Policy Research Working Paper | Agriculture | World Bank

Can diaries help improve agricultural production statistics ? Evidence from Uganda

2011-06-30T04:00:00.000Z

Although good and timely information on agricultural production is critical for policy-decisions, the quality of underlying data is often low and improving data quality could have a high payoff. This paper uses data from a production diary, administered concurrently with a standard household survey in Uganda to analyze the nature and incidence of responses, the magnitude of differences in reported outcomes, and factors that systematically affect these. Despite limited central supervision, diaries elicited a strong response, complemented standard surveys in a number of respects, and were less affected by problems of respondent fatigue than expected. The diary-based estimates of output value consistently exceeded that from the recall-based production survey, in line with reported disposition. Implications for policy and practical administration of surveys are drawn out.

Entrepreneurship capital and technical efficiency : the role of new business / firms as a conduit of knowledge spillovers

2011-07-27T04:00:00.000Z

Increasingly, entrepreneurship is being discussed and considered as a source of high economic growth and competitiveness. A conceptual process of creative construction that characterizes the dynamics between entrants and incumbents can prove quite useful to analyze the impact of countries' entrepreneurship capital on economic performance and can be a guide for economic policy. This paper applies a Stochastic Frontier Analysis approach to test the hypothesis that entrepreneurship capital promotes economic performance by serving as a conduit of knowledge spillovers. In addition, kernel density functions are employed to analyze convergence (or divergence) in the efficiency estimated for individual countries. The empirical evidence and results here tend to support the hypothesis. Specifically, the empirical analysis shows that the rate of expenditure on research and development in relation to new businesses registered has a positive and significant effect in increasing technical efficiency. These factors facilitate the dissemination of existing knowledge, develop entrepreneurship capital, and thus provide the missing link to economic performance -- entrepreneurship capital. The authors also show the trends and dynamics of changes in countries technical efficiency.

Who is benefiting from fertilizer subsidies in Indonesia ?

2011-08-15T04:00:00.000Z

Using the Agricultural Census 2003 and the Rice Household Survey 2008 for Indonesia, this paper analyzes the distribution of benefits from fertilizer subsidies and their impact on rice production. The findings suggest that most farmers benefit from fertilizer subsidies; however, the 40 percent largest farmers capture up to 60 percent of the subsidy. The regressive nature of the fertilizer subsidies is in line with research carried out in other countries, the result of larger farms using a larger volume of fertilizer. This paper confirms that fertilizer used in adequate quantities has a positive and significant impact on rice yields, but it also provides evidence that over-using fertilizer has an adverse impact on yields (an inverted U-curve relationship).

Consensus, institutions, and supply response : the political economy of agricultural reforms in Sub-Saharan Africa

2011-08-29T04:00:00.000Z

During the late 1980s and the 1990s, most countries in Sub-Saharan Africa implemented agricultural policy reforms, along with national political and economic reforms. The agricultural reforms focused on opening up processing and marketing activities to increased competition and eliminating export taxes and restrictions to improve producer incentives. In eight of nine country/commodity case studies analyzed in this paper, output responded positively in the short run to the reforms. In many cases, however, the initial supply response was not sustained in the face of subsequent shocks. The studies suggest that stakeholder consensus on the distribution of sector-specific rents is a key variable affecting the sustainability of supply responses. Agricultural sector reforms lead to large changes in income distribution. The greater the acceptance of the distribution of rents following the reforms, the better sectors are able to accommodate subsequent shocks. In cases where the initial consensus on the distribution of rents is weak, shocks lead to reform reversals in some cases or an inability to design necessary support institutions in others. The diversity in outcomes across similar products and countries suggests it is possible to achieve sector and local level results that differ from national ones.

The impact of economics blogs

2011-08-29T04:00:00.000Z

There is a proliferation of economics blogs, with increasing numbers of economists attracting large numbers of readers, yet little is known about the impact of this new medium. Using a variety of experimental and non-experimental techniques, this study quantifies some of their effects. First, links from blogs cause a striking increase in the number of abstract views and downloads of economics papers. Second, blogging raises the profile of the blogger (and his or her institution) and boosts their reputation above economists with similar publication records. Finally, a blog can transform attitudes about some of the topics it covers.

