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Doctor of Philosophy / Department of Agricultural Economics / Nathan P. Hendricks / Price changes affect the profitability of agricultural land use at the intensive margin (i.e. crop choice) and the extensive margin (i.e. land devoted to crop production). Understanding how prices impact localized land use decisions is important for predicting how production and its allocation across producers change with prices. Due to its wide expanse and diverse geography, the productivity US land differs across space and uses. Understanding the drivers of land use decisions while accounting for such diversity is essential for accurately modeling supply response at the regional and national level. This dissertation contains two studies that provide insight into how price changes impact land use decisions at the extensive and intensive margins. In the first chapter examine the corn supply-price relationship in the United States. I perform this analysis using field-level data across the contiguous US (CONUS). This study is unique in that it incorporates micro-level data from over 3 million fields to estimate region-specific supply response and then aggregates results to the national level. The dataset used in this study is nearly comprehensive, representing field-level decisions across fields that accounted for over 88% of national corn production between 2009 and 2016. The findings from this study illustrate the importance of incorporating heterogeneity in supply response models. Supply response to price differed substantially across regions with high supply sensitivity in the north-central US and Mississippi River Delta, moderate sensitivity in Corn Belt states, andlow sensitivity in the western and Gulf Coast states. The relative importance of corn production in the in the Corn Belt states of Iowa, Illinois, Indiana, and Nebraska meant that it was far less sensitive and, in the long-run, more stable to price changes than national corn supply as a whole. Including heterogeneity in supply response also provided policy relevant context to supply response studies. Overall supply response was negatively correlated with area yields. This meant that price changes have a larger effect on planted corn acres and a smaller effect quantity of corn itself. In the last chapter I examine the impact that ethanol plant capacity has on local land use at the extensive margin. The Renewable Fuel Standard (RFS) has been one of the most influential agricultural policies in the past 20 years, increasing general US crop prices by over 20% and inducing a substantial in US ethanol production capacity (Carter et al., 2016; Roberts and Schlenker, 2013). Its effect on cropland extensification was a concern before it was passed since the policy includes a stipulation forbidding ethanol production on cropland converted after 2007. Lands at the extensive margin tend to be less productive and more environmentally sensitive. Extensive transitions also tend to be less frequent than transitory breaks in crop rotations making their impacts longer-lasting. The goal of this final analysis is to isolate the impact of ethanol expansion on cropland transitions from the general price changes. The concurrent increase in general crop prices and ethanol construction from the RFS complicates the estimation of plants’ effects. I isolate these effects using difference- in-differences (DID) which removes impact from common price trends between the treatment and control group. The standard DID approach results show significant pre-treatment effects stemming from non-random ethanol plant construction. Treatment is likely non-random since ethanol plants lo- cate in areas that provide better returns. Factors that impact the returns to plants confound the analysis since they likely also impact cropland transition decisions. To address this, I use propensity score matching to ensure these confounding factors are identically distributed between the treatment and control groups. Under the matched DID models, the expansion of ethanol plants tended to increase cropland retainment and reduce lands transitioning from non-cropland to cropland. While these results seem contradictory, they are consistent with the findings in recent literature. These impacts are thought to arise due to higher program retention in the major US cropland retirement program CRP due to changes that disproportionately impacted major ethanol production areas.

The overall objective of this study is to develop a framework to predict the impacts of government policies on agricultural production in Albania. The specific goal of this study is to provide some empirical estimates of the farmers' short-run supply response to government policies that effect output and input prices. Different theoretical approaches to integrating the questions this study purports to answer were considered. Two models were deemed as most appropriate for Albanian agriculture. The first is a semi-commercial farm household model and the second is the well-known indirect profit function model. The first model was preferred. However, the second was used instead, due to the lack of information necessary for an empirical application of the semi-commercial farm household model. A quadratic functional form was selected to approximate the profit function. It satisfied the Taylor series approximation convergence test. Two approaches were used to estimate the empirical model. In the first, the traditional approach, the symmetry and homogeneity conditions were imposed beforehand and then the system of equations was estimated using the ITSUR procedure in SAS. Following common practice, a joint Rao test of these conditions was conducted, implicitly assuming that the test statistic has a Fisher distribution or, stated differently, assuming that parameter estimators are normally distributed. The test results indicate that the conditions are met. A second approach, proposed by McGuirk, et al., was also used in this study. The approach proposed by McGuirk, et al., requires that, before imposing and/or testing any theoretical assumption, the unrestricted model is estimated and tested to see if all the underlying statistical assumptions of the linear regression are met. The misspecification tests suggested that the model is not statistically adequate. This finding indicated that the theoretical test conducted in the traditional approach was invalid. An alternative estimation procedure is proposed in the study for cases when a statistically adequate model cannot be specified. Named the sub-sample or the bootstrapping method, this procedure consists of randomly selecting a large number of sub-samples from the cross-sectional sample and running a regression for each of them. The large number of estimates for each of the coefficients serves as a basis for estimating 95-percent confidence intervals. An inspection of the supply and input demand elasticities calculated based on coefficients estimated through the sub-sample method revealed that half of them have wide 95 percent confidence intervals. Therefore, predicting policy impacts across all output and input equations is not possible. However, elasticities that have narrow confidence intervals and make economic sense can be used to predict isolated policy impacts, if Albania returns to the conditions that prevailed before the political turmoil of 1997. / Ph. D.

