Bad day for research and biodiversity

Russia may plow under its plant bank - "which includes more than 70 hectares planted with 5,500 different varieties of apples, pears, cherries, and numerous berry species - most of which occur nowhere else on Earth and were developed over hundreds of year" - to build housing. It is also a national treasure: "Russian scientists famously starved to death rather than surrender their seeds during the 900-day siege of Leningrad during World War II." The institution has appealed the case to Putin and Medvedev, the only two people with authority to overturn the ruling.

The genetic wealth harbored in thousands of plants growing at Pavlovsk lies in untold numbers of mutations for drought tolerance, unique taste and growth characteristics, and propagation abilities that could help to improve crops on a global scale, according to Emile Frison, director general of the charity Bioversity International, devoted to agricultural biodiversity. Simply banking seeds from the collection's plants is not an option: Most of the unique fruit plant strains do not reproduce asexually, and are pollinated by other strains, so their seeds do not necessarily yield adult plants that mirror the characteristics of the parent plant. For this reason, the only way to preserve the vast genetic diversity contained in the Pavlovsk is to keep the plants growing in the ground or to move them to a new site -- a dicey and time-consuming proposition, as the perfect site would have to be found and planted only after years of grafting and then monitoring for suitable transplants.

While it would take years to move the plants, they could be bulldozed in 3-4 months. A notice was passed around the department with a letter you can send to Pres. Medvedev, asking him to intervene (below the fold).

Kenya: Food Price Controls and Biofuels

The Kenyan Parliament has passed a price control bill, currently awaiting Pres. Kibaki's signature. I'm not informed of all the details, but it sounds heavily directed at maize and wheat prices. Analysts at the Kenya Institute for Public Policy Research and Analysis argue that price controls in the 1990s did more harm than good and these are likely to go the same way: "it may benefit the poor who have been priced out of food in the short term but is unsustainable in the long term." Among the reasons for concern are reductions in FDI and agricultural job loss, farmers switching to cash crops which would reduce food supply, and increased maize hoarding by farmers.

The last several maize harvests have not been good, leading to a 130% price increase in 2009 while world maize prices declined following the food price crisis. Despite this, overall inflation has fallen from almost 20% to 5%.

Proponents of the bill contend that it is an attempt to regulate maize and wheat millers, who "are a cartel that makes supernormal profits..." Analysts and retailers ask whether price controls are the way to deal with the cartel. There are anti-trust laws that can be used; increased international trade can provide additional sources of competition; it could hurt the newly forming COMESA (Common Market for Eastern and Southern Africa); and is "treating the symptoms and not curing the underlying disease." Agricultural research and investments to diversify agriculture and consumption patterns into a more diverse diet -- remember, meat, milk, fruits, and vegetables also compete with maize -- could lower prices both directly and indirectly without risking increased unemployment and hunger.

Meanwhile, there are arguments for and against setting aside 50,000 ha. of woodland forest for growing jatropha trees to produce biofuels. Opponents contend that the benefits jatropha trees have been vastly oversold and their costs underestimated: "a number of companies in East Africa have abandoned Jatropha cultivation citing its non-profitability with no single large-scale commercial growing of Jatropha succeeding in East Africa." The crop is blamed with eroding rather than preserving marginal lands, "causing poverty in many parts of the world," its oils are poisonous to humans and livestock, and would endanger some native species.

"The crop actually requires more water per litre of bio-fuel produced than most other bio-fuel plants. They even claimed that one plant can yield 4-6 kgs of oil per year yet recent studies by Kenya Forestry Research Institute (KEFRI) have shown it can only give away 0.6kg."

One proponent firm, Sun Biofuels, argues that it has had success and hasn't displaced food crops, having bought land used for growing tobacco. "If biofuels weren't a viable option, the Kenyan government wouldn't have added a provision for it in its revision of its feed-in tariff."

Lit in Review: 2.5 on environmental policies tangentially related to the food system

One of the most insightful presentations I went to last year was recently published:
de Gorter and Just, The Economics of a Blend Mandate For Biofuels, AJAE, August 2009, 738-50; ungated.
The US supports biofuels using two primary policy instruments, a blend mandate that requires a certain level of biofuels to be mixed into gasoline and a biofuels tax credit. They demonstrate with a simple theoretical model that the combination of policies is perverse, effectively subsidizing gasoline instead of biofuels, increasing pollution, traffic congestion, and foreign energy dependence. We're subsidizing foreign oil instead of domestic corn producers. The figures get a little hairy, but it's highly recommended.

