152x Filetype PPT File size 0.76 MB Source: www.canr.msu.edu
Contents • Agricultural commercialization conceptual framework • Agricultural household models before and after 1985 – Separable vs Non-Separable household models • Household modeling exercises • Conclusions • Resources Agricultural Commercialization Conceptual Framework Food and cash - Food = Marketed crop production demand surplus Agricultural Commercialization Conceptual Framework Labor, mgt Weather Preferences Land Inputs Population Income Food and cash - Food = Marketed crop production demand surplus Food prices Infrastructure and International market efficiency markets & trade Agricultural household models – Before 1985 • “Separable household models” – Maximize household income – Allocate income among consumption goods to maximize utility • “Separable” in that production decisions are not affected by consumption decisions • Marketed surplus is difference between optimal quantity of production and optimal quantity of consumption – They could only be equal by coincidence so this should only occur rarely Agricultural household models – Before 1985 Model doesn’t explain several important patterns Prediction of separable model Patterns in developing countries Farmers specialize in few commodities Many farms are diversified, producing according to comparative advantage many food and cash crops Farmers allocate most land to Small share of land allocated to cash commercial crops crop production Farmers either buy or sell each crop Many household grow and consume (only rarely does optimal production = staple crops, without buying or selling optimal consumption)
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