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Changing the risk at the margin: Smallholder farming and public policy in developing countries
Umeå University, Faculty of Social Sciences, Department of Economics.
2010 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

This thesis consists of a summary and four self-contained papers.

Paper [I] examines whether the implementation of a social safety net programme in Ethiopia has affected the value, risk and composition of farmers‟ crop portfolios. The empirical analysis suggests that the value and risk of the crop portfolio have not been altered due to the programme. However, the programme seems to have brought about some changes in the land allocated to different crops.

Paper [II] studies how a social safety net affects farmers‟ (dis)investments in productive assets. More specifically, it studies how the Productive Safety Net Programme in Ethiopia has changed livestock and tree holdings. The results indicate no significant effect on livestock holdings, but a significant increase in tree holdings.

Paper [III] investigates if there is a problem of adverse selection in formal microlending in rural Bangladesh. The results indicate that farmers who only borrow formally have a shadow price of capital that is substantially higher than the average informal interest rate. This suggests that farmers that only borrow formally are perceived as poor credit risks by informal lenders.

Paper [IV] explores the economic incentives surrounding the cultivation of opium poppy in Afghanistan. Specifically, it examines the impact of eradication policies when opium is used as a means of obtaining credit, and when the crops are produced in sharecropping arrangements. The results indicate that both these features are likely to affect the outcome of eradication policies.

Place, publisher, year, edition, pages
Umeå: Nationalekonomi, Umeå universitet , 2010. , 25 p.
Series
Umeå economic studies, ISSN 0348-1018 ; 810
Keyword [en]
Smallholder farming, Public policy, Informal risk strategies, Microcredit, Opium eradication, Development economics, Food policy
National Category
Economics
Research subject
Economics
Identifiers
URN: urn:nbn:se:umu:diva-33854ISBN: 978-91-7459-022-7 (print)OAI: oai:DiVA.org:umu-33854DiVA: diva2:318342
Public defence
2010-06-04, Samhällsvetarhuset sal s305, Umeå universitet, Umeå, 10:15 (English)
Opponent
Supervisors
Available from: 2010-05-14 Created: 2010-05-07 Last updated: 2012-02-23Bibliographically approved
List of papers
1. Can a social safety net affect farmers crop portfolios? A study of the productive safety net programme in Ethiopia.
Open this publication in new window or tab >>Can a social safety net affect farmers crop portfolios? A study of the productive safety net programme in Ethiopia.
2010 (English)Report (Other academic)
Abstract [en]

In this paper, we examine whether a minimum level of ensured consumption from a social safety net has the potential of breaking the vicious circle of risk avoidance and low return in African agriculture. We study how the implementation of a social safety net programme in Ethiopia has affected the value, risk and composition of farmers’ crop portfolios. The effects of programme participation on the value and risk of the crop portfolio are examined in a Just-Pope production function, and the effects of programme participation on composition of the crop portfolio are tested in a set of acreage response models. The empirical analysis is based on unique household panel data that allow us to control for unobserved heterogeneity. No significant effect on the value and risk of the crop portfolio could be found. However, the programme seems to have brought about some changes in the land allocated to different crops. The greatest effect is towards increased cultivation of perennials, which are high-value, high-risk crops in this part of Ethiopia.

Place, publisher, year, edition, pages
Umeå: Umeå universitet, Institutionen för Nationalekonomi, 2010. 50 p.
Series
Umeå economic studies, ISSN 0348-1018 ; 807
Keyword
Crop choice, Social safety nets, Food-for-work programmes, PSNP, Ethiopia
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:umu:diva-33862 (URN)
Available from: 2010-05-10 Created: 2010-05-07 Last updated: 2012-02-23Bibliographically approved
2. Impacts of the productive safety net program in Ethiopia on livestock and tree holdings of rural households
Open this publication in new window or tab >>Impacts of the productive safety net program in Ethiopia on livestock and tree holdings of rural households
2011 (English)In: Journal of Development Economics, ISSN 0304-3878, E-ISSN 1872-6089, Vol. 94, no 1, 119-126 p.Article in journal (Refereed) Published
Abstract [en]

We evaluated the impacts of the Ethiopian Productive Safety Net Program (PSNP) on rural households' holdings of livestock and forest assets/trees. We found no indication that participation in PSNP induces households to disinvest in livestock or trees. In fact, households that participated in the program increased the number of trees planted, but there was no increase in their livestock holdings. We found no strong evidence that the PSNP protects livestock in times of shock. Shocks appear to lead households to disinvest in livestock, but not in trees. Our results suggest that there is increased forestry activity as a result of PSNP, and that improved credit access encourages households to increase their livestock holdings.