Cotton, biotechnology, and economic development

2011-12-05T05:00:00.000Z

During the past decade, cotton prices remained considerably below other agricultural prices (although they recovered toward the end of 2010). Yet, between 2000-04 and 2005-09 world cotton production increased 13 percent. This paper conjectures that biotechnology-induced productivity improvements increased supplies by China and India, which, in addition to keeping cotton prices low, aided these countries to cap-ture market share from (and cause losses to) non-users of biotechnology. By contrast, with a single exception, Africa has not adopted biotechnology and, not coincidentally, its cotton output declined by more than 20 percent between the first and second half of the past decade. The paper concludes that the development implications of biotechnology go beyond cotton and Africa. High energy prices have been an important driver of the recent commodity price boom. Therefore, investment and policy strategy responses to a cost-driven boom should be consistent with cost-saving alternatives. Biotechnology clearly meets this challenge.

Knowledgeable bankers ? the demand for research in World Bank operations

2011-12-12T05:00:00.000Z

Development impact calls for knowledgeable development practitioners. How then do the operational staff of the largest development agency value and use its research? Is there an incentive to learn and does it translate into useful knowledge? A new survey reveals that the bulk of the World Bank's senior staff value the Bank's research for their work, and most come to know it well, although a sizable minority have difficulty accessing research to serve their needs. Another group sees little value to research for their work and does not bother to find out about it. Higher perceived value is reflected in greater knowledge about research, though there are frictions in this process. Staff working on poverty, human development and economic policy tend to value and use research more than staff in the more traditional sectors of Bank lending -- agriculture and rural development, energy and mining, transport and urban development; the latter sectors account for 45 percent of lending but only 15 percent of staff highly familiar with Bank research. Without stronger incentives for learning and more relevant and accessible research products, it appears likely that this lag in demand for research by the traditional sectors will persist.

Soil endowments, production technologies and missing women in India

2012-02-22T05:00:00.000Z

The female population deficit in India has been explained in a number of ways, but the great heterogeneity in the deficit across districts within India still remains an open question. This paper argues that across India, a largely agrarian economy, soil texture varies exogenously and determines the workability of the soil and the technology used in land preparation. Deep tillage, possible only in lighter and looser loamy soils, reduces the use of labor in cultivation tasks performed by women and has a negative impact on the relative value of girls to a household. The analysis finds that soil texture explains a large part of the variation in women's relative participation in agriculture and in infant sex ratios across districts in India.

Agriculture public spending and growth in Indonesia

2012-02-23T05:00:00.000Z

This paper analyzes the trends and evolution of public spending in the agriculture sector in Indonesia, as well as the impact of public spending on agricultural growth. It finds that, in line with empirical work undertaken in other countries, public spending on agriculture and irrigation during the period 1976-2006 had a positive impact on agricultural growth, while public spending on fertilizer subsidies had the opposite effect. The composition of spending patterns in Indonesia over the past decade can partly explain why significant increases in public spending for agriculture have not resulted in a commensurate increase of agricultural production. The paper is structured as follows. Section I presents analytical and empirical findings about the impact of overall public spending on growth, with a particular focus on Indonesia, followed by an analysis of the government's role in agriculture. More precisely, it discusses how public spending can contribute to higher productivity and faster growth in the sector. The section draws lessons from the empirical literature and country examples worldwide, exploring the implications of some of these findings in the Indonesia context. Section II presents the results of an empirical analysis of the impact of agriculture public spending on agriculture gross domestic product per capita growth in Indonesia, using time series analysis with both ordinary least squares and generalized method of moments econometric techniques. Section III analyzes in detail agriculture public spending trends in Indonesia over the period 2000-08, highlighting that a large and increasing share of the spending is being allocated to subsidies (fertilizer, credit, seeds) and to fund transfers to farmers and farmers' groups.

How vulnerable are Arab countries to global food price shocks ?

2012-03-29T04:00:00.000Z

This paper presents new estimates of pass-through coefficients from international to domestic food prices by country in the Middle East and North Africa. The estimates indicate that, despite the use of food price subsidies and other government interventions, a rise in global food prices is transmitted to a significant degree into domestic food prices in many countries in the Middle East and North Africa, although cross-country variation is significant. In nearly all countries, domestic food prices are highly downwardly rigid. The finding of asymmetric price transmission suggests that not only international food price levels matter, but also food price volatility. High food pass-through tends to increase inflation pressures, where food consumption shares are high. Domestic factors, often linked to storage, logistics, and procurement, have also played a major role in explaining high food inflation in the majority of countries in the region.

