H. Holly Wang

The Transition to Modern Agriculture: Contract Farming in Developing Economies

Recent years have seen considerable interest in the impact of contract farming on farmers in developing countries, motivated out of belief that contract farming spurs transition to modern agriculture. In this article, we provide a thorough review of the empirical literature on contract farming in both developed and developing countries, using China as a special case of the latter. We pay careful attention to broad implications of this research for economic development. We first find empirical studies consistently support the positive contribution of contract farming to production and supply chain efficiency. We also find that most empirical studies identify a positive and significant effect of contract farming on farmer welfare, yet are often unable to reach consistent conclusions as to significant correlates of contract participation.

Meat demand in China

Purpose - The purpose of this paper is to provide a thorough analysis of meat demand in China and predict future trends in meat consumption. Design/methodology/approach - Expenditure as well as Marshallian and Hicksian demand elasticities of various meats in China are evaluated using the linear almost ideal demand system. Findings - Results from this paper show that pork, the primary meat in Chinese diets, has become a necessity and that poultry, beef, mutton, and fish are considered luxuries within the meat budget allocation of Chinese households. Furthermore, the results predict that for any increase in future meat expenditure, the largest share of that increase will be allocated to pork consumption. Originality/value - This paper fills a gap currently present in the empirical literature regarding time series meat demand analysis in China. This paper makes use of newly available time series data on Chinese meat consumption and prices to estimate expenditure as well as own-price and cross-price elasticities. Implications for both domestic meat producers and grain exporters are discussed.

Factors affecting crop insurance purchases in China: the Inner Mongolia region

Purpose - The purpose of this paper is to explain the factors affecting crop insurance purchases by farmers in Inner Mongolia, China. Design/methodology/approach - A survey of farmers in Inner Mongolia, China, is undertaken. Selected variables are used to explain crop insurance purchases, and a probit regression model is used for the analysis. Findings - Results show that a number of variables explain crop insurance purchases by farmers in Inner Mongolia. Of the eight variables in the model, seven are statistically significant. The eight variables used to explain crop insurance purchases are: knowledge of crop insurance, previous purchases of crop insurance, trust of the crop insurance company, amount of risk taken on by the farmer, importance of low crop insurance premium, government as the main information source for crop insurance, role of head of village, and number of family members working in the city. Research limitations/implications - A possible limitation of the study is that data includes only one geographic area, Inner Mongolia, China, and so results may not always fully generalize to all regions of China, for all situations. Practical implications - Crop insurance has been recently expanded in China, and the information from this study should be useful for insurance companies and government policy makers that are attempting to increase the adoption rate of crop insurance in China. Social implications - Crop insurance may be a useful approach for stabilizing the agricultural sector, and for increasing agricultural production and food security in China. Originality/value - This is the first study to quantitatively model the factors affecting crop insurance purchases by farmers in Inner Mongolia, China.

Emerging markets for imported beef in China: Results from a consumer choice experiment in Beijing

The purpose of this study is to explore emerging markets for imported beef in China by assessing Beijing consumer demand for quality attributes. This study utilizes data from an in-store choice experiment to evaluate consumer willingness-to-pay for select food quality attributes (food safety, animal welfare, Green Food and Organic certification) taking into account country-of-origin information. Our results show that Beijing consumers value food safety information the most, and are willing to pay more for Australian beef products than for US or domestic (Chinese) beef. We explore the various relationships between the quality attributes, find evidence of preference heterogeneity and discuss agribusiness and marketing implications of our findings.

Agricultural marketing and food safety in China: a utility perspective

Purpose - – The purpose of this paper is to explore Chinese food safety issues by analysing select incidents within he Chinese agricultural marketing system. Design/methodology/approach - – A marketing utility framework is utilized to discuss some of the major food safety incidents in China and potential solutions are explored. Findings - – The paper finds that food safety issues arise from problems of asymmetric information which leads to the profit seeking behaviour of agents distorting rather than enhancing the creation of one of the four types or marketing utility (time, form, place and possession). Additionally, structural causes found within the Chinese food marketing system have contributed to the food safety problems. Research limitations/implications - – This is not an empirical research with numerical data. Originality/value - – This study is one of the first to address Chinese food safety problems from an agricultural marketing utility perspective. Key anecdotes are used to support the claims made in this study.

