Mekbib G. Haile

Worldwide Acreage and Yield Response to International Price Change and Volatility: A Dynamic Panel Data Analysis for Wheat, Rice, Corn, and Soybeans

This article estimates a worldwide aggregate supply response for key agricultural commodities— wheat, rice, corn, and soybeans—by employing a newly-developed multi-country, crop-calendar-specific, seasonally disaggregated model with price changes and price volatility applied accordingly. The findings reveal that, although higher output prices serve as an incentive to improve global crop supply as expected, output price volatility acts as a disincentive. Depending on the crop, the results show that own-price supply elasticities range from about 0.05 to 0.40. Output price volatility, however, has negative correlations with crop supply, implying that farmers shift land, other inputs, and yield-improving investments to crops with less volatile prices. Simulating the impact of price dynamics since 2006, we find that price risk has reduced the production response of wheat in particular—and to a lesser extent, rice—thus dampening price incentive effects. The simulation analysis shows that the increase in own-crop price volatility from 2006–2010 dampened yield by about 1–2% for the crops under consideration.

Short-Term Global Crop Acreage Response to International Food Prices and Implications of Volatility

Understanding how producers make decisions to allot acreage among crops and how decisions about land use are affected by changes in prices and their volatility is fundamental for predicting the supply of staple crops and, hence, assessing the global food supply situation. The innovations of the present paper are estimates of monthly (i.e. seasonal) versus annual global acreage response models for four staple crops: wheat, soybeans, corn and rice. We focus on the impact of (expected) crop prices, oil and fertilizer prices and market risks as main determinants for farmers’ decisions on how to allocate their land. Primary emphasis is given to the magnitude and speed of the allocation process. Estimation of intra-annual acreage elasticity is crucial for expected supply and for input demand, especially in the light of the recent short-term volatility in food prices. Such aggregate estimates are also valuable to verify whether involved country-specific estimations add up to patterns that are apparent in the aggregate international data. The econometric results indicate that global crop acreage responds to crop prices and price risks, input costs as well as a time trend. Depending on respective crop, short-run elasticities are about 0.05 to 0.25; price volatility tends to reduce acreage response of some crops; comparison of the annual and the monthly acreage response elasticities suggests that acreage adjusts seasonally around the globe to new information and expectations. Given the seasonality of agriculture, time is of the essence for acreage response: The analysis indicates that acreage allocation is more sensitive to prices in northern hemisphere spring than in winter and the response varies across months.

What Factors Determine the Time Allocation of Agricultural Extension Agents on Farmers' Agricultural Fields? Evidence Form Rural Ethiopia

Conservation and judicious use of soil and water play an important role for sustainable crop production and improving the livelihood of people especially in the semi- arid and arid belts of India. The present work evaluates the changes brought about by soil and water conservation interventions in the beneficiary villages of Ratlam and Mandsaur districts, Madhya Pradesh in terms of cropped area, irrigated area and number of irrigations applied. An exploratory survey and evaluation through questionnaire based interview of the respondents was conducted. The post intervention period recorded a net increase of cropping area with ensured irrigation cover and more number of irrigations applied to the crop by the farmers of the beneficiary villages even in water scarce Rabi season.

Impacts of extension access and cooperative membership on technology adoption and household welfare

This paper examines the impacts of access to extension services and cooperative membership on technology adoption, asset ownership and poverty using household-level data from rural Nigeria. Using different matching techniques and endogenous switching regression approach, we find that both extension access and cooperative membership have a positive and statistically significant effect on technology adoption and household welfare. Moreover, we find that both extension access and cooperative membership have heterogeneous impacts. In particular, we find evidence of a positive selection as the average treatment effects of extension access and cooperative membership are higher for farmers with the highest propensity to access extension and cooperative services. The impact of extension services on poverty reduction and of cooperatives on technology adoption is significantly stronger for smallholders with access to formal credit than for those without access. This implies that expanding rural financial markets can maximize the potential positive impacts of extension and cooperative services on farmers’ productivity and welfare.