The Government of Senegal is attempting to liberalize the groundnut market. In the past, this market was highly regulated with government-set producer prices, groundnut oil processing mills owned by parastatals, and requirements that all groundnuts be sold to these quasi-governmental organizations. In recent years, these rules are being relaxed, and farmers are allowed to sell groundnuts on the open market. However, farmers continue to sell most of their groundnuts, as before, to the mills. This study attempts to shed light on the effects of this market liberalization. First, an attempt is made to provide estimates of the farmers' short-run output supply and input demand responses to price changes. A quadratic profit function model is estimated using data collected for the current study and a similar dataset collected by Akobundu [1997]. Second, a quadratic programming model is used to examine the effects of eliminating pan-territorial prices. Results indicate that the elimination of the pan-territorial price system will have an overall benefit to Senegalese society. However, as expected, groundnut producers in areas remote from the groundnut oil processing mills would face lower prices. The effects on producers and consumers in the major producing regions, however, were found to be minimal. Finally, the dissertation provides an extensive description of the economic activities of small-scale farm households in Senegal's Groundnut Basin. Differences between males and females and between household heads and other males in the household are also examined. Although females are not as involved in groundnut production, they do not seem to face discrimination in either the official or the open market. The description of the situation facing small-scale farmers provided in this dissertation is not encouraging. The quantity and timing of the rains in the Groundnut Basin add an unwelcome uncertainty to farming. Increases in population are adding pressure to the environment and are placing heavy demands on wood and grazing lands. Only eight percent of the farmers had groundnut seed multiplication ratios less than one, and sixty-seven percent had ratios less than five. The dissertation also indicates that farmers are not producing enough to feed their families. Fewer than twelve percent of the households produce a caloric surplus. Sixty percent produced less than fifty percent of their caloric needs. The study indicates that farmers are not earning enough from agricultural production to take care of normal expenses throughout the year. Thus, when combined with uncertain rains and a worsening environment, the farmers have little margin of safety. Therefore, any government policies affecting groundnut production in particular or agricultural production in general should take into account the situation already facing the farmers. / Ph. D.

Natural rubber is a major export crop and the sector is an important source of employment in Thailand. Very few rubber studies in the past have examined the demand and supply equations simultaneously and the previously results are dated. The objectives of this study was to estimate the econometric model of demand and supply of natural rubber in Thailand and determine if a relationship exists between the supply of rubber and its determinants. The data contained in the study are secondary time series annual data from 1977-2012. The instrumental variables estimation by two-stage least squares was used to solve and analyze the demand and supply of rubber. Results were statistically significant at 0.01 level, which showed that the U.S. GDP per capita, the estimated price, rainfall and rice price have a significant effect on quantity of rubber production in Thailand with an estimated elasticity of 1.4, 3.3, -3.6 and -2.6, respectively. The implications of the results are assessed through the lens of rubber producers, rubber consumers and agricultural policy makers.