Biotechnology innovation for inclusive growth : a study of Indian policies to foster accelerated technology adaptation for affordable development

2012-04-03T04:00:00.000Z

This paper describes and analyzes a series of complementary policy initiatives in India to adapt and commercialize existing global biotechnologies to meet local needs in healthcare, agriculture, industry and the environment in a more affordable manner. This evolving approach has been implemented through six complementary elements, namely (1) translational research; (2) technology access through global consortia; (3) commercialization supported by public-private partnerships, broadly interpreted; (4) skills development; (5) regulation; and (6) institutional governance, including special purpose vehicles, for effective project management. The paper focuses on two public-private partnership initiatives, the Small Business Innovation Research Initiative and the Biotechnology Industry Partnership Program, which together have allocated more than US$70 million in public funding to almost 150 projects, contributing to a total public-private investment of more than $170 million over the past five years. The authors' key recommendation, to ensure effective resource use and better policy impact, is for these innovation-support initiatives to adopt more continuous monitoring with quicker feedback from learning to implementation, and more rigorous impact evaluation including approaches that allow the results of firms benefiting from support to be compared with an appropriate group of firms not benefiting from support.

Quality contingent contracts : evidence from Tanzania's coffee market

2012-08-14T04:00:00.000Z

The literature on product quality in markets where product attributes are not readily observable indicates that information asymmetries and incentive problems may lead to the under-provision of quality. This paper contributes to this literature by estimating the effects of village-level contractual arrangements on producer incomes and on quality enhancing production practices. Three contract types are studied: spot contracts, contingent contracts with product grading and contingent contracts without product grading. To do this, the study uses original data from a survey of 450 coffee producers in Tanzania's coffee market that take advantage of contractual variation in the Kilimanjaro region. The results indicate that coffee contracts that include village-based product grading have a large positive effect on producer incomes, and that the grading effect is associated with production practices that enhance quality. The results also indicate that cooperative membership has no significant effect on producer incomes.

Should African rural development strategies depend on smallholder farms ? an exploration of the inverse productivity hypothesis

2012-09-06T04:00:00.000Z

In Africa, most development strategies include efforts to improve the productivity of staple crops grown on smallholder farms. An underlying premise is that small farms are productive in the African context and that smallholders do not forgo economies of scale -- a premise supported by the often observed phenomenon that staple cereal yields decline as the scale of production increases. This paper explores a research design conundrum that encourages researchers who study the relationship between productivity and scale to use surveys with a narrow geographic reach, when policy would be better served with studies based on wide and heterogeneous settings. Using a model of endogenous technology choice, the authors explore the relationship between maize yields and scale using alternative data. Since rich descriptions of the decision environments that farmers face are needed to identify the applied technologies that generate the data, improvements in the location specificity of the data should reduce the likelihood of identification errors and biased estimates. However, the analysis finds that the inverse productivity hypothesis holds up well across a broad platform of data, despite obvious shortcomings with some components. It also finds surprising consistency in the estimated scale elasticities.

Agricultural trade : what matters in the Doha round ?

2012-11-13T05:00:00.000Z

This survey concludes that including agriculture in the Doha Agenda negotiations was important both economically and politically, although the political resistance to reform is particularly strong in this sector. While agriculture accounts for less than 10 percent of merchandise trade, high and variable agricultural distortions appear to cause the majority of the cost of distortions to global merchandise trade. Within agriculture, most of the costs appear to arise from trade barriers levied on imports since these barriers tend to be high, variable across time and over products, and are levied by a wide range of countries. The negotiations faced a need for balance between discipline in reducing tariffs and hence creating the market access gains that are central to the negotiations, and flexibility in managing political pressures. While the approach of providing flexibility on a certain percentage of tariff lines is seriously flawed, the proposed Modalities still appear to provide worthwhile market access. Better ways appear to be needed to deal with developing countries' concerns about food price volatility while reducing the collective-action problems resulting from price insulation.

