{"title":"Measuring the Returns to Investment in RD&E in the WA Grains Industry Using Equilibrium Displacement Modelling","authors":"Kuo Li, R. Kingwell, G. Griffith, B. Malcolm","doi":"10.22004/AG.ECON.292474","DOIUrl":"https://doi.org/10.22004/AG.ECON.292474","url":null,"abstract":"","PeriodicalId":41561,"journal":{"name":"Australasian Agribusiness Review","volume":null,"pages":null},"PeriodicalIF":0.9,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83547508","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Agricultural RD&E managers have responded to the increased focus on value chains in food and agricultural product markets and most Australian agricultural RD&E corporations now have value chain programs embedded in their portfolios of funded projects. As community concerns have intensified within the social, environmental and public health spheres, the agricultural RD&E corporations also have started to invest some resources in areas of research which have externality implications. However, the assessment processes they use typically have not kept up with these changes, and some are questioning the basis of the current approaches when whole-of-chain and externality issues are important considerations. In this paper, the idea that agricultural value chain RD&E results in ‘chain goods’ is linked with Swann’s idea of a ‘club goods solution’ to research funding, to argue that a ‘chain goods solution’ can be a viable means of funding research activity that relates to agricultural value chains. Thus, members of a value chain need not rely solely on government to fund value chain RD&E. A set of criteria is suggested to determine who should fund RD&E activities in Australian agricultural value chains depending on the relative balance between expected private, chain and social benefits.
{"title":"Financing Agricultural Value Chain RDE: An Alternative Approach with Examples from the Red Meat Industry","authors":"S. Mounter, E. Fleming, G. Griffith","doi":"10.22004/AG.ECON.292473","DOIUrl":"https://doi.org/10.22004/AG.ECON.292473","url":null,"abstract":"Agricultural RD&E managers have responded to the increased focus on value chains in food and agricultural product markets and most Australian agricultural RD&E corporations now have value chain programs embedded in their portfolios of funded projects. As community concerns have intensified within the social, environmental and public health spheres, the agricultural RD&E corporations also have started to invest some resources in areas of research which have externality implications. However, the assessment processes they use typically have not kept up with these changes, and some are questioning the basis of the current approaches when whole-of-chain and externality issues are important considerations. In this paper, the idea that agricultural value chain RD&E results in ‘chain goods’ is linked with Swann’s idea of a ‘club goods solution’ to research funding, to argue that a ‘chain goods solution’ can be a viable means of funding research activity that relates to agricultural value chains. Thus, members of a value chain need not rely solely on government to fund value chain RD&E. A set of criteria is suggested to determine who should fund RD&E activities in Australian agricultural value chains depending on the relative balance between expected private, chain and social benefits.","PeriodicalId":41561,"journal":{"name":"Australasian Agribusiness Review","volume":null,"pages":null},"PeriodicalIF":0.9,"publicationDate":"2019-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"90514244","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
An existing equilibrium displacement model of the Australian beef industry was updated to enable the distribution of the total benefits from the adoption of new technology or promotion investments to be estimated across the beef value chain. Three hypothetical simulations were run to test the impact of recalibrating the model to the new initial equilibrium. The distribution of the gross benefits to the various industry sectors were found to be broadly similar to those reported in the original model. Cattle producers receive between 29 and 40 per cent of the potential gross benefits from the hypothetical investments, overseas consumers receive between 11 and 15 per cent, while domestic consumers receive between 37 and 47 per cent, depending on the scenario. Beef processors, feedlots and domestic retailers all receive much smaller shares of gross benefits, typically less than 5 per cent each. While the updated model provides a framework that reflects the current industry size and structure, the results are conditional on the specified price and quantity values, their underlying assumptions and calculations, and the parameter values used to represent industry responses to price changes.
