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Agriculture and Rural Development

Despite low commodity prices, growth prospects in low-income countries remain robust

Gerard Kambou's picture
Large agricultural sectors, remittances, and public investment have cushioned the impact of sharply weaker terms of trade in commodity-exporting low-income countries (LICs). Growth in LICs was flat in 2014, but is expected to pick up in 2015 and remain robust during 2016–17.  Declining commodity prices, however, are likely to increasingly put pressure on fiscal and current account balances of LICs that rely heavily on exports of energy and metals. Many commodity-exporting LICs have limited buffers to absorb this deterioration.

What drives local food prices? Is it world prices? Weather? Seasonality? Policies? Fuel prices? Other costs?

John Baffes's picture
The question has been asked often in the context of the post-2005 commodity price boom. In a recently published working paper, What drives local food prices? Evidence from the Tanzanian maize market, we examine the factors driving movements of prices in 18 major regional maize markets in Tanzania.

On booms and super-cycles: China and India's central role in global commodity markets

John Baffes's picture
Global commodity prices underwent an exceptionally strong and sustained boom beginning in 2000. Unlike a typical price cycle, this boom has been characterized as a “super cycle”, i.e., a demand-driven surge in commodity prices lasting possibly decades rather than years. Many researchers say this is the fourth “super cycle” of the past 150 years. The price super cycle has been attributed to strong growth in emerging markets.

Commodities (mostly) continue to tumble

John Baffes's picture

We just published our Commodity Market Outlook for the third quarter of 2015, and report that most prices declined in the second quarter of 2015 due to ample supplies and weak demand, especially in industrial commodities (see figure below).
 

 
Energy prices rose 12 percent in the quarter, with the surge in oil offset by declines in natural gas (down 13 percent) and coal prices (down 4 percent). However, energy prices fell on average to 39 percent below 2014 levels. Natural gas prices are projected to decline across all three main markets—U.S., Europe, and Asia—and coal prices to fall 17 percent. Excluding energy, our report notes a 2 percent decline in prices for the quarter, and forecasts that non-energy prices will average 12 percent below 2014 levels this year. Iran’s new nuclear agreement with the US and other leading governments, if ratified, will ease sanctions, including restrictions on oil exports from the Islamic Republic of Iran. Downside risks to the forecast include higher-than-expected non-OPEC production (supported by falling production costs) and continuing gains in OPEC output. Possible (less likely) upside pressures may come from closure of high-cost operations—the number of operational oil rigs in the US is down 60 percent since its November high, for example—and geopolitical tensions. 

Natural resource booms are a mixed blessing for local communities, too*

Punam Chuhan-Pole's picture

The impact of natural resource wealth on macroeconomic outcomes is well researched, with the debate centered on whether resources are bad for development (i.e., the phenomenon of the resource curse). However, relatively little attention has been given to examining the effect on communities where those resources are located. 

But interest in the local impact of resource abundance is growing, underpinning a nascent literature.  The focus of this research is on exploring whether extractive activities improve or harm welfare in adjoining regions, and how the benefits or costs are transmitted to the local population.  The answers to these questions can inform policy, leading to better outcomes, and may also help us understand the sources of regional and social tensions associated with extractive industries. 

Why are women farmers in Sub-Saharan Africa less productive?

Kevin McGee's picture
Researchers have documented a wide array of gender disparities in sub-Saharan Africa that have important implications for individual and household well-being. Perhaps one of the most significant disparities is in agricultural production, the primary economic activity for the majority of the population in sub-Saharan Africa. Closing this gender gap in agricultural productivity would not only improve the welfare of female farmers but could also have larger benefits for other members of the household, especially children.

​Good food and good economics both start with quality ingredients

Alberto Zezza's picture
Do economists and policy analysts pay enough attention to the quality of the data they work with? The focus in these professions seems to be much more on using and developing sophisticated econometric and statistical models, or pretty data visualization software, than on assessing the quality of the data that are fed into those models and tools (let alone working to improve the quality of the data).
 

Building feedback into project implementation: A visit to the Social Observatory

Ken Chomitz's picture
“Do you decide on what types of clothes to wear based on your own preferences?”  That’s a question on a survey instrument designed to assess whether Tamil Nadu’s Empowerment and Poverty Reduction Project (part of the Pudhu Vaazhvu Project or PVP) is actually having an impact on women’s empowerment. The question resonated strongly with the project beneficiaries I met. For them, it was a touchstone indicator of empowerment. That may be because it was crafted by a group of the women for whom the project is designed. 
 

Geographical poverty traps in rural areas: A growing global problem

Edward B. Barbier's picture
More than one-third of the rural population in developing countries lives on less-favored agricultural land, according to global spatial datasets from 2000. How, then, does this distribution influence the incidence of poverty in these countries? 

A Bitter Side to Andhra Pradesh's Ex-Post Sugarcane Permit System

Richard J. Sexton's picture

India is the World’s second largest producer of sugarcane (after Brazil). Approximately 45 million Indian farmers are involved in cane production, and cane processing is the second largest agro-processing sector in the Country. In her dissertation research on this industry (supervised by Goodhue and Sexton) Sandhya Patlolla encountered an unusual marketing practice that is unique to the Andhra Pradesh (AP) State. Private sugar processors issue ‘permits’ to selected cane growers a few weeks before harvest. These permits allow growers to deliver a specified amount of cane during a specified period of time. Farmers without a permit must sell their cane at a reduced price for manufacture into gur, a traditional Indian sweetener. The price difference averaged 43% over the six years of data acquired for our study. We wondered why sugar processors in AP would create uncertainty among farmers by using ex post permits instead of offering ex ante production contracts?

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