Research Note: Peasant Farmer Supply Response To Maize Price Changes In The Middledrift District
0
Citation
0
Reference
20
Related Paper
Abstract:
Arguments of irrational response of peasants to changes in product prices have been put forward, as have arguments for rational economic behaviour. The paper investigates whether the fanners ' behaviour complies with economic theory - if they respond in an economically rational manner - when they produce a crop both as a staple and cash crop. A Nerlovian partial adjustment Jagged model was used to estimate the maize supply response of fanners in the Middledrifi district of the Eastern Cape to changes in product prices. The results indicate that producers are responsive to price incentives and their response is elastic in both the short (1,23) and long run (1,41). The coefficient of adjustment which measures the speed of adjustment is 0,87. The prices of maize and the competing crop (sorghum) and the areas under maize in the preceding season are found to be important factors to the producers in their land allocation decision making process. The model therefore shows that fanners to cl1anges in product prices to product price changes to changes in product prices.Keywords:
Peasant
Cash crop
Cite
This study assessed how responsive maize output is to price and non-price factors and how sensitive fertilizer and labour demand are to prices and non-price factors using cross-sectional farm-level data for 334 maize producing households in the High Potential Maize Zone of Kenya. The study employed normalized restricted translog profit function to estimate maize supply and variable input demand elasticities. Results show that maize price support is an inadequate policy for expanding maize supply. Fertilizer use was found to be particularly important in the decisions on resource allocation in maize production. Of the fixed inputs, land area was found to be the most important factor contributing to the supply of maize. It is suggested that making fertilizer prices affordable to small holder farmers by making public investment in rural infrastructure and efficient port facilities, and promoting standards of commerce that provide the incentives for commercial agents to invest in fertilizer importation, wholesaling and retailing would be desirable. Encouraging more intensive use of other productivity enhancing inputs in addition to fertilizer is also suggested, since land consolidation to achieve economies of scale may seem untenable in the light of the existing extensive sub-division of land parcels into uneconomical units.
Investment
Cite
Citations (6)
This study analyzed the supply response of potato to price and non-price factors in Swaziland using econometrics techniques. An improved Nerlovian adjustment model was applied on the historical time series data spanning from 1986-2016 and VECM to estimate the acreage supply response of potato to price and no-price factors. And the model was used to estimate the supply response and to estimate the short and long run elasticity’s of price. The results showed that the price change of potato and substitute crop price are positive and significant which implies that farmers respond positively to a change in price in the short run but in the long run it is not significant because of the uncertainties of its markets. Rainfall is not significant to supply of potato in the short run because potato are irrigated crops but in the long run they may have a positive impact as farmers can be able to use the water that comes from the rainfall. However, the sustainability of potato production is paramount to the supply response of the product. Therefore, needed inputs such as credit facilities and subsidized planting materials should be made available to the farmers and the government and various stakeholders must work tireless to try and develop the markets of sweet potato in order to be sustainable so that farmers must be able to respond to sweet potato price increase even in the long run without any fear of risk, because of the uncertainty of the markets.
Cite
Citations (2)
Calculated after the impulse response functions,it is found that when the prices of the agricultural production rise along with the food prices,partially or completely offset the increase of farmer's income caused by the preferential policies.Granger causality test shows that grain prices,farmers' income are Granger cause.Therefore,agricultural means of production prices rise must be controlled within a reasonable range.And suggestions about strengthening construction of circulation system of agricultural production have been proposed.
Vector autoregression
Food Prices
Circulation (fluid dynamics)
Cite
Citations (1)
The study analyzes the acreage response of maize with respect to price and non-price factors in Swaziland during the period 1968-2017. Rainfall and agricultural policy are the non-price factors considered in this study. The Cointergration and Vector Error Correction Modeling approaches were used to estimate the short run and long run elasticities of price and non-price factors acreage response of maize in Eswatini. The results confirm that non-price factors seem to have more effect on acreage response in the long run. The introduction of the Maputo declaration policy in 2003 had not yeld the positive impact on maize annual acreage changes. The study also shows that climatological factors such as rainfall has a positive influence on maize production and resource allocation both in short and long run. Development of climate change mitigation and adaptation strategies would assist the maize production sector in the country. The strategies cannot affect natural conditions like rainfall, but it can compensate for the negative impact of climate change by increasing investment in irrigation, promoting efficient use of water and encouraging adoption of drought resistant varieties of seeds.