{"title":"Updating and Recalibrating Equilibrium Displacement Models of the Australian Livestock Industries: Beef","authors":"Yue Zhang, S. Mounter, G. Griffith","doi":"10.22004/AG.ECON.285019","DOIUrl":"https://doi.org/10.22004/AG.ECON.285019","url":null,"abstract":"An existing equilibrium displacement model of the Australian beef industry was updated to enable the distribution of the total benefits from the adoption of new technology or promotion investments to be estimated across the beef value chain. Three hypothetical simulations were run to test the impact of recalibrating the model to the new initial equilibrium. The distribution of the gross benefits to the various industry sectors were found to be broadly similar to those reported in the original model. Cattle producers receive between 29 and 40 per cent of the potential gross benefits from the hypothetical investments, overseas consumers receive between 11 and 15 per cent, while domestic consumers receive between 37 and 47 per cent, depending on the scenario. Beef processors, feedlots and domestic retailers all receive much smaller shares of gross benefits, typically less than 5 per cent each. While the updated model provides a framework that reflects the current industry size and structure, the results are conditional on the specified price and quantity values, their underlying assumptions and calculations, and the parameter values used to represent industry responses to price changes.","PeriodicalId":41561,"journal":{"name":"Australasian Agribusiness Review","volume":null,"pages":null},"PeriodicalIF":0.9,"publicationDate":"2018-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"73268018","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In this article we review the literature on the service sector relating to agricultural producers and agribusinesses. The review reveals a significant gap in the literature regarding the ‘professional agriculture services sector’. This sector comprises those services accessed by the broader business community, such as legal, financial and marketing services, as well as agriculture-specific professional services such as production benchmarking, information technology that supports farm management, land valuation, machinery services, education providers, agronomy, production benchmarking and farm succession planning facilitation. The identification of this sector provides a launching pad for understanding a hidden area of agricultural employment. Like the broader economy, pressures of global competition coupled with technological innovation, have created demand for professional rather than non-professional workers in the agriculture sector. Whilst official Australian data show employment in agriculture is declining, we argue that employment generated by this sector may be more widely captured in service sector statistics. The identification of the professional agriculture service sector enables a more accurate view of employment trends in agriculture and has application for businesses, government and education providers.
{"title":"Taking Stock: Identifying the Growing Agricultural Service Sector in Australia","authors":"L. Newsome, A. Sheridan","doi":"10.22004/AG.ECON.285016","DOIUrl":"https://doi.org/10.22004/AG.ECON.285016","url":null,"abstract":"In this article we review the literature on the service sector relating to agricultural producers and agribusinesses. The review reveals a significant gap in the literature regarding the ‘professional agriculture services sector’. This sector comprises those services accessed by the broader business community, such as legal, financial and marketing services, as well as agriculture-specific professional services such as production benchmarking, information technology that supports farm management, land valuation, machinery services, education providers, agronomy, production benchmarking and farm succession planning facilitation. The identification of this sector provides a launching pad for understanding a hidden area of agricultural employment. Like the broader economy, pressures of global competition coupled with technological innovation, have created demand for professional rather than non-professional workers in the agriculture sector. Whilst official Australian data show employment in agriculture is declining, we argue that employment generated by this sector may be more widely captured in service sector statistics. The identification of the professional agriculture service sector enables a more accurate view of employment trends in agriculture and has application for businesses, government and education providers.","PeriodicalId":41561,"journal":{"name":"Australasian Agribusiness Review","volume":null,"pages":null},"PeriodicalIF":0.9,"publicationDate":"2018-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"77344855","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Erandathie Pathiraka, G. Griffith, R. Farquharson, R. Faggian
The focus of this study is to develop an economic modelling framework for the coconut industry in Sri Lanka using the equilibrium displacement modelling approach. This is necessary for two main reasons. With the industry shifting from an export oriented industry to a domestic industry and coconut yield becoming highly variable due to climatic factors, a number of government interventions have been implemented according to market conditions. There are a few previous studies which have assessed the impact of these measures on individual industry sectors. However, there is no economic framework to undertake the assessment of various policies being used for the whole industry. In addition, the Sri Lankan coconut sector is likely to be significantly adversely effected by climate change and there are a number of possible adaptation options being considered, but again there is no framework to undertake an economic assessment of these options. In this study we develop and test an equilibrium displacement model of the Sri Lankan coconut industry that will then be available to analyse the economic impact of different climate and policy scenarios and the distribution of these impacts among the various stakeholders in the industry.
