Fabienne Femenia

The Decoupling of Farm Programs: Revisiting the Wealth Effect

Recent reforms of agricultural policies in developed countries have introduced direct payments as replacements for traditional production-enhancing instruments. Whereas these new instruments can, in principle, influence production through several channels, current empirical studies show no significant impact on production; direct payments mainly increase land values. In this article, we revisit the evaluation of the coupling effects passing through the wealth of agricultural households. The initial wealth of these agents, while mainly being in the form of land asset holding, is always assumed to be fixed. To the contrary, we show theoretically and through an empirical simulation exercise that once the impact of farm programs on initial wealth is properly accounted for, the measure of the coupling effects is not as negligible as found in previous studies. Copyright 2010, Oxford University Press.

On the European Responsibility in the Agricultural Multilateral Trade Negotiations: Modelling the Impacts of the Common Agricultural Policy

The present round of multilateral trade negotiations is still deadlocked over agricultural trade. The European Union (EU) is urged by its trading partners to open its agricultural markets. Economic evaluations of trade liberalisation scenarios unanimously conclude that a substantial opening of agricultural markets is required for a successful (welfare-improving) Doha Round. In this paper, we perform new evaluations to identify precisely the contributions of the European farm policy and to examine the robustness of these evaluations in the representation of this complex policy. Using the same specifications as in major previous studies, our first simulations show that the EU has a major responsibility in delivering significant gains to the developing countries. On the other hand, when we conduct the same experiments with a more relevant calibration and modelling of the European farm policy instruments, the gains that these developing countries may reap from the EU liberalisation are considerably reduced. Accordingly the current charge against the EU is simply inopportune.

Modeling Heterogeneous Farm Responses to European Union Biofuel Support with a Random Parameter Multicrop Model

Although there is now widespread evidence of substantial variability in economic agents’ responses to economic drivers in many applied economics fields, this variability has been largely overlooked by econometric agricultural production models. This article sets out to fill this gap by providing methodological contributions and empirical results. First, we consider panel data multicrop models featuring random intercept and slope parameters to account for the heterogeneous responses of crop producers to economic drivers. Second, we show that Monte Carlo expectation-maximization algorithms are particularly well-suited to estimating this type of model. Third, based on an application of our empirical modeling framework with a sample of French grain crop producers, we demonstrate substantial variability in farmers’ responses to economic incentives. Fourth, we use the estimated model and a simple “statistical calibration” procedure to build farm-specific simulation models, which are then used to evaluate the effects of the rapeseed price increase induced by European Union (EU) biofuel support. Our simulation results demonstrate that ignoring the variability in the considered farmers’ responses to the economic incentives results in significant overestimation of the increases in rapeseed yield levels and variable input use levels induced by EU biofuel support, as well as significant underestimation of the variability in the congruent increases in rapeseed acreages.