Investment
Cite
Citations (2)
Though several studies on farmers' response to price changes and price fluctuations over the years for the major crops in Bangladesh are available few have focused on farmers' response in terms of revenue changes and revenue fluctuations. After the Nerlovian pioneering work (1958) on supply responses, a substantial number of price response studies are available both for the developed and developing countries, but the farmers' response in terms of area changes/output supply to revenue changes/fluctuations has largely been ignored. Both product price changes (in real terms) and yield changes affect farmers' gross margin/ profit. If yield of a crop is stagnating or remain constant over time, then studies in terms of real price changes could be appropriate to analyse the farmers' response behaviour than to revenue response
Profit margin
Marginal revenue
Gross margin
Cite
Citations (1)
In this paper we find that real grain prices in China have displayed increased volatility in the past decade. This is true for rice, wheat, corn, and for most of provinces. Farmers in China are found to be risk averse because when they make acreage allocation decisions. Given the widespread access to land in China, farmers mostly respond negatively in their sown area decisions towards price risk. The large price variations from 1984-1995 may have contributed to the slowdown in agricultural output growth from 1984-1995.
Price risk
Cite
Citations (2)
The global hunger indices of 2008 and 2009 (Grebmer et al. 2008, 2009) point to persistently high levels of hunger and food insecurity and a worsening of the situation due to rising crop prices. At the same time, there is a lack of empirical knowledge on the demand- and supply-side determinants of crop prices. Given this situation, this paper estimates structural equation models by means of the three-stage least-squares estimator to identify the sensitivity of the price of three major crops (wheat, maize, and rice) in up to eight countries (India, China, Egypt, Thailand, Ecuador, Uruguay, the United States, and Australia) to global and country-specific crop demand and supply conditions. The evidence suggests that conclusions regarding the determinants of crop prices critically depend on the choice of crop and country. The nonexistence of a consistent and homogenous set of price determinants suggests that the stability and predictability of crop prices depends on country-specific domestic policies that target both the crop demand and supply side. The evidence also suggests that supply-side initiatives are likely to be more effective to this end.
Predictability
Empirical evidence
Cite
Citations (0)
This study used a supply response model to determine factors affecting maize supply in Vietnam. It estimated response coefficients from semi-annual time-series data for the period 1986-2011. Using three criteria, it chose the rational expectation hypothesis supply response model (Model I) with the separated price expectation formation hypothesis according to the information set at time (t-1) to estimate the supply response model for maize. Farmers used the available information set to form their expected price. Estimated parameters’ results in Model I indicate that the farmers' supply had a positive response to the expected price of maize, but was negative to that of cassava. This means that maize and cassava are close substitutes in the supply response models. Maize production also positively responds to the amount of fertilizer per hectare, maize area, one-period lagged investment, irrigation, trend variable, and agricultural extension policy. Recommended policies include: enhancement of the judicious use of fertilizers and possible establishment of local factories; increase in maize area by changing the crop structure and multiple cropping with long-term industrial trees like perennials and fruit trees; improvement of the irrigation system in two deltas and in high production regions; increase in government support to farmers; increase in government spending on research and development of new maize varieties; and improvement of the extension system to provide farmers the needed market and technological information.
Hectare
Investment
Cropping system
Agricultural policy
Cite
Citations (3)
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.
Food Prices
Staple food
Econometric model
Cite
Citations (10)
Abstract An adaptive regression model is used to examine the relative importance of cash and government support prices in determining cotton production over time. The results show that the cash price is more important as a source of price information for cotton producers than the government program price. The cash price was shown to have a greater influence on acreage response in every year, including periods thought to be dominated by government commodity programs.
Relative price
Cash crop
Agribusiness
Cite
Citations (13)