{"title":"Specifying and Testing an Equilibrium Displacement Model of the Coconut Market in Sri Lanka","authors":"Erandathie Pathiraka, G. Griffith, R. Farquharson, R. Faggian","doi":"10.22004/AG.ECON.285015","DOIUrl":"https://doi.org/10.22004/AG.ECON.285015","url":null,"abstract":"The focus of this study is to develop an economic modelling framework for the coconut industry in Sri Lanka using the equilibrium displacement modelling approach. This is necessary for two main reasons. With the industry shifting from an export oriented industry to a domestic industry and coconut yield becoming highly variable due to climatic factors, a number of government interventions have been implemented according to market conditions. There are a few previous studies which have assessed the impact of these measures on individual industry sectors. However, there is no economic framework to undertake the assessment of various policies being used for the whole industry. In addition, the Sri Lankan coconut sector is likely to be significantly adversely effected by climate change and there are a number of possible adaptation options being considered, but again there is no framework to undertake an economic assessment of these options. In this study we develop and test an equilibrium displacement model of the Sri Lankan coconut industry that will then be available to analyse the economic impact of different climate and policy scenarios and the distribution of these impacts among the various stakeholders in the industry.","PeriodicalId":41561,"journal":{"name":"Australasian Agribusiness Review","volume":null,"pages":null},"PeriodicalIF":0.9,"publicationDate":"2017-10-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86639116","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
In its 2008 Inquiry report into the impact of imports on the Australian pig meat industry, the Productivity Commission (PC) concluded that the main reason for the declining profitability of pig farmers in Australia was the higher costs of feed in the domestic market. Movements of the Australian dollar were also found to favour increased imports of pig meat. Based on analyses conducted with data up to 2007, the PC was unable to justify the need for Australia to activate the safeguard measures prescribed under the World Trade Organization (WTO) rules in order to temporarily protect the local pig industry. In a preceding paper, using exactly the same methods but with a dataset updated to 2013, the authors found that domestic production, rather than import volumes or prices, has been affecting the saleyard price and that there was not a strong causal effect between import volume or unit values and domestic production or saleyard price. Thus, based on a straightforward updating of the PC’s models, the PC conclusions were confirmed: it is unlikely that a new case could be made for the application of the WTO safeguard measures to the Australian pig meat industry. However, there were a number of statistical problems with the PC models that were simply updated for the previous analysis. In this paper, the PC models are re-specified and re-estimated to overcome these statistical problems. However, the misspecifications do not lead to any different implications of the results.
{"title":"The Economic Impact of Imports on the Australian Pig Industry: Is it Time for the WTO’s Safeguard Measures? 2. Re-estimating the Productivity Commission’s Vector Autoregression and Inverse Demand Models","authors":"Meizal Popat, G. Griffith, S. Mounter","doi":"10.22004/ag.econ.285013","DOIUrl":"https://doi.org/10.22004/ag.econ.285013","url":null,"abstract":"In its 2008 Inquiry report into the impact of imports on the Australian pig meat industry, the Productivity Commission (PC) concluded that the main reason for the declining profitability of pig farmers in Australia was the higher costs of feed in the domestic market. Movements of the Australian dollar were also found to favour increased imports of pig meat. Based on analyses conducted with data up to 2007, the PC was unable to justify the need for Australia to activate the safeguard measures prescribed under the World Trade Organization (WTO) rules in order to temporarily protect the local pig industry. In a preceding paper, using exactly the same methods but with a dataset updated to 2013, the authors found that domestic production, rather than import volumes or prices, has been affecting the saleyard price and that there was not a strong causal effect between import volume or unit values and domestic production or saleyard price. Thus, based on a straightforward updating of the PC’s models, the PC conclusions were confirmed: it is unlikely that a new case could be made for the application of the WTO safeguard measures to the Australian pig meat industry. However, there were a number of statistical problems with the PC models that were simply updated for the previous analysis. In this paper, the PC models are re-specified and re-estimated to overcome these statistical problems. However, the misspecifications do not lead to any different implications of the results.","PeriodicalId":41561,"journal":{"name":"Australasian Agribusiness Review","volume":null,"pages":null},"PeriodicalIF":0.9,"publicationDate":"2017-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"80165025","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
H. Chang, J. Spriggs, J. Anjen, Eleo Dowa, J. Kewa, Donald Hehona
Sweetpotato is the most important food crop in the Highlands of Papua New Guinea (PNG). In recent years, sweetpotato has become a cash crop for smallholder farmers driven by the need to generate income in a market economy. Marketing opportunities exist for Highland sweetpotato, especially in coastal markets, because of income growth and urbanisation. Despite this , long distance sweetpotato marketing has been problematic. The objective of this research was to identify socio - economic constraints to, and opportunities for, improving the marketing efficiency of the long distance sweetpotato value chain in PNG. The results from the value chain analysis suggested that although there was a demand for high quality Highland sweetpotato in coastal markets, the long distance sweetpotato value chain was underdeveloped . This was due to several constraints : lack of access to sup port services (credit , extension and market information); poor infrastructure (roads and the transport system and storage and market facilities) ; inadequate postharvest management ; lack of business skills , financial literacy and marketing planning ; unclear price signals; lack of trust among chain players , uncoordinated value chain activities; and declining demand. The main conclusion was that to transition from subsistence farming to semi - commercial/commercial farming, s mallholder farmers need to become more market - oriented and better equipped with business skills . Furthermore, they need to be prepared to change their current marketing and postharvest practices in order to supply high quality products to the right markets at competitive prices. Government also has a key role to play in terms of providing an appropriate enabling environment , including a reliable transport system , business development services and a locally appropriate pricing and grading system . This environment is necessary to support the effort of farmers in adopting improved marketing and postharvest practices.
