Agricultural Economics

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The real exchange rate and Ghana's agricultural exports
(African Economic Research consortium, 1992-10-07) Fosu, K. Yerfi
Policy modelling in agriculture: Testing the response of agriculture to adjustment policies in Nigeria
(African Economic Research consortium, 1997-03-02) Kwanashie, Mike; Garba, Abdul-Ganiyu; Ajilima, Isaac
Adjustment programmes and agricultural incentives in Sudan: A comparative study
(African Economic Research consortium, 1997-03-04) Elamin, Nasredin A. Hag; El Mak, Elsheikh M.
This study analyses the impact on agricultural price incentives of the main adjustment programmes implemented by the Sudanese government during the period 1978-1993, notably the Economic Recovery Programme (ECRP) 1978-1985 and the national economic Salvation programme (NESP), 1990-93. The study addresses two basic questions: Did these programmes provide any tangible incentives to agriculture? And are improved price incentives an efficient and sufficient condition for increasing aggregate agricultural output? The effects of the programmes on the level and stability of price incentives were measured, both at the sectoral (direct) and economywide (indirect) levels. The results indicate that both programmes failed to improve either the level or the stability of real farm prices. Poor macroeconomic policies appear to be the main cause. With regard to the efficacy of price incentives in stimulating aggregate agricultural output, the findings tend to confirm the predominant view that increases in real farm prices have positive but limited overall effect on agriculture. Non-price factors appear to play a greater role in determining aggregate agricultural output. The analysis implies that without the provision of adequate credit, public investments and improvement in infrastructure, the aggregate response of agriculture to price incentives would be minimal.
Agricultural credit under economic liberalization and Islamization in Sudan
(African Economic Research consortium, 1998-02-05) Elhiraika, Adam B.; Ahmed, Sayed A.
This study uses survey data to examine the operations of the agrarian credit market, formal and informal, in Sudan under conditions of recent economic liberalization and Islamization; the latter does not allow interest rate fixing. In addition to descriptive analysis, the study specifies and estimates a model of farm household participation in the credit market. The survey results show a substantial increase in formal borrowing in agriculture, but relatively low informal credit. Implicit interest rates are found to be high in the formal segment compared with their previous levels, and the levels of formal and informal agrarian rates of interest are comparable. The research concludes that there is a need for enhanced institutional financial intermediation in the agrarian credit market as well as scope for the promotion of savings and credit associations among farmers.
The Nigerian economy: Response of agriculture to adjustment policies
(African Economic Research consortium, 1998-03-07) Kwanashie, Mike; Ajilima, Isaac; Garba, Abdul-Ganiyu
This study estimated price and non-price supply response coefficients for nine individual crops, sub-sectoral aggregates and commodity exports using the two-stage least squares (TSLS) and seemingly unrelated regression method (SURM) as tools for evaluating the effects of sub-sectoral aggregates on Nigerian agriculture. The estimates confirm two results in the supply response literature: (1) short-run price elasticities of individual crops are smaller than the long-run elasticities and (2) commodity sub-sectoral aggregates do not respond significantly to prices as individual crops. The results also show that the responses of food crops are sensitive to Nigeria’s agro-climate and the traditional cropping patterns of Nigerian farmers, who are mainly smallholders. Moreover, individual crops and sub-sectoral aggregates do not respond significantly to capital expenditure on agriculture (CEA), possibly because of action lags, weak choice of agricultural infrastructures and corruption. Non-tradeable crops are more sensitive to the SAP dummy for institutional change (D2) than to the price support and food import dummy (D1). However, the SAP dummy is likely to indicate the effects of the reverse flow of labour from urban to rural areas following the down sizing that accompanied SAP. This is because food (cassava, millet and groundnut) and cotton (consumed mainly by domestic textile companies) are the only crops that have significant and positive response coefficients. Finally, commodity exports are positively sensitive to terms of trade. The results point strongly to two conclusions. First, the significant sensitivity of crops to price incentives is not sufficient to generate desired aggregate response. This result is consistent with the findings of the supply response literature and suggests that structural adjustment is more likely to affect the distribution of farm incomes than agricultural productivity and growth. Second, the sensitivity of commodity exports to terms of trade implies that external and, hence, exogenous factors play a critical role in the path of exports. Therefore, getting domestic prices of commodities right would not be sufficient to expand the foreign revenue from commodity exports. This is also consistent with the consensus in the 1970s about the international commodity price and the well-established neoclassical propositions about the short- and long-run paths of commodity prices and income under conditions of free enterprise. The results suggest that price incentives, shorter policy lags, more efficient infrastructural support to smallholder farm households, and less corruption in the design and implementation of agricultural policies would raise the production possibility frontier of farmers, who make up over 60% of employed Nigerians. Food should be at the core of a socially optimal Nigerian agricultural policy because it has the strongest potential for structural transformation of the economy and better price and policy responsiveness than tradeable crops.
