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The Variable Response of Agricultural Supply to World Price Instability in Developing Countries

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  • Julie Subervie

Abstract

This paper analyses the effect of world price instability on the agricultural supply from developing countries and determines to what extent this effect is dependent upon the macroeconomic environment. Producers from agricultural commodity-exporting countries are particularly vulnerable to the fluctuations of world prices: they are widely exposed to price shocks and have little ability to cope with them. Nevertheless, the effectiveness of risk-coping strategies is conditioned by the influence of macroeconomic factors (infrastructure, inflation and financial deepening). Thus country-specific price indices are established, and the response of production indices to price instability indices is estimated by using a panel model including macroeconomic variables which interact with price instability. Such analysis is based on a sample of 25 countries between 1961 and 2002. The results highlight a significant negative effect of the world price instability on supply, and further show that high inflation, weak infrastructure and a poorly developed financial system exacerbate this effect. Copyright 2007 The Author. Journal compilation 2007 The Agricultural Economics Society.

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  • Julie Subervie, 2008. "The Variable Response of Agricultural Supply to World Price Instability in Developing Countries," Journal of Agricultural Economics, Wiley Blackwell, vol. 59(1), pages 72-92, February.
  • Handle: RePEc:bla:jageco:v:59:y:2008:i:1:p:72-92
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    1. repec:spr:ssefpa:v:9:y:2017:i:4:d:10.1007_s12571-017-0702-2 is not listed on IDEAS
    2. David Dawe, 2014. "Transmission of global food prices, supply response and impacts on the poor," Chapters,in: Handbook on Food, chapter 5, pages 100-121 Edward Elgar Publishing.
    3. Magrini, Emiliano & Morales-Opazo, Cristian & Balie, Jean, 2014. "Supply response along the value chain in selected SSA countries: the case of grains," Proceedings Issues, 2014: Food, Resources and Conflict, December 7-9, 2014, San Diego, California 197193, International Agricultural Trade Research Consortium.
    4. World Bank, 2012. "Responding to Higher and More Volatile World Food Prices," World Bank Other Operational Studies 12950, The World Bank.
    5. Samuel Guerineau & Hélène Ehrhart, 2012. "The impact of high and volatile commodity prices on public finances: Evidence from developing countries," Working Papers halshs-00659098, HAL.
    6. Müller, Kirsten & Musshoff, Oliver & Weber, Ron, 2014. "The more the better? How collateral levels affect credit risk in agricultural microfinance," DARE Discussion Papers 1402, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).
    7. Donato, Romano & Carraro, Alessandro, 2015. "Modelling Acreage, Production and Yield Supply Response to Domestic Price Volatility," 2015 Fourth Congress, June 11-12, 2015, Ancona, Italy 207278, Italian Association of Agricultural and Applied Economics (AIEAA).
    8. Sarris, Alexander, 0. "Food commodity price volatility and food insecurity," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), issue 3.
    9. Samuel GUERINEAU & Hélène EHRHART, 2011. "Commodity price volatility and Tax revenues: Evidence from developing countries," Working Papers 201131, CERDI.
    10. Alexandros Sarris, 2014. "Trade, food and welfare," Chapters,in: Handbook on Food, chapter 13, pages 325-352 Edward Elgar Publishing.
    11. Bingxin Yu & Shenggen Fan, 2011. "Rice production response in Cambodia," Agricultural Economics, International Association of Agricultural Economists, vol. 42(3), pages 437-450, May.
    12. Samuel Guerineau & Hélène Ehrhart, 2012. "The impact of high and volatile commodity prices on public finances: Evidence from developing countries," Working Papers halshs-00659100, HAL.
    13. Alexandros SARRIS, 2014. "Options for Developing Countries to Deal with Global Food Commodity Market Volatility," Working Papers P98, FERDI.
    14. Hélène Ehrhart & Samuel Guerineau, 2012. "Commodity price volatility and Tax revenues: Evidence from developing countries," Working Papers halshs-00658210, HAL.
    15. Alexandros SARRIS, 2014. "Options for Developing Countries to Deal with Global Food Commodity Market Volatility," Working Papers P98, FERDI.
    16. Konstantakis, Konstantinos N. & Michaelides, Panayotis G., 2017. "Technology and Business Cycles: A Schumpeterian Investigation for the USA," MPRA Paper 80636, University Library of Munich, Germany.
    17. Haile, Mekbib G. & Wossen, Tesfamichael, 2016. "Impacts of climate and price changes on global food production," 2016 AAAE Fifth International Conference, September 23-26, 2016, Addis Ababa, Ethiopia 246374, African Association of Agricultural Economists (AAAE).
    18. Theofanis Papageorgiou & Panayotis G. Michaelides & John G. Milios, 2011. "Technology and economic fluctuations in the US food sector (1958-2006): An empirical approach from a political economy perspective," International Journal of Social Economics, Emerald Group Publishing, vol. 38(2), pages 140-164, January.

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