{"title":"Improving sweetpotato marketing in Papua New Guinea: Results from a value chain analysis","authors":"H. Chang, J. Spriggs, J. Anjen, Eleo Dowa, J. Kewa, Donald Hehona","doi":"10.22004/AG.ECON.262478","DOIUrl":"https://doi.org/10.22004/AG.ECON.262478","url":null,"abstract":"Sweetpotato is the most important food crop in the Highlands of Papua New Guinea (PNG). In recent years, sweetpotato has become a cash crop for smallholder farmers driven by the need to generate income in a market economy. Marketing opportunities exist for Highland sweetpotato, especially in coastal markets, because of income growth and urbanisation. Despite this , long distance sweetpotato marketing has been problematic. The objective of this research was to identify socio - economic constraints to, and opportunities for, improving the marketing efficiency of the long distance sweetpotato value chain in PNG. The results from the value chain analysis suggested that although there was a demand for high quality Highland sweetpotato in coastal markets, the long distance sweetpotato value chain was underdeveloped . This was due to several constraints : lack of access to sup port services (credit , extension and market information); poor infrastructure (roads and the transport system and storage and market facilities) ; inadequate postharvest management ; lack of business skills , financial literacy and marketing planning ; unclear price signals; lack of trust among chain players , uncoordinated value chain activities; and declining demand. The main conclusion was that to transition from subsistence farming to semi - commercial/commercial farming, s mallholder farmers need to become more market - oriented and better equipped with business skills . Furthermore, they need to be prepared to change their current marketing and postharvest practices in order to supply high quality products to the right markets at competitive prices. Government also has a key role to play in terms of providing an appropriate enabling environment , including a reliable transport system , business development services and a locally appropriate pricing and grading system . This environment is necessary to support the effort of farmers in adopting improved marketing and postharvest practices.","PeriodicalId":41561,"journal":{"name":"Australasian Agribusiness Review","volume":null,"pages":null},"PeriodicalIF":0.9,"publicationDate":"2016-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"88407755","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Imports of pig meat into Australia have grown rapidly in recent years and now total around 150 Kt pa (shipped weight). This is well over 300Kt in carcase weight terms, and makes up two - thirds of processed pig meat production and about half of domestic consumption. A recurring question is whether these trends have harmed the domestic pig industry and , if so, to the degree sufficient to warrant safeguard action under WTO regulations. While the Productivity Commission regularly examines the aggregate data to test this hypothesis, in this paper we investigate the value system that coordinates the imports of Danish pig meat into the Australian pig meat market, and we seek to identify which parameters impact this value system. We find that the Danish pig meat industry built its current position in the Australian market (about 40Kt pa, mainly middles for bacon) based on the following determinants of value: economies of scale in production, processing and logistics; uniform quality of the middles; high food-safety and veterinary standards ; the ability to supply a c ustomised product ”made to order”; and a long-term focus on the customer. Other conributing factors include Australians’ strong preference for ham and bacon which means that Danish suppliers can obtain higher prices in Australia for middles than they can elsewhere , and the recent strength of the $AU : the $AU/ Euro rate has fluctuated between 0.64 - 0.86 over recent years. Import prices set domestic prices for manufacturing type pig meat, and imported products are typically cheaper than domestically produced pig meat suitable for manufacturing. Given the latitude allowed by the arguably ineffective country - of - origin labelling laws, cost efficient manufacturers will use imported product. This has resulted in a consi derable degree of industry consolidation as well as a marked decline in the production of pigs more suitable for manufacturing pig meat in Australia. Those producers who are left have moved out of the processed market towards the fresh pork market and , to a lesser extent, towards export markets. We also examine one of the dominant value chains in this system and analyse how it achieved and maintains success.