Perils of simulation : parallel streams and the case of stata's rnormal command

2012-11-28T05:00:00.000Z

Large-scale simulation-based studies rely on at least three properties of pseudorandom number sequences: they behave in many ways like truly random numbers; they can be replicated; and they can be generated in parallel. There has been some divergence, however, between empirical techniques employing random numbers, and the standard battery of tests used to validate them. A random number generator that passes tests for any single stream of random numbers may fail the same tests when it is used to generate multiple streams in parallel. The lack of systematic testing of parallel streams leaves statistical software with important potential vulnerabilities. This paper shows one such vulnerability in Stata's rnormal function that went unnoticed for almost four years, and how to detect it. It then shows practical implications for the use of parallel streams in existing software.

The impact of the global food crisis on self-assessed food security

2013-01-22T05:00:00.000Z

The paper provides the first large-scale survey-based evidence on the impact of the global food crisis of 2007-08 using an indicator of self-assessed food security from the Gallup World Poll. For the sampled countries as a whole, this subjective indicator of food security remained the same or even improved, seemingly owing to a combination of strong economic growth and limited food inflation in some of the most populous countries, particularly India. However, these favorable global trends mask divergent trends at the national and regional levels, with a number of countries reporting substantial deterioration in food security. The impacts of the global crisis therefore appear to be highly context specific.

Rain, agriculture, and tariffs

2013-03-27T04:00:00.000Z

This paper examines whether and how rainfall shocks affect tariff setting in the agricultural sector. In a model of strategic trade policy, the authors show that the impact of a negative rainfall shock on optimal import tariffs is generally ambiguous, depending on the weight placed by the domestic policy maker on tariff revenue, profits and the consumer surplus. The more weight placed on domestic profits, the more likely it is that the policy maker will respond to a rainfall shortage by reducing import tariffs. These findings are robust to alternative assumptions about market structure and the timing of the game. Using detailed panel data on applied tariffs and rainfall for 70 nations, the authors find robust evidence that rainfall shortages generally induce policy makers to set lower tariffs on agricultural imports.

Food prices, wages, and welfare in rural India

2013-04-17T04:00:00.000Z

This paper considers the welfare and distributional consequences of higher relative food prices in rural India through the lens of a specific-factors, general equilibrium, trade model applied at the district level. The evidence shows that nominal wages for manual labor both within and outside agriculture respond elastically to increases in producer prices; that is, wages rose faster in rural districts growing more of those crops with large price run-ups over 2004-09. Accounting for such wage gains, the analysis finds that rural households across the income spectrum benefit from higher agricultural commodity prices. Indeed, rural wage adjustment appears to play a much greater role in protecting the welfare of the poor than the Public Distribution System, India's giant food-rationing scheme. Moreover, policies, like agricultural export bans, which insulate producers (as well as consumers) from international price increases, are particularly harmful to the poor of rural India. Conventional welfare analyses that assume fixed wages and focus on households' net sales position lead to radically different conclusions.

Political economy of public policies : insights from distortions to agricultural and food markets

2013-05-02T04:00:00.000Z

The agricultural and food sector is an ideal case for investigating the political economy of public policies. Many of the policy developments in this sector since the 1950s have been sudden and transformational, while others have been gradual but persistent. This paper reviews and synthesizes the literature on trends and fluctuations in market distortions and the political-economy explanations that have been advanced. Based on a rich global data set covering a half-century of evidence on commodities, countries, and policy instruments, the paper identifies hypotheses that have been explored in the literature on the extent of market distortions and the conditions under which reform may be feasible.

Trade insulation as social protection

2013-05-16T04:00:00.000Z

In a world with volatile food prices, countries have an incentive to shelter their populations from induced real income shocks. When some agents are net food producers while others are net consumers, there is scope for insurance between the two groups. A domestic social protection scheme would therefore transfer resources away from the former group to the latter in times of high food prices, and do the reverse otherwise. This paper shows that in the presence of consumer preference heterogeneity, implementing the optimal social protection policy can potentially induce higher food price volatility. Such policy indeed generates a counter-cyclical demand shock that amplifies the effects of the underlying food shortage. The results call for a reassessment of food stabilization policies. In particular, the authors urge caution against the systematic condemnation of trade insulation practices.