Modeling Corners, Kinks, and Jumps in Crop Acreage Choices: Impacts of the EU Support to Protein Crops

Abstract

Null crop acreages raise pervasive issues when modelling acreage choices with farm data. We revisit these issues and emphasize that null acreage choices arise not only due to binding nonnegativity constraints but also due to crop production fixed costs. Based on this micro-economic background, we present a micro-econometric multi-crop model that consistently handles null acreages and accounts for crop production fixed costs. This multivariate endogenous regime switching model allows for specific crop acreage patterns, such as multiple kinks and jumps in crop acreage responses to economic incentives, that are due to changes in produced crop sets. Currently available micro-econometric multi-crop models, which handle null acreages based on a censored regression approach, cannot represent these patterns. We illustrate the empirical tractability of our modelling framework by estimating a random parameter version of the proposed endogenous regime switching micro-econometric multi-crop model with a panel dataset of French farmers. Our estimation and simulation results support our theoretical analysis, the effects of crop fixed costs and crop set choices on crop acreage choices in particular. More generally, these results suggest that the micro-econometric multicrop model presented in this article can significantly improves empirical analyses of crop supply based on farm data.

Farm‐level responses to weather trends: A structural model

“…We divide farm-level fertilizer expenses by the country-level fertilizer price to measure fertilizer quantities at the farm level. For other material inputs (e.g., seed, pesticides, material, energy, contract services, and water use), we calculate implicit quantities by dividing total expenses by a Tornquist price index 12 (e.g., Henry de Frahan et al, 2011;Koutchadé et al, 2021) constructed at the regional (NUTS 2) level. Following Lacroix and Thomas (2011), we chose other material inputs as the numeraire in our estimation procedure, because no physical quantity for this input can be obtained from the accountancy data set.…”

Regional Analysis of the Impact of the 2020 Health Crisis on the Private-Sector Wage Bill: Structural and Local Effects

“…More recently, Cortignani & Dono (2020) show that the expansion of legume crops promoted by the greening measures of the CAP improved the environmental balance of Italian farms as expected, but to the detriment of economic (income) and social (salaried and non-salaried work) impacts. Lastly, using a micro-econometric model that takes into account the heterogeneity of French agricultural holdings, Koutchadé et al (2021) quantify the impact of coupled subsidies on extensive margins, i.e. on decisions to include legumes in crop rotation.…”

“…The maximisation programme depends on input and output prices, fixed factors (material and building capital, total agricultural surface area and self-employed labour) and technological possibilities. For the latter, we follow Koutchadé et al (2021) and model crop yields using a quadratic function specific to each crop, dependent on the quantities of inputs used (fertilisers and plant protection products). However, these yields do not depend on the number of hectares cultivated.…”

“…The parameters of the production and utility functions are calibrated using SAM data and price or expenditure elasticity. For agricultural supply, the parameters are determined on the basis of the econometric findings of Koutchadé et al (2021). For example, the price elasticity of wheat production is 0.55, broken down into a surface area effect (0.50) and yield effect (0.05).…”

Protein Deficit in France – A Prospective Analysis

“…However, it is parameterintensive. To reduce the number of parameters, the logistic functions are specified as in Koutchadé et al (2021).…”