Sri Lanka achieved a high level of self-sufficiency in rice in the 1980s through a series of investments on irrigation, technological change, and marketing and trade policies. However, more than two decades of expansion in the international rice market has diminished the validity of rice self-sufficiency policies as an economic development strategy. As a consequence, trends in the international market through their impacts on reducing investments such as rice research, extension, and irrigation development have adversely affected the ability of Sri Lanka to maintain the same levels of rice self-sufficiency in the future. In the domestic policy area however, some degree of indecision exists in undertaking reforms necessary to take advantage of the trends in the international rice economy. Given the overwhelming influence rice has on the direction of national agriculture policies in Sri Lanka, it is critical to resolve this indetemlinacy pertaining to rice policies. The objectives of the present study are to estimate the producers' response to numerous policy variables that impact on the levels of rice production, and the country's ability to manage food-security under a regime of market-friendly policies. A supply response model based on the choice of technique approach with endogenous determination of technology was specified to capture the effects of policy variables on rice output determination. The dynamic effects of technology, prices, and investments on productivity are therefore accounted for in the model. The supply response system is composed of blocks of equations for determination of investment in quasi-fixed inputs, choice of technology, and yields. Data for the period since 1974 during which notable changes took place in the rice supply situation in Sri Lanka were used in the analysis.. Results suggest that a major share of rice output growth in Sri Lanka is explained by the producers' response to government-supplied, technology-related variables such as irrigation and research. Rice supply response to input and output prices was slight relative to the response to technology variables. Model simulations showed that, under a regime of more market friendly policies, continuation of current investment trends and policies would lead to a worsening of rice self-sufficiency levels over the next 10 years. It was also observed that with modest growth in irrigation and research investments, it is possible to maintain rice self-sufficiency at levels comparable to the present. / Ph. D.

Thesis (M. Sc. Agriculture (Agricultural Economics)) -- University of Limpopo, 2019 / The South African dairy industry is approximately 0.5% of the global production. The production of milk contributes to exports, manufacturing, employment, food security and development of other producers of agricultural products such as maize and soya bean. Following the deregulation of the agricultural markets in 1996, the dairy industry has seen a decline in the number of producers, with Milk Producer Organisation noting that between 2008 and 2015 there has been a decline of 58%. Therefore, the decline in producers necessitates the need to understand the nature and factors that influence the remaining producers to continue producing. This study, therefore, was undertaken to examine the supply response of milk production to price and non-price factors in South Africa using the Nerlovian Partial adjustment model. In that regard, the historical data for the period of 1996 to 2014 was used and analysed in Eviews 10 software. The short-run and Long-run elasticities of milk production were found to be inelastic. The results of the study further indicated that milk production was responsive to changes in price of beef, technology, previous production, and temperature. Given the study findings, thus recommendations made are that technological research and advancement, such as animal cross breeding is necessary to improve production of milk in the country. Furthermore, better price incentives such as price floors and subsidies are necessary in the industry, to encourage more milk production and reduce likelihood of farmers to switch from milk to beef, given the changes in price.

(Ph. D. (Agricultural Economics)) -- University of Limpopo, 2021 / The issues regarding the determinants of agricultural production and food supply are currently of great interest in developing countries. This, in turn, has led to the undertaking of this study focusing on the effectiveness of incentives that can be offered within the agricultural sector to boost production. The study aims to model the supply response of key agricultural commodities to price incentives, price risk and non-price incentives. Special focus is given to four major grain crops, namely; maize, wheat, sorghum and barley, which are of strategic interest to South Africa. The emphasis of the study is on two significant aspects of agricultural supply response: First, an attempt is made to determine the level of price risk among the selected grain crops using two distinct price risk measures. Second, the Autoregressive Distributed Lag-Error Correction Model (ARDL-ECM) approach to cointegration is used to estimate the responsiveness of grain producers to price risk, price incentives and non-price incentives. Annual historical time series data of 49 observations for the period 1970 to 2018 is used in the analysis. Data is tested for stationarity using the Augmented Dickey-Fuller test and the Dickey-Fuller Generalised Least Square (DF-GLS) detrending test. The empirical results reveal that grain supply in South Africa is reasonably responsive to price incentives. However, the degree of responsiveness is low and varies among different crops. Depending on the crop, the results show that own price supply elasticities range from about 0.24 to 0.75. Supply elasticities for nonprice factors are much higher, indicating that non-price incentives (i.e. rainfall, fertiliser, technology) are better production drivers than price incentives in South Africa. Thus, instead of regarding price mechanisms as being the only tools to promote agricultural production, it is concluded that further expansion of irrigation facilities and encouraging the adoption of drought-resistant varieties will stimulate grain production. The results underscore the relevance of price risk in determining production output and show that greater price risk leads to reduced production levels, particularly for maize and barley. In light of such evidence, any policy initiatives undertaken to stabilise the grain industry should look into proposing packages (i.e., forward contracts, futures contracts, contract farming) that reduce the negative impacts of price volatility in grain commodity markets