Humboldt-Universität zu Berlin - DFG research unit SiAg 2010-2013

Workshop: Analysis of Structural Change in Agriculture – State of the Art and Recent Developments

Schedule

Please, register via www.gewisola2013.hu-berlin.de.

No additional fees apply for participants registered for the GEWISOLA 2013 meeting.

The workshop will consist of six oral presentations (each about 20 minutes) and discussions. Presentations and discussions will be centered around five thematic foci:

Behavioral Foundations of Structural Change
Alfons Balmann, Karin Kataria (IAMO Halle), Christian Schade (HU Berlin)

The overall aim of this presentation is to discuss if experimental methods can contribute to an understanding of structural change in agriculture, and will be structured as follows: First, a brief review about the use of experimental methods in agricultural economics will be provided and its role and potentials for agricultural economics in general and for research on structural change in agriculture in particular will be discussed. Thereafter, two experiments carried out within the SiAg research group, related to coordination on land markets and farmers’ disinvestment behavior will be summarized and their implications for structural change in agriculture will be discussed. Experimental methods in economics are nowadays recognized as a standard and accepted technique among economists and an important complement to other approaches used in economics. It allows for example testing economic theories and behavioral assumptions in a controlled way; the experiments are typically carried out in a laboratory allowing the researcher to design the experiments in a way that casual effects can be tested in a more accurate way compared to what is possible with field data. In spite of the increased interest for experimental methods in economics, a brief review of the literature indicate that the use of experimental methods in agricultural economics is still relatively uncommon with the exception of experiments concerned with willingness to pay for food with certain standards

Modeling Dynamics of Structural Change in a Competitive Stochastic Environment
Oliver Mußhoff (Uni Göttingen), Martin Odening, Silke Hüttel, Stefan Kersting (HU Berlin), Jan-Henning Feil (Uni Göttingen)

One basic factor driving structural change in an industry is entry and exit of firms. The agricultural sector, however, is one of the industries where growth and shrinkage of farms directly affect each other. The linkage is generated by production quotas or production factors which are limited on a sectoral level, as for example agricultural land. Due to the complexity of this interdependency, other studies dealing with structural change in agriculture and industry dynamics often neglect this relationship and make rather restrictive assumptions on firms’ investment or disinvestment behaviour. It seems to be difficult, though, to assess optimal agricultural policy schemes without considering investment and disinvestment of farms simultaneously. The presentation discusses two different approaches to tackle this problem and model entry and exit of firms endogenously in a dynamic stochastic framework. The first one is a dynamic stochastic equilibrium model and the second one rests on a real options model. We evaluate both models with respect to their strengths and weaknesses and show how different political instruments affect the structural change in the agricultural industry.

Vertical Relations in Agribusiness
Vanessa von Schlippenbach (DIW Berlin), Heinrich Hockmann (IAMO Halle), Andreas Harasser, Isabel Teichmann (DIW Berlin)

Before reaching final consumers, agricultural products have to pass a sequential production process. This encompasses the supply of inputs, farming, the processing of agricultural commodities to consumer goods, and finally the distribution to consumers. In the last decades, agribusiness has been subject to profound structural change resulting in increasingly dominant agents at all stages of the chain. Against this background, we analyze firms’ interactions in (food) value chains which are characterized by both sellers and buyers having some degree of market power. Building on the current theory of industrial organization, contract theory, game theory and bargaining theory, we study the impact of firms’ strategic behavior on the price, variety and quality of the products offered to consumers. In particular, we deal with (i) buyer power of retailers and processors, (ii) the implications of retailers’ private standards, and last but not least (iii) the role of intermediaries for the performance of vertical chains.

Agricultural Policy Evaluation using Micro Data
Silke Hüttel (HU Berlin), Martin Petrick (IAMO Halle)

Two central methodological questions in the proliferating field of policy impact evaluation are how to construct plausible counterfactuals and how to control for unobserved selection bias. The menu of available approaches to tackle these problems can be summarized under two basic methodological paradigms, the “structural econometric approach” and the “treatment effect approach”. The structural econometric approach is the established approach in the economics literature which derives estimating equations and their endogenous and exogenous variables from a microeconomic model. The treatment effect approach emerged from the statistical literature and more narrowly focuses on the ex-post evaluation of a particular policy in a particular circumstance, namely where there is an observed treatment group and a comparison group. The focus is on studying so-called potential outcomes, that is pairs of outcomes that emerge from different levels of treatment for the same unit of observation. A popular non-parametric method to implement this approach is that of matching, where the outcomes of individuals are compared who are observationally identical except for the treatment. Such analysis requires fewer assumptions on functional form and exogeneity, however, it is argued that the link to economic theory is often weak and results from one particular policy or program are hard to generalize. There is an emerging discussion in the agricultural economics literature to what extent both approaches can and should be used for agricultural policy evaluation. The aim of this contribution is to evaluate the merits of both approaches for a specific agricultural example: the effect of the participation in agri-environmental measures on the labour intensity of the farm. Using a panel of farms from the EU’s FADN database for Germany, we present results of a matching and a structural modeling evaluation, discuss their relative strengths and weaknesses and give recommendations for evaluation practice.

Agricultural Policy Impact Analysis using Simulation Models

Andre Deppermann, Frank Offermann (vTI Braunschweig), Harald Grethe (Uni Hohenheim)

Simulation models are frequently used for ex-ante analysis of agricultural policy reform. Different model types with different aggregation levels are applied alone or in combination with other models to tackle different policy questions. These analyses have in common that several assumptions have to be made concerning future macroeconomic and market developments to generate a reference situation (baseline) for the comparison of counterfactual policy scenarios under the ceteris paribus assumption to quantify the impacts of policy reform.

To generate such a baseline, plausible market and policy developments are typically assumed and exogenously implemented in the models. However, assumptions made for the baseline might be of major relevance for the evaluation of policy reform. Obviously, an abolishment of e.g. intervention prices will be differently evaluated in a situation with high in contrast to a situation with low world market prices. Furthermore, it is well known that the assessment of distributive effects highly depends on the distribution in the base situation.

In this paper we want to contribute to the understanding of the impact of baseline generation on the evaluation of agricultural policy reform at different aggregation levels and for different policy dimensions (trade, production and income distribution).