Parkhurst and Shogren, Smart Subsidies for Conservation, AJAE, Vol 90, No 5, Proceedings 2008, 1192-1200; ungated.
They demonstrate experimentally the usefulness of internalizing environmental externalities into subsidy payments. If landholders are forced to retire a certain acreage of land, they pick the lowest value land. The same thing happens if a simple subsidy is used that simply reimburses them enough to encourage them to retire the desired amount of land. A smart subsidy that pays a bonus based on the number of common borders on a landholder's own land and neighboring landholders' results in a stable equilbrium where the largest contiguous zone of land is preserved for biodiversity. This occurs without enforced public or private cooperation mechanisms.

Barry Goodwin's discussion in the same journal brings up an excellent point in evaluating the effects of climate change on agriculture. Researchers need to include models of how crops will evolve and be adapted (naturally and via genetic modification) to the requirements of new climate realities. "Yield data from yesterday (1960-2007 in the case of this article) may not tell us a great deal about yields in 2050."

Lit in Review: Three on Agricultural Risk

From the American Journal of Agricultural Economics, Vol 91, No 3 - August 2009

Di Falco and Chavas, "On Crop Biodiversity, Risk Exposure, and Food Security in the Highlands of Ethiopia," p. 599-611.
Facts: Ethiopia experienced droughts in 1965, 1974, 1983-4, 1987, 1990-91, 1999-2000, 2002. Ethiopia is a global center of genetic diversity for several crops, including barley. [A communal barley harvest in Ethiopia, right]
Method: Moment-based specification of the stochastic production function to identify how biodiversity affects the first three moments, unique farm survey, 1999-2000.
Findings: Most decision makers exhibit risk aversion and are DARA. Biodiversity increases farm productivity, even controlling for management practices and microclimate factors. Biodiversity increases skewness and variance, so higher upside and lower downside. The effects are larger on poorer soils (biodiversity and land quality are substitutes). Experience is not statistically significant.
Future research identified: This was a one year survey, so couldn't address the dynamics of management decisions.

Gramig, Horan, and Wolf, "Livestock Disease Indemnity Design When Moral Hazard is Followed by Adverse Selection," p. 624-641, ungated.
Discussion: The US Constitution requires governments to repay farmers when their livestock must be seized to prevent or treat infection. These indemnity payments are a form of implicit insurance and also, critically, disaster payment. Unconditional payments reduce the incentive for farmers to invest in biosecurity measures, particularly if they are paid the full market healthy price so that they suffer no loss at all.
Policy recommendation: Use two policies, one penalty for failure to disclose problem and one indemnity to incentivize proper levels of biosecurity investment. Belgium and the Netherlands give no payment for dead animals (so they want to report before the animal dies) and only partial payment for sick animals (so they want to invest in biosecurity). Private markets may be in conflict with the public policies.
Future research: This paper does not account of the externality and free rider problem: my optimal choice of biosecurity depends on my neighbors'.

Ito and Kurosaki, "Weather Risk, Wages in Kind, and the Off-Farm Labor Supply of Agricultural Households in a Developing Country," p. 697-710, ungated.
Method: multivariate two-limit tobit, Survey of Living Conditions, Uttar Pradesh and Bihar, 1997-98, with labor allocation in 31 (!) categories based on source of wage and whether in cash or in kind.
Facts: 41.4% of households (hhds) rely only on self-employment - largely they have more land and a higher reservation wage; 58.6% have at least one family member earnings wages, usually non-agriculture.
Findings: Education decreases the share of agricultural wage work. The more worker-age males and dependents in a hhd, the lower labor share on own-farm and more for off-farm wage work. The number of working-age females is not significant. Rainfall variance reduces own-farm labor, implying that risk makes people work off-farm. Rainfall variance increases agricultural work paid in kind and nonagricultural work, but is not statistically significant in determining agricultural work paid in cash.