Trade Barrier Volatility and Agricultural Price Stabilization
National barriers to agricultural trade are often varied to insulate domestic markets from international price variability, especially following a sudden spike. This paper examines the extent of that behavior by governments using new annual estimates of agricultural price distortions in 75 countries. Responses to price spikes are shown to be equally substantial for agricultural-importing and agricultural-exporting countries, thereby weakening the domestic price-stabilizing effect of their interventions. Bringing discipline to export restrictions through new World Trade Organization rules could help alleviate the extent to which government responses to exogenous upward price spikes exacerbate those shocks.[1]
What Explains Agricultural Price Movements?
After 2005, commodity prices experienced their longest and broadest boom since World War II. Agricultural prices have now come down considerably since their 2011 peak, but are still 40% higher in real terms than their 2000 lows. This paper briefly addresses the main arguments on the causes of the agricultural price cycle. It broadens the scope of analysis by focusing on six agricultural commodities, and identifies the relative weights of key quantifiable drivers of their prices. It concludes that increases in real income negatively affect real agricultural prices, consistent with the Prebisch–Singer hypothesis and its predecessor, Engel’s Law. Energy prices matter most (not surprisingly, given the energy-intensive nature of agriculture), followed by stock-to-use ratios and, to a lesser extent, ex-change rate movements. The cost of capital affects prices only marginally, probably because it not only influences demand, but also evokes a supply response. The added value of these results lies in that, when examined in tandem and against market fundamentals, they challenge the conclusions from uni-dimensional approaches that often put disproportionate weight on an individual factor.[2]
Agricultural price transmission across space and commodities during price bubbles
This article investigates agricultural price transmission during price bubbles. The empirical approach concerns the horizontal transmission of cereal prices both across different market places and across different commodities. The trade policy intervention put forward to mitigate the impact of price exuberance is considered. The analysis is performed using Italian and international weekly spot (cash) price data over years 2006–2010, a period of generalized turbulence of agricultural markets. Firstly, the properties of price time series are explored; then, interdependence across prices is specified and estimated by adopting appropriate cointegration techniques. Results suggest that the bubble had only a slight impact on the price spread and the temporary trade-policy measure, when effective, has limited this impact. [3]
Determinants of Sugarcane Price and Revenue in Sokoto Metropolis, Sokoto State, Nigeria
Aims: The study was carried out to determine the price and revenue of sugarcane in Sokoto metropolis.
Study Design: Purposive sampling technique was used to select.Ramin Kura market because of the high concentration of sugarcane seller in the market. That was followed by systematic sampling of 50 respondents.
Place and Duration of Study: Sample for the study was obtained at Ramin Kura market in Sokoto metropolis between February 2012 and December 2012.
Methodology: From the list of the sugarcane sellers (comprising 252 registered members) collected from the association of sugarcane sellers at Ramin Kura market, systemic sampling was used to select one respondent out of every five interval giving a total of 50 sugarcane marketers that were used for the study. Data collection was done using a structured questionnaire. Data analysis was done using Multiple regression.
Results: The study revealed that while the coefficient of quantity demanded (0.456) had significant positive effect on the price of sugarcane, distance from source (-1.182) and handling cost (-0.570) had significant negative effects on the price of sugarcane. However, length of stem, tax and storage cost did not have any significant effect on the price of sugarcane at the Ramin Kura market. The study also showed that quantity sold (0.719), transportation cost (1.11) and storage cost (0.138) had significant effect on the total revenue obtained by the sugarcane sellers.
Conclusion: Based on the results, it was concluded that quantity demanded, distance from source and handling costs were the main determinanats of sugarcane price in Sokoto metropolis. Also, quantity sold, transportation cost and storage cost were the main determinant of sugarcane revenue in the metropolis[4]
Cost-Price Squeeze in Export Oriented Crop Production: Welfare Implication for Commercialized Smallholder Tea Producers in Kenya
Tea production, a leading export crop in Kenya and produced largely by smallholders was analyzed to determine how the input and output prices adjust to both inflation and exchange rates. It was hypothesized that prices received and prices paid by farmers are not cointegrated and that a cost-price squeeze could not be rejected in the long-run. Based on cointegration analysis results, we could not reject the null hypothesis of no cointegration between prices paid and prices received in the long run. Macroeconomic variables impacts unevenly on the tea sector with probable negative effects on the welfare of smallholders. The livelihood of export oriented cash crop producers in less developed countries, therefore, becomes integrally vulnerable to market forces. Price volatility coupled with constant market shocks could impact negatively on the general livelihoods of the smallholder export farmers particularly food access at the household level.[5]
Reference
[1] Anderson, K. and Nelgen, S., 2012. Trade barrier volatility and agricultural price stabilization. World Development, 40(1), pp.36-48.
[2] Baffes, J. and Haniotis, T., 2016. What explains agricultural price movements?. Journal of Agricultural Economics, 67(3), pp.706-721.
[3] Esposti, R. and Listorti, G., 2013. Agricultural price transmission across space and commodities during price bubbles. Agricultural Economics, 44(1), pp.125-139.
[4] Maikasuwa, M.A., Jatto, N.A., Maryam, M., Abbas, A.Y. and Abdullahi, Y.T., 2014. Determinants of sugarcane price and revenue in Sokoto Metropolis, Sokoto State, Nigeria. Journal of Experimental Agriculture International, pp.41-47.
[5] Kiplimo, B.L., Inyanje, L., Ngeno, V., Kipkurgat, T. and Lopokoiyit, M.C., 2015. Cost-Price Squeeze in Export Oriented Crop Production: Welfare Implication for Commercialized Smallholder Tea Producers in Kenya. Journal of Economics, Management and Trade, pp.374-381.
