Agribusiness Review - Vol. 11 - 2003
Ross Kingwell -Senior Adviser, WA Department of Agriculture and Visiting senior lecturer, University of Western Australia
Paper 1 , January 9, 2003
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This study reports findings from a mail survey of Western Australian broadacre farmers participating in quality assurance (QA) accreditation. A 50 percent response rate generated a sample size of 78 usable replies. The average farm in the survey spent $13,470 gaining QA accreditation, upgrading facilities and implementing the QA system. Most of these costs were set-up costs incurred in the first year of QA training. Almost half of all farmers in the survey considered QA accreditation and implementation to be value for money. A further 39 per cent were unsure of its value. Only 13 per cent of respondents felt it was not a worthwhile investment. Most respondents agreed that there were benefits, apart from price premia, in applying a QA system and 84 per cent of growers viewed QA accreditation as the start of greater regulation of grain production.
Even if no price premium was available for QA grain, 39% of respondents indicated they still believed QA to be worthwhile. However, this same group of farmers also indicated that if the premium for QA grain was less than $8.90 per tonne they would begin to question the value of implementing the QA system on their farm. Overall, farmers in the survey suggested an average premium of $12.30 per tonne was required to prevent them questioning the merits of QA.
A simple investment model suggested that to exactly offset the cost of QA accreditation and implementation a price premium of $11.70 per tonne was required. This premium was very close the price premium of $12.30 per tonne identified by growers as being required before they would doubt the worth of adopting a QA system.
Nilufar Jahan - Senior Research Officer of ABARE, Canberra, Perry Smith and Gill Rodriguez - Senior Economists, ABARE, Canberra
Paper 2, February 12, 2003
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The dairy and meat processing sectors are significant contributors to the Australian economy. It generates employment and export earnings. For example, processed dairy and meat products accounted for 35 per cent of total food exports in 2000. Hence, the growth of the dairy and meat processing sectors is an important issue for Australia.
The dairy and meat processing sectors grew annually by 1.47 and 0.37 per cent respectively from 1980 to 1998. A third of the growth in the dairy processing sector arose from productivity gains.
Research expenditures, programs such as work place reforms and changes in the exchange rate significantly influenced the productivity changes in the dairy and meat processing sectors.
Dean Patton - NSW Agriculture, Agricultural Research Station, Trangie, NSW and John P. Brennan - NSW Agriculture, Wagga Wagga Agricultural Institute, Wagga Wagga, NSW
Paper 3, May 26, 2003
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The new AWB Ltd payment system for wheat grades has changed the incentives for farmers to grow and market wheat varieties in Australia. Based around standard quality characteristics, the payment system provides incremental premiums and discounts for deviations in protein and screenings around this standard. The aim of this paper is to compare the optimal crop-pasture rotation using the previous cliff-face pricing structure with the new premiums and discounts pricing structure. The optimal rotations are analysed by applying a linear programming model of farming systems in the Central West of NSW (PRISM Condobolin). To assess the robustness of our results, optimal rotations are also compared for a range of cereal and oilseed prices. It was found that the new pricing structure favours increased cereal production by reducing the relative economic importance of beneficial rotation crops, particularly canola. This is an important finding, given the need to develop and promote more ecologically sustainable farming systems that are not dominated by cereal production.
Liangyue Cao, Nico Klijn and Trish Gleeson, Australian Bureau of Agricultural and Resource Economics, GPO Box 1563, Canberra ACT 2601, Australia
Paper 4, June 5, 2003
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The size of the cost to the Australian beef industry of a potential loss of major beef export markets following an outbreak of foot and mouth disease (FMD) in Australia is important in determining appropriate precautions. The size of this cost is evaluated with a dynamic bioeconomic model of Australian beef production, consumption and export trade. The model developed by ABARE represents forward-looking competitive behavior of beef producers and traders on domestic and export markets based on perfect foresight. The model enables estimation of the cost due to a FMD outbreak under various scenarios regarding the duration of market closure and affected zones.
Iain Fraser, Department of Economics and Finance, La Trobe University, Vic 3086 and Department of Agricultural Science Imperial College, Wye, UK
Paper 5, June 12, 2003
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In this paper the role of contracts in coordinating the supply of grapes between independent wine grape growers and wineries is examined. A review of technical issues that underpin the design and implementation of contracts provides insights into the wine industry. A review of the economics literature on contractual relations in the wine industry indicates that although grape contracts are important they are subject to a number of problems. In particular, the precise determination of grape quality is a source of tension, as are current pricing arrangements.