Place, publisher, year, edition, pages
Elsevier B.V., 2011
Keyword
Trees, Livestock, Safety net, Ethiopia
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:umu:diva-33863 (URN)10.1016/j.jdeveco.2009.12.002 (DOI)
Available from: 2010-05-07 Created: 2010-05-07 Last updated: 2017-12-12Bibliographically approved
3. Formal microlending and adverse (or non-existent) selection a case study of shrimp farmers in Bangladesh
Open this publication in new window or tab >>Formal microlending and adverse (or non-existent) selection a case study of shrimp farmers in Bangladesh
2011 (English)In: Applied Economics, ISSN 0003-6846, E-ISSN 1466-4283, Vol. 43, no 28, 4203-4213 p.Article in journal (Refereed) Published
Abstract [en]

Microcredit schemes have become a popular means of improving smallholders' access to credit and making long term investment possible. However, it remains to be explored whether the current microcredit schemes are more successful than earlier formal small scale lending in identifying successful borrowers. We studied shrimp farming in a rural region in Bangladesh where formal microlending is well established, but where more expensive informal microlending coexists with the formal schemes. Farmers - both those who exclusively use formal loans and those who also use informal loans - remain credit-constrained; both types overutilize labour in order to reduce the need for working capital. However, the credit constraint is actually milder for the informal borrowers: the implicit shadow price of working capital is substantially higher in the group that only takes formal loans than in the group that also uses informal loans. These results suggest that informal lenders - with their closer ties to the individual farmers - remain more successful in identifying those smallholder farmers that are most likely to use the borrowed funds successfully. Informal lenders have an information advantage that formal microlenders lack: the latter need to find routes to access this information in order for formal microcredit schemes to succeed.

Place, publisher, year, edition, pages
Taylor & Francis Group, 2011
Keyword
Microcredit, Adverse selection, Informal credit
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:umu:diva-33864 (URN)10.1080/00036846.2010.491444 (DOI)
Available from: 2010-05-07 Created: 2010-05-07 Last updated: 2017-12-12Bibliographically approved
4. Counterproductive counternarcotic strategies? A study of the effects of opium eradication in the presence of imperfect capital markets and sharecropping arrangements.
Open this publication in new window or tab >>Counterproductive counternarcotic strategies? A study of the effects of opium eradication in the presence of imperfect capital markets and sharecropping arrangements.
2010 (English)Report (Other academic)
Abstract [en]

In this paper, we model the economic incentives surrounding opium crop production at farm level in Afghanistan. Specifically, we examine the impact of eradication policies when opium is used as a means of obtaining credit, and when the crops are produced in sharecropping arrangements. The theoretical analysis suggests that when perfect credit markets are available, an increased risk of having the opium poppy eradicated will lead to less land being allocated to opium poppy. Thus, with perfect credit markets, the eradication policy is likely to have the intended effect of lowering opium crop production. However, when opium is sold on futures markets as a means of obtaining credit, the effects of opium eradication are no longer clear-cut: in some cases the outcome may actually increase the land allocated to opium poppy. Finally, the results indicate that when opium is produced in sharecropping arrangements, increased risk of opium eradication will unambiguously make the tenants worse off, while landlords may actually benefit.

Place, publisher, year, edition, pages
Umeå: Institutionen för nationalekonomi, Umeå Universitet, 2010. 40 p.
Series
Umeå economic studies, ISSN 0348-1018 ; 809
Keyword
Opium, Eradication, Futures markets, Sharecropping
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:umu:diva-33867 (URN)
Available from: 2010-05-10 Created: 2010-05-07 Last updated: 2012-02-23Bibliographically approved

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CiteExportLink to record
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Citation style
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