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Crop choices in micro-econometric multi-crop models: modelling corners, kinks and jumps

Author

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  • Koutchadé, Obafèmi Philippe
  • Carpentier, Alain
  • Féménia, Fabienne

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 non-negativity 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 multi-crop model presented in this article can significantly improves empirical analyses of crop supply based on farm data.

Suggested Citation

  • Koutchadé, Obafèmi Philippe & Carpentier, Alain & Féménia, Fabienne, 2020. "Crop choices in micro-econometric multi-crop models: modelling corners, kinks and jumps," Working Papers 307209, Institut National de la recherche Agronomique (INRA), Departement Sciences Sociales, Agriculture et Alimentation, Espace et Environnement (SAE2).
  • Handle: RePEc:ags:inrasl:307209
    DOI: 10.22004/ag.econ.307209
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    Keywords

    Crop Production/Industries; Production Economics; Research Methods/ Statistical Methods;
    All these keywords.

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General

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