Economic liberalization and privatization of agricultural marketing and input supply in Tanzania: A case study of cashewn uts
(African Economic Research consortium, 1998-11-30) Mwase, Ngila
Since 1991 massive restructuring and liberalization of agricultural marketing have been undertaken in Tanzania. The study examines this process in the context of SAP and the need to ensure a more economically viable private sector driven agricultural marketing system. Private firms and traders are increasingly marketing agricultural inputs and outputs, hitherto a preserve of marketing boards and cooperatives. The study uses interviews and a questionnaire to examine the impact of these changed on smaliholder cashew producers, with special emphasis on the producers' views and expectations. We conclude that despite some financial and logistical problems, and vested interest, some positive results are discernible. Given favourable pricing, marketing and processing policies, the persistent decline in cashew production has been reversed, and producer prices have increased. The challenge is to develop a privatised and sustainable cashew marketing system that is responsive to producers' needs and expectations.
Price, exchange rate volatility and Nigeria’s agricultural trade flows: A dynamic analysis
(African Economic Research consortium, 1999-03-05)
The integration of Nigeria's rural and urban foodstuffs markets
(African Economic Research consortium, 2005-11-04) Okoh, Rosemary N.; Egbon, P.C.
The study intended to determine the presence and level of integration of the rural and urban foodstuffs markets of Nigeria. A central prediction of the law of one price is that prices of all transactions will tend to uniformity, allowing for the transportation cost between different spatial markets. Using the Johansen bivariate test of cointegration, it was established that the rural and urban foodstuffs markets are pair-wise cointegrated. The test for convergence to the law of one price as well as the test for weak exogeneity for urban foodstuffs prices (Y1) could not be rejected at the 1% level of significance. Hence, we conclude that the rural and urban foodstuffs markets are well integrated and are in the same market for arbitrage. The results further suggest that the urban market price drives the rural market price. The size of the adjustment coefficient for the rural foodstuffs price (Y2) shows that the speed of adjustment to disequilibrium is moderate. The persistence profile further shows that it would take about five months for the effects of a shock on the market system to die out. The findings of this research have significant policy implications for Nigeria’s domestic foodstuffs market system as well as its international trade policies.
Technical efficiency differentials in rice production technologies in Nigeria
(African Economic Research consortium, 2006-04-04) Ogundele, Olorunfemi O.; Okoruwa, Victor O.
Food production in Zambia: The impact of selected structural adjustment policies
(African Economic Research consortium, 2006-09-06) Simatele, Munacinga C.H.
The paper examines the impact of selected structural adjustment policies on food production in Zambia. Using a four-year panel of post-harvest data, a system of six crops, two variable inputs and three fixed inputs is estimated. The resulting supply responses suggest a negatively sloped supply curve for sorghum and millet, which is attributed to the presence of credit constraints. Simulations are conducted to asses the impact of the removal of subsidies and exchange rate controls. The results indicate that these policies have led to increased food production although the magnitude of the increase is in general not very large. The results also indicate a significant fall in fertilizer use. Information, credit and distance to markets are also very important variables for food production. Deliberate efforts are needed to develop both input and output markets and to provide more formal credit institutions targeted at small-scale farmers.
Determinants of technical efficiency differentials amongst small- and medium-scale farmers in Uganda: A case of tobacco growers
(African Economic Research consortium, 2006-10-04) Obwona, Marios
It is argued that technical efficiency is determined by individual farm- and farmer-specific characteristics. Such characteristics may be divided into two groups – demographic characteristics, which dominate the decision making process of the farmer, and socioeconomic and institutional characteristics, which influence a farmer’s capacity to apply the decisions at the farm level. The principal objectives of this study are to explore the potential for improving production efficiencies of farmers and to identify factors that influence such efficiencies. The study uses cross-section data from a sample of 65 small- and medium-scale farmers. A stochastic production frontier approach is used to estimate the farmer-specific technical efficiencies. The estimated efficiencies are then explained by socioeconomic and demographic factors. It is shown that education, credit accessibility and extension services contribute positively towards the improvement of efficiency. These results therefore suggest that if more resources are invested in extension services, the availability of credit is improved and there is less fragmentation of land, then there will be an improvement in technical efficiency of farmers in Uganda.
