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The Impact Of Food Price Shock On Heterogeneous Credit Constrained Firms

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  • Pavel Ciaian
  • d’Artis Kancs

Abstract

The paper analyses how the rising agricultural prices affect heterogenous farm access to inputs and production under credit market imperfections in the CEE transition countries. Using farm level panel data which contains 37416 observations, we estimate a farm credit constraint equation and find that small individual farms (IF) are on average more credit constrained than large corporate farms (CF). Using the estimated parameters we simulate the effect of the recent food price shock. Our results suggest that in the presence of credit market imperfections, the relatively less credit constrained CF benefit more from higher output prices than IF, as they are able to expand their production more flexibly. These findings have implications for the developing countries: not only consumers in the LDC may loose, but also producers, which on average are more credit constrained than farmers in developed countries, may loose their market shares and hence income in the log run.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Annals of Public and Cooperative Economics.

Volume (Year): 82 (2011)
Issue (Month): 2 (06)
Pages: 115-137

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Handle: RePEc:bla:annpce:v:82:y:2011:i:2:p:115-137

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  3. Pavel Ciaian & Johan Swinnen, 2005. "Land Market Imperfections and Agricultural Policy Impacts in the New EU Member States: A Partial Equilibrium Analysis," LICOS Discussion Papers, LICOS - Centre for Institutions and Economic Performance, KU Leuven 15805, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
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  21. Ciaian, Pavel & Swinnen, Johan F.M., 2006. "AJAE Appendix: Land Market Imperfections and Agricultural Policy Impacts in the New EU Member States: A Partial Equilibrium Analysis," American Journal of Agricultural Economics Appendices, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 88(4), November.
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