{"title":"Evaluating the consequences of imports on a local value chain: the case of Danish pig meat exports to the Australian market","authors":"K. Hamann, G. Griffith, S. Mounter","doi":"10.22004/AG.ECON.262476","DOIUrl":"https://doi.org/10.22004/AG.ECON.262476","url":null,"abstract":"Imports of pig meat into Australia have grown rapidly in recent years and now total around 150 Kt pa (shipped weight). This is well over 300Kt in carcase weight terms, and makes up two - thirds of processed pig meat production and about half of domestic consumption. A recurring question is whether these trends have harmed the domestic pig industry and , if so, to the degree sufficient to warrant safeguard action under WTO regulations. While the Productivity Commission regularly examines the aggregate data to test this hypothesis, in this paper we investigate the value system that coordinates the imports of Danish pig meat into the Australian pig meat market, and we seek to identify which parameters impact this value system. We find that the Danish pig meat industry built its current position in the Australian market (about 40Kt pa, mainly middles for bacon) based on the following determinants of value: economies of scale in production, processing and logistics; uniform quality of the middles; high food-safety and veterinary standards ; the ability to supply a c ustomised product ”made to order”; and a long-term focus on the customer. Other conributing factors include Australians’ strong preference for ham and bacon which means that Danish suppliers can obtain higher prices in Australia for middles than they can elsewhere , and the recent strength of the $AU : the $AU/ Euro rate has fluctuated between 0.64 - 0.86 over recent years. Import prices set domestic prices for manufacturing type pig meat, and imported products are typically cheaper than domestically produced pig meat suitable for manufacturing. Given the latitude allowed by the arguably ineffective country - of - origin labelling laws, cost efficient manufacturers will use imported product. This has resulted in a consi derable degree of industry consolidation as well as a marked decline in the production of pigs more suitable for manufacturing pig meat in Australia. Those producers who are left have moved out of the processed market towards the fresh pork market and , to a lesser extent, towards export markets. We also examine one of the dominant value chains in this system and analyse how it achieved and maintains success.","PeriodicalId":41561,"journal":{"name":"Australasian Agribusiness Review","volume":null,"pages":null},"PeriodicalIF":0.9,"publicationDate":"2015-10-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"77341678","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The marketing strategies of agricultural producers have become increasingly focussed on the sale of differentiated products to intermediary buyers rather than the sale of homogeneous commodities directly to retailers. The wool value chain in Australia fits the description of differentiated products being sold by wool producers to agribusiness firms that are intermediaries in the chain. The attributes of wool that are the source of this differentiation are used by firms to add value to their operations, reflected in higher retail prices paid for wool products. We measure the overall efficiency with which wool is converted into value across different processing routes and end products in the Australian wool value chain and decompose it into its technical, scale and mix efficiency components. We find that wool price changes significantly with a change in fibre diameter, staple length and staple strength and employ a flexible functional form to capture the relations between these wool attributes and lot value. Results show that considerable scope exists to increase the value of most sale lots, and indicate that the overall efficiency in extracting value is lower for wool supplied to processes that produce high-value wool garments. We then ascertain that various factors related to wool production and product characteristics significantly influence the level of technical efficiency. The mix of the three key attributes in wool lots was found not to be a major factor influencing overall efficiency whereas scale efficiency scores (which we measure as returns to wool attributes) were clearly much lower than those for technical and mix efficiency scores, a function of strongly increasing returns to wool lots as the levels of attributes increase. We test propositions about the skewness of distributions of efficiency scores in translating wool attributes into value. Most distributions of overall efficiency scores are positively skewed for production processes paying high prices for wool, and differences in overall efficiency were observed across selling centres. Prima facie, the results provide a strong case for wool producers to move to higher value levels of wool attributes by producing finer, stronger and longer wool fibres – especially the former. But such a strategy may not be an optimal one for producers to follow because the investments they make to implement such a strategy may entail high costs and take a long period to fruition that would lead to a heavy discounting of future benefits. A full benefit-cost analysis would be needed of any investments to raise the levels of wool attributes and otherwise improve wool quality at the farm level.