Analysis of factors affecting the technical efficiency of arabica coffee producers in Cameroon
(The African Economic Research Consortium, 2007-01) Nchare, Amadou
This study analyses the factors influencing the technical efficiency of arabica coffee farmers in Cameroon. To carry out this analysis, a translog stochastic production frontier function, in which technical inefficiency effects are specified to be functions of socioeconomic variables, is estimated using the maximum-likelihood method. The data used were collected from a sample of 140 farmers during the 2004 crop year. The results obtained show some increasing returns to scale in coffee production. The mean technical efficiency index is estimated at 0.896, and 32% of the farmers surveyed have technical efficiency indexes of less than 0.91. The analysis also reveals that the educational level of the farmer and access to credit are the major socioeconomic variables influencing the farmers’ technical efficiency. Finally, the findings prove that further productivity gains linked to the improvement of technical efficiency may still be realized in coffee production in Cameroon.
Implications of Rainfall Shocks for Household Income and Consumption in Uganda
(The African Economic Research Consortium, 2007-07) Asiimwe, John Bosco
Much of Uganda’s agricultural production activities are rain-fed, meaning that changes in weather conditions have important implications for households’ total agricultural production and wellbeing. This study uses a basic model of household production to assess the impact of rainfall shocks (using rainfall variability) on farm income and consumption expenditure and the response of households to such shocks. Pooled cross sectional data of farm households are derived from the Uganda National Household Surveys for 1992/93, 1999/2000 and 2002/03, which provide a rich source of information on individual and household characteristics (size, age, sex, education, employment, etc.), household income, expenditure, and exposure to risk/shocks. Rainfall statistics are obtained from various issues of the Statistical Abstracts and the Background to the Budget. We show that rainfall shocks have important implications for both income and consumption of households, with strong policy implications towards cushioning agricultural households. Higher than average rainfall in the first planting and first harvest seasons is found to result in lower incomes and consumption. Given that about 40% of Uganda’s total output is obtained from rain-fed agriculture, the impact of rainfall variability on household welfare has important implications for national income. It is also noted that other factors such as ownership of land, education of the household head and household size are important in the determination of household welfare. Community characteristics such as access to electricity, markets and infrastructure in general play a very important role in the welfare of agricultural households. Programmes to protect households against rainfall shocks such as irrigation schemes, storage facilities for dry produce, staggered planting and crop diversification can provide helpful avenues to reduce income variability among agricultural households. In order to reduce welfare variability and poverty in general, it is necessary to continue the focus on education and targeting of poor and vulnerable households in terms of access to education, health care and other welfare programmes. Access to land has strong implications for both income and consumption - households with access to larger land areas are likely to have higher incomes and higher consumption expenditures - suggesting that land policies to improve access are needed so as to enhance incomes of agricultural households.
Sources of Technical Efficiency among Smallholder Maize Farmers in Southern Malawi
(AERC, 2007-11) Ephraim W. Chirwa
The agricultural sector in Malawi is vital to the economy for incomes and food security. The sector accounts for 35% of national income, generates 90% of foreign exchange, and provides paid and self-employment to 92% of the rural population. One constraint in achieving food security has been the small size and fragmented nature of land holdings among a large proportion of households in Malawi. Nonetheless, since independence there have been several attempts by the government to improve the productivity of food crops on small farms, particularly for maize, including the development of high yielding maize varieties, subsidization of farm inputs, provision of credit facilities, and the liberalization of both farm produce prices and farm produce marketing. While there have been several studies on food production in Malawi, the focus has mainly been on technology development and adoption, production constraints, the impact of structural adjustment policies, and the impact of price and marketing liberalization. This paper estimates technical efficiency among smallholder maize farmers in Malawi and identifies sources of inefficiency using plot-level data. We find that smallholder maize farmers in Malawi are inefficient; the average efficiency score is 46.23% and 79% of the plots have efficiency scores below 70%. The results of the study reveal that inefficiency declines on plots planted with hybrid seeds and for those controlled by farmers who belong to households with membership in a farmers club or association.
Technical Efficiency of Rice Farmers in Northern Ghana
(AERC, 2008-04-02) Seidu Al-hassan
Examining the level of farm-specific technical efficiency of farmers growing irrigated and non-irrigated rice in Northern Ghana, this study fitted cross-sectional data into a transcendental logarithmic (translog) production frontier. The study concludes that rice farmers are technically inefficient. There is no significant difference in mean technical efficiencies for non-irrigators (53%) and irrigators (51%). The main determinants of technical efficiency in the study area are education, extension contact, age and family size. Providing farmers with both formal and informal education will be a useful investment and a good mechanism for improving efficiency in rice farming. There is also need for training more qualified extension agents and motivating them to deliver
An Empirical Analysis of the Determinants of Food Imports in Congo
(African Economic Research consortium, 2010-04-03) Safoulanitou, Léonard Nkouka; Ndinga, Mathias Marie Adrien
The aim of the study was to identify the factors that are likely to explain the evolution of food imports in Congo. Several variables related to the Dutch disease, the necessity to ensure food security following the crisis in the agricultural industry, armed confl icts, re-export trade, and the tax and customs reform were tested using an econometric model. The analysis showed that the exchange rate of the local currency, armed conflicts, reexport trade, income and the domestic production index all represent the main factors that account for food imports in Congo in the short and/or long term. These results allowed us to draw some economic policy implications.
