. T.; Rayner, A. J.; Reed, G. V.

doi: 10.1111/j.1477-9552.1999.tb00890.xpmid: N/A

This paper uses a computable general equilibrium model to assess the effects of the Uruguay Round (UR) and CAP reform. Detailed attention is given to the impact of the agricultural components of the UR and of the CAP reform on the agricultural and food‐processing sectors of the EU. The CGE model used, while based on the standard Global Trade Analysis Project (GTAP) model, uses a more detailed representation of the UR and CAP policy changes than is usual in GTAP analyses of the UR effects. In so doing it assumes a degree of specificity of factors used in agriculture and makes appropriate agricultural policy variables endogenous. Finally, it assesses the consequences of assuming imperfect competition in all non‐agricultural sectors.

Léony, Yves; Peeters, Ludo; Quinqu, Maurice; Surry, Yves

doi: 10.1111/j.1477-9552.1999.tb00891.xpmid: N/A

This paper proposes the use of the Generalised Maximum Entropy (GME) method to estimate input‐output coefficients, which reflect the unobserved allocation of farm input accounting costs to the various outputs produced. The GME method uses Shannon's information criterion as a basis for estimation. The performance of the GME method is compared with three other estimation techniques: Ordinary Least Squares (OLS), Bayesian estimation, and Linear Programming (LP). The various methods are applied to accounting data from a sample of beef‐dairy farms in Brittany, France. The analysis shows that the GME method offers an interesting alternative to “traditional” estimation methods. In contrast with the latter, though, the GME method is suitable to handle easily the problems of singularity, constrained estimation, and zero‐observations. Moreover, due to its flexibility, transparency and relative ease of implementation, the GME method is of great value to practitioners. However, the sensitivity of the GME estimates with respect to the design of the prior information set needs to be investigated further.

Hallam, David; Bailey, Alastair; Jones, Philip; Errington, Andrew

doi: 10.1111/j.1477-9552.1999.tb00892.xpmid: N/A

Econometric estimation of enterprise input use and production costs offers a less expensive alternative to special surveys. Estimates of input allocation are of use within programming models, for policy analysis and income forecasting. However, simple ordinary least squares estimation has been plagued by a number of problems and the results have been disappointing. This paper provides some empirical evidence on the extent to which these problems can be overcome, or at least mitigated, through exploitation of panel data sets and appropriate panel data estimation techniques. The results confirm that this approach provides some improvement in estimation results, but some practical and methodological problems remain.

Thirtle, Colin

doi: 10.1111/j.1477-9552.1999.tb00893.xpmid: N/A

Estimates of the rate of return (ROR) to publicly funded‐agricultural research are getting lower as private expenditures and spill‐overs are more adequately handled. For UK sugar beet there is a pool of technology available and the spill‐ins are not measurable. An alternative approach is to assume that the difference between productivity growth in sugar and the rest of UK agriculture is attributable to the Sugar Beet Research and Education Committee's R&D and extension expenditures, funded by the only long‐standing producer levy in the UK. These expenditures are used to explain the difference between total factor productivity (TFP) growth in sugar (3.5 per cent per annum) and the rest of UK agriculture (2.0 per cent per annum). The producer's ROR calculated using this approach is 11 per cent and the lower bound on the total return, to producers and consumers is 21 per cent, whereas the conventional methodology gives returns of 87 per cent. Thus, the upward bias in ROR calculations may be removed by changing the approach to the problem.

Choe, Chongwoo; Fraser, Iain

doi: 10.1111/j.1477-9552.1999.tb00894.xpmid: N/A

This paper examines the issue of compliance monitoring in agri‐environmental policy when a farmer is risk‐neutral and risk‐averse. The optimal contract model presented here significantly extends and generalises the results and conclusions of Choe and Fraser (1998). In this paper the environmental agency explicitly chooses monitoring accuracy and monitoring costs as well as rewards for farmers. It is found that, by modelling the environmental agency as being cost‐conscious optimal monitoring accuracy may or may not be higher for a risk‐averse farmer than for a risk‐neutral farmer. Essentially, the environmental agency faces an explicit trade‐off between monitoring costs and incentive payments as a means to ensure the desired behaviour from the farmer. The importance of the results derived are discussed in the context of agri‐environmental policy design and implementation

Bateman, Ian J.; Ennew, Christine; Lovett, Andrew A.; Rayner, Anthony J.

doi: 10.1111/j.1477-9552.1999.tb00895.xpmid: N/A

Ongoing concerns regarding the economic losses associated with the CAP and the negative environmental impacts of present land use have led to calls for land use change and consequent efforts to identify areas which are, from both a financial and social perspective, most appropriate for such conversion. This paper develops and applies an output value modelling methodology in which site‐specific biophysical factors are combined with farm level data in order to predict input usage and, subsequently, farm profit. The spatial analytic capabilities of a geographical information system (GIS) are used to combine the variety of data employed to permit analysis of a large study area (the entirety of Wales) and yield models of both the market and shadow value of output from the two principal agricultural sectors of the area: dairying and sheep farming. The GIS is then used to produce readily interpretable maps of these values across the study area. The resulting maps are highly compatible both with value maps of alternative land uses given in the recent literature and with approaches to policy formulation currently under development by a range of UK agencies. Such maps may be used to assist estimation of the extent and location of farming response to land use policy change.

Bullock, David S.; Salhofer, Klaus; Kola, Jukka

doi: 10.1111/j.1477-9552.1999.tb00896.xpmid: N/A

The paper provides a general framework of normative agricultural policy analysis within which it is possible to unify forty years of literature. It is shown that the literature has gone from examining a very small set of simple policies to a much broader set of policies that combine policy instruments simultaneously. In ranking alternative policies agricultural economists have tried to consider distributive equity. While at a glance it may seem that many different methods have been used to consider distributive equity, we show that in general all these methods can be traced back to three alternative methods based on welfarism and Pareto efficiency.

Hind, Abigail M.

doi: 10.1111/j.1477-9552.1999.tb00897.xpmid: N/A

Ten case study businesses were assessed in relation to sixteen criteria in order to test the application of an hypothesised life cycle. Analysis of stakeholder aspirations for each of these ten businesses was also undertaken. On the basis of the empirical evidence, it was demonstrated that stakeholder groups favour diverse goals, that the level of goal coherence between major stakeholder groups declines as a co‐op progresses through the co‐operative life cycle and that in the later stages of the life cycle, the aspirations of the managers, rather than those of the farmers, are realised. Furthermore, the managers' preferred goals are reflected in the organisational and financial structures and trading practices of individual late stage businesses, which are more akin to investor oriented firms than traditional co‐operatives.