Dr. David Pearson. Lecturer, School of Marketing and Management, University of New England, Armidale, NSW 2351 firstname.lastname@example.org
Paper 6, July 10, 2003
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Most fresh fruits and vegetables are unbranded. However, buyers are assisted with brands when purchasing most other grocery products.
Brands have the potential to be of value to buyers and to the organisations that own them. However, research has shown that brands are only valuable to buyers when the attribute being sought fluctuates and is hidden from them at the time of purchase. Such as tastes with respect to apples. On this basis, for example, brands are relevant for apples, oranges, rockmelons and grapes, but not for potatoes, onions or mushrooms. However, it may not even be possible to develop successful brands with products for which they are relevant. This is due to the difficulty of reducing fluctuations in the attributes sought and hence being able to present a consistent product to the buyer as well as the difficulty of the organisation investing in the brand receiving some benefit. Thus, many fresh fruit and vegetable products are likely to remain unbranded.
Waqar A. Jehangir - Senior Agricultural Economist, International Water Management Institute, Lahore, Pakistan email@example.com Muhammad Ashfaq - Assistant Professor, University of Agriculture, Faisalabad, Pakistan
and Evan Christen Irrigation and Drainage Engineer, CSIRO (Land and Water) Griffith, NSW, Australia
Paper 7, July 18, 2003
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The paper describes a study of canal and supplemental ground water used by 544 farmers for wheat growing in the Rechna Doab catchment of Pakistan. The main objective was to assess the on-farm financial gains through alternate modes of irrigation and comparing them with conjunctive water use. For econometric analysis, a linear relationship between the wheat production and different determinant variables was assumed. The results highlighted the problem of increased use of tubewell water in the saline groundwater zones that had resulted in the deterioration of the groundwater quality and led to the problem of permanent upconing of saline groundwater. Conjunctive water management increased the farm income by about Rs. 1000 and 5000 per hectare compared to only using the canal and tubewell water, respectively The results of financial analysis show that the net gains were 30 percent higher on the farms using conjunctive water management as compared to the farms using only tubewell irrigation.
Dr Norman E. Philp, Associate Professor in International Business, Charles Sturt University. Albury, NSW, firstname.lastname@example.org
Paper 8, July 22, 2003
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This paper suggests an instrument that can be used by export advisors and other export development practitioners to determine whether or not food and beverage processing firms that have not yet actively exported have, in fact, a high probability of ever doing so. The instrument is developed from an empirically based, logistic regression model relating to the management and firm-specific determinants of a firm's export orientation. This model was able to predict the probability of a firm being an "active exporter" with an accuracy of over 84%. The major management attitudes and attributes that appeared to strongly influence whether or not a firm became an active exporter were its management's willingness to commit resources to export development, their attitudinal commitment to export, their recognition of the significance of product price in the firm's market competitiveness, the firm's access to export-specific management skills, and whether or not the manager was tertiary educated. Four of these constructs were then used to develop the suggested instrument.
Tingsong Jiang, Asia-Pacific School of Economics and Management, The Australian National University, Canberra 0200 email@example.com and Centre for International Economics, GPO Box 2203, Canberra 2601 firstname.lastname@example.org
Paper 9, September 05, 2003
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Along with the rapid economic growth since China undertook economic reform in 1978, the income gap among Chinese regions has widened. Using CERD , a computable general equilibrium model of the Chinese economy with regional details, this paper investigates the impact of China's accession to the World Trade Organisation on regional development and finds that, although all regions will gain from the accession, the trend of a widening gap among regions will be reinforced rather than eased. Specifically, the eastern coastal region gains more than the inland regions. The result is robust no matter whether the change in trade balance is left free or fixed, although the scenario with zero change in the trade balance generates a lower overall welfare gain and an even worse regional disparity. A retreat from WTO commitments in tariff cuts in agriculture reduces welfare gains, but could to some degree ameliorate the worsening inequality between rural and urban households and between coastal and inland regions. Similarly, increasing transfer payment to the inland regions could marginally improve the regional and rural-urban inequality at the cost of overall welfare gain. On the other hand, domestic market reform allowing more freely movement of factors and commodities across regions could improve the regional and rural-urban inequality and achieve higher total welfare gains.