The Wheat Sector in Ethiopia: Current Status and Key Challenges for Future Value Chain Development

This paper provides a general overview of the current status and key challenges of the Ethiopian wheat value chain. Wheat is an important staple food crop in Ethiopia. Improving wheat production and productivity is therefore a key part of the agenda in the Ethiopian government’s food security policy programs. Policy interventions that aim at improving wheat production or agricultural production for that matter, however, require interventions beyond the farm — at the whole wheat value chain. Both domestic production and import — the two key sources of wheat grain supply to the Ethiopian wheat value chain — have shown a substantial increase since the mid-1990s. Yet, a steady increase in domestic wheat consumption has resulted in rising wheat and wheat product prices over the past two decades. For instance, wheat grain, wheat flour as well as wheat bread prices have all more than doubled between 2000 and 2013. Using a qualitative survey of selected wheat value chain actors and a review of existing literature, this study provides an overview of the wheat value chain, institutional and marketing arrangements, and trader behaviour of wheat value chain actors in Ethiopia. The wheat value chain consists of multiple actors that include several smallholder farmers and the Ethiopian grain trade enterprise (EGTE) at the upstream and urban and rural consumers at the other end. The study stresses the need for formulation of market-enhancing policies, such as quality control and dispute settlement mechanisms as well as better access to market information, to improve wheat productivity as well as marketing efficiency.

Producer to retailer price transmission in cereal markets of Ethiopia

This paper investigates price transmission between producer and retail prices of teff, wheat, and maize in Amhara and Oromia, the two major cereal markets in Ethiopia. Market and cereal specific asymmetric error correction models were estimated to analyze producer-retail price transmission using monthly data from 2001 to 2011. For seven out of eight crop-market combinations, with the exception of the Amhara wheat market, we found no evidence of asymmetric price transmission from producer to retail prices in the long run. Neither contemporaneous nor long-run price transmission asymmetry was found in either the Amhara or Oromia teff markets. This was also the case for the maize market except that there existed a short-run asymmetric price transmission that disappeared in the long run in Oromia. We therefore conclude that there is no strong empirical evidence to support the purported ‘market power’ or ‘inventory holding’ behaviour in the Ethiopian cereal markets to explain asymmetric vertical price transmission in the long run. The evidence of asymmetric price transmission for the Amhara wheat market, unlike the wheat market in Oromia, may indicate some differential in the quality of infrastructure and the length and complexity of wheat value chains between these two markets. Symmetric price adjustments in these cereal markets suggest that input price changes may have positive long run implications for food security and welfare of the poor in Ethiopia.

Access to Information and Price Expectation Errors of Smallholder Farmers: Theory and Empirics

The lag between agricultural production decision and output realization makes access to information critical for farmers. Using household survey data from rural Ethiopia, this study explores the role of access to information in determining the magnitude of smallholder farmers’ price expectation errors. The empirical findings suggest that farmers who own information and communication technologies (ICT) and who reside closer to markets make smaller price forecasting errors. The beneficial effect of ICT is stronger for households that reside farther away from grain markets and for those headed by younger farmers. Improving both information and road infrastructure, which reduces the cost of accessing information, is therefore vital. The results of this study were robust across different types of econometric estimators as well as the use of alternative measurements of price forecasting error.

Food and Agriculture in Ethiopia: Progress and Policy Challenges

and export-oriented biofuel production, which overlooks the role of national markets and policy frameworks. As a result, there is very little discussion on developing countries’ own biofuel policies as important variables for creating pro-poor outcomes. As a desk assessment based solely on the literature (most of it from 2010 or earlier), the book offers little novelty to those already familiar with biofuel sustainability debates. Yet, it duly brings attention to the understudied social dimensions of sustainable development and offers a good introduction to the biofuels subject. The book may be particularly attractive to those in the fields of rural sociology, development studies, and to enthusiasts of emerging green economy initiatives. To the latter, Biofuels and Rural Poverty can be a powerful reminder that, without sufficient attention to equity issues, ‘green’ sectors may easily aggravate – rather than help address – social problems.