A comparison of rural and urban healthcare consumption and health insurance

Purpose - Since 1999, China has undergone reform of its healthcare system. City-based social health insurance (SHI) is the primary form of current health insurance, supplemented by various commercial health insurance programs. The rural new cooperative medical system (NCMS) was introduced in 1993 and extended to cover the whole of rural China in 2003. Design/methodology/approach - The paper developed a theoretical model for consumer demand of medical services and health insurance based on an expected utility framework with a two-stage decision under uncertainty. The model is then applied to current health insurance systems in China for urban citizens and rural residents separately. Least square and logistic regressions are employed. Findings - The major results are that although the factors driving the decisions on health insurance participation are basically the same for rural and urban citizens, the participation levels are quite different. The major difference is that urban SHI has higher coverage and urban citizens have higher income, resulting in a much larger urban medical expenditure. Practical implications - The empirical analysis reveals that health insurance programs have played an important role in the healthcare expenditure for urban residents, while the NCMS has not made a significant impact towards increasing the ability of rural residents to seek more medical services, based on data at 2004. Originality/value - This is the first paper employing a health production theory on Chinas new urban and rural healthcare programs.

Welfare and Market Impacts of Food Safety Measures in China: Results from Urban Consumers' Valuation of Product Attributes

This study provides an economics assessment of various food safety measures in China. A choice experiment approach is used to elicit Chinese consumer preferences for various food safety attributes using data from a 2008 urban consumer survey. An alternative welfare calculation is used to model aggregate market impacts of select food safety measures. Our results show that the largest welfare gains are found in the current government-run certification program. The implementation of a third-party certification system, a traceability network and a product label would generate significant value and would help reduce current system inefficiencies in China. This study builds on previous research and provides an alternative approach for calculating consumer valuation of safety and quality attributes that can be used to estimate aggregate economic and welfare impacts.

Consumer Associations with the “All Natural” Food Label

ABSTRACT “All natural” food labels have become increasingly popular in recent decades. Labels may communicate to consumers a level of food quality above that of unlabeled products. In April 2011, a nationally representative survey was conducted asking respondents to estimate the likelihood that they will increase purchasing in response to an “all natural” label on food products. The sample totaled 1,000 respondents, with 49% being male and 35% between the ages of 45 and 64. Demographic information includes gender, age, income, region, and education. Ordered logit models were used to estimate the likelihood of changes in purchasing based on the “all natural” label. This stated that intended behavior change was evaluated using the ordered logit estimates for nine products: beef, pork, poultry, ice cream, yogurt, cheese, milk, soft dairy products, and bread and bakery products. For all products, being male and having too little information at grocery stores decreased the likelihood of purchase. Conversely, those respondents, who associate the “all natural” label with no preservatives, perceived such products to have improved taste, improved nutritional value, and improved food safety increased the likelihood of purchase.

Do Chinese dairy firms have market power? an estimation of market power with price heterogeneity

Purpose - The purpose of this paper is to investigate market power in dairy industry in China. Specifically, we analyze market power for different firm size, locations of region and city empirically. Design/methodology/approach - We estimate the market power by controlling the unobserved price heterogeneity. The econometric model was developed through a typical production function. We added three dummy variables to differentiate firms of different sizes, at urban or rural locations, and in east or other regions, according to the characteristics of the dairy industry. A sample including 511 observations were used to do the regression. Findings - Our results show that Chinese dairy industry as a whole is a competitive industry in general,while the large firms have gained considerable market power. The firms locate in the eastern area grow slower than firms locate in the middle and western area. Originality/value - The authors believe that this is the first study to analyze the market power in China’s dairy industry by controlling the unobserved price heterogeneity. Dairy is usually thought to be competitive, while in our paper we found that large firms can exercise market power while small firms operate in a competitive market.

Exploring preferences beyond the (cereal) box: ready-to-eat breakfast cereal buying behaviors

Ready-to-eat breakfast cereals vary widely in terms of nutrition and price. The diversity in cereal offerings makes it ideal for the study of preferences for individual nutrients and the potential impact that providing nutritional information may have on consumer purchasing behavior. Using a survey of 1,265 Midwestern residents, a random parameters logit model was employed to estimate the willingness to pay for nutritional elements of ready-to-eat breakfast cereal. Household demographic data, including household food security status, were collected. Agricultural and food businesses may seek to provide product information, including nutritional information, to their customers. In addition, national and local policies may seek to empower consumers’ decision making through education. Nutritional information may not have the intended impact of influencing healthier choices. Responses from those shown educational material on nutrition were tested and found not different from respondents not shown the information.