Supply Response, Risk and Institutional Change in Nigerian Agriculture
(African Economic Research consortium, 2010-05-17) Ajetomobi, Joshua Olusegun
Nigeria is among many African countries that have engaged in agricultural liberalization since 1986 in the hope that reforms emphasizing price incentives will encourage producers to respond. Hitherto, the reforms seem to have introduced greater uncertainty into the market given increasing rates of price volatility. This study therefore models supply responses in Nigerian agriculture that include the standard arguments as well as price risk. The data come from the AGROSTAT system of the statistical division of the Food and Agriculture Organization (FAO), Federal Ministry of Agriculture statistical bulletins, Central Bank of Nigeria statistical bulletins, Federal Office of Statistics Agricultural Survey Manual and the World Bank Africa Development Indicators. The data are analysed using autoregressive distributed lag and error correction models. The results indicate that producers are more responsive not only to price but to price risk and exchange rate in the structural adjustment programme (SAP) period than in the commodity marketing board (CMB) period. Following deregulation, price risk needs to be meaningfully reduced for pulse and export crops, especially cowpea and cocoa.
Contingent Valuation in Community-Based Project Planning: The Case of Lake Bamendjim Fishery Restocking in Cameroon
(AERC, 2011-01) Fonta, William M.; . Ichoku, Hyacinth E; Nwosu, Emmanuel
The study examined the usefulness and relevance of the contingent valuation method (CVM) in community-based (CB) project planning and implementation. To elicit willingness to pay (WTP) values for the restocking of Lake Bamendjim with Tilapia nilotica and Heterotis niloticus fish species, the study used pre-tested questionnaires interviewer-administered to 1,000 randomly selected households in the Bambalang The region of Cameroon.The data were elicited with the conventional referendum sign and analysed using a referendum model. Empirical findings indicated that about 85% of the sampled households were willing to pay about CFAF1,054 (US$2.1) for the restocking project. This amount was found to be significantly related to the starting price used in the referendum design, household income, the gender of the respondent, the age of the respondent, household poverty status, and previous participation of a household in a community development project.The findings prompted the following recommendations. Firstly, in order to reduce community burden due to cash constraints, it is advisable for the mean estimate obtained for the scheme to be split into four instalments over a year. Secondly, since the success of the scheme largely depends on the governing roles of the scheme, it is further advisable for the community to allowthemanagement of the scheme to be handled by the elderly community members. Finally, it will be important during the financing of the scheme, to levy wealthier household heads an amount sufficient to subsidize poorer household heads who cannot afford to pay the threshold price.
Analysis of Technical Efficiency Differentials among Maize Farmers in Nigeria
(African Economic Research consortium, 2011-11-30) Olarinde, Luke Oyesola
This study analyses technical efficiency differentials and their determinants among maize farmers in Nigeria. A total sample of 300 maize farmers from Oyo and Kebbi States (150 from each) was selected, and data on input-output and socioeconomic variables were collected and analysed using descriptive statistical methods and by applying a translog frontier production function to the data. Results show that in the two states surveyed, the sizes of farms were small, and they were mostly managed by hired labour in Oyo State, and by family labour in Kebbi State. The results also indicate that the sampled farmers are not technically efficient, with mean technical efficiencies of only 0.5588 and 0.5758 in Oyo and Kebbi states, respectively. However, there are increasing returns to scale in both states. The main determinants of technical efficiency were found to include extension services and farm distance in the two states, farming experience in Oyo State, and credit accessibility, number of other crops grown and rainfall (precipitation) in Kebbi State. Furthermore, the study found that the differences in the mean technical efficiency levels of the farmers did not emanate from the absolute differences in the individual efficiencies among the farmers in the various farming communities. Nonetheless, there were significant absolute differences in the mean efficiencies among farmers in the zones of each of the two states, and the difference in the mean technical efficiencies of the two states was found to be highly significant. The study concludes that there is considerable room for improving the technical efficiencies in the two states. This, however, calls for the motivation of the farmers by making available more production inputs. It is suggested that these farmers are empowered with appropriate financial means to acquire these inputs and to hire more labour. In this way, farmers will be able to allocate more land to maize cultivation. When this is done, farmers’ productivity will improve, resulting in maximum return of farmers’ output (in quantity and value terms) per input use and, consequently, increasing their income. This will ultimately reduce hunger and alleviate poverty.
Effects of Deforestation on Household Time Allocation among Rural Agricultural Activities: Evidence from Western Uganda
(African Economic Research consortium, 2012-08-05) Okwi, Paul Okiira; Muhumuza, Tony

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