{"title":"Is the Australian wool industry efficient at converting wool into value","authors":"E. Fleming, D. Cottle","doi":"10.22004/AG.ECON.262473","DOIUrl":"https://doi.org/10.22004/AG.ECON.262473","url":null,"abstract":"The marketing strategies of agricultural producers have become increasingly focussed on the sale of differentiated products to intermediary buyers rather than the sale of homogeneous commodities directly to retailers. The wool value chain in Australia fits the description of differentiated products being sold by wool producers to agribusiness firms that are intermediaries in the chain. The attributes of wool that are the source of this differentiation are used by firms to add value to their operations, reflected in higher retail prices paid for wool products. We measure the overall efficiency with which wool is converted into value across different processing routes and end products in the Australian wool value chain and decompose it into its technical, scale and mix efficiency components. We find that wool price changes significantly with a change in fibre diameter, staple length and staple strength and employ a flexible functional form to capture the relations between these wool attributes and lot value. Results show that considerable scope exists to increase the value of most sale lots, and indicate that the overall efficiency in extracting value is lower for wool supplied to processes that produce high-value wool garments. We then ascertain that various factors related to wool production and product characteristics significantly influence the level of technical efficiency. The mix of the three key attributes in wool lots was found not to be a major factor influencing overall efficiency whereas scale efficiency scores (which we measure as returns to wool attributes) were clearly much lower than those for technical and mix efficiency scores, a function of strongly increasing returns to wool lots as the levels of attributes increase. We test propositions about the skewness of distributions of efficiency scores in translating wool attributes into value. Most distributions of overall efficiency scores are positively skewed for production processes paying high prices for wool, and differences in overall efficiency were observed across selling centres. Prima facie, the results provide a strong case for wool producers to move to higher value levels of wool attributes by producing finer, stronger and longer wool fibres – especially the former. But such a strategy may not be an optimal one for producers to follow because the investments they make to implement such a strategy may entail high costs and take a long period to fruition that would lead to a heavy discounting of future benefits. A full benefit-cost analysis would be needed of any investments to raise the levels of wool attributes and otherwise improve wool quality at the farm level.","PeriodicalId":41561,"journal":{"name":"Australasian Agribusiness Review","volume":null,"pages":null},"PeriodicalIF":0.9,"publicationDate":"2015-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"86142937","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This study examines the impact of contract farming with Farmer Organizations on farmers' income. Contract farming with farmer organizations is a smallholder farmer-inclusive contract farming system. Field surveys were conducted in August 2010 with 75 farmers (including 39 contract farmers) in Kampong Thom province, Cambodia. The analysis—i.e., using a treatment effects model—indicates that contract farming with farmer organizations significantly raises farmers' income. The econometric model and qualitative data show that the contract farming can attribute to an increase of farming productivity, quality of produce and farming cost efficiency.
{"title":"Impact of Contract Farming with Farmer Organizations on Farmers' Income: A Case Study of Reasmey Stung Sen Agricultural Development Cooperative in Cambodia","authors":"An Sokchea, R. Culas","doi":"10.22004/AG.ECON.262469","DOIUrl":"https://doi.org/10.22004/AG.ECON.262469","url":null,"abstract":"This study examines the impact of contract farming with Farmer Organizations on farmers' income. Contract farming with farmer organizations is a smallholder farmer-inclusive contract farming system. Field surveys were conducted in August 2010 with 75 farmers (including 39 contract farmers) in Kampong Thom province, Cambodia. The analysis—i.e., using a treatment effects model—indicates that contract farming with farmer organizations significantly raises farmers' income. The econometric model and qualitative data show that the contract farming can attribute to an increase of farming productivity, quality of produce and farming cost efficiency.","PeriodicalId":41561,"journal":{"name":"Australasian Agribusiness Review","volume":null,"pages":null},"PeriodicalIF":0.9,"publicationDate":"2015-03-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"83233560","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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