Marc F. Bellemare Posts

That’s the title of a new working paper my PhD student Chris Boyd (who’s on the market this year; hire her, she is wonderful!) and I finished over the holidays.

This paper picks up where my coauthors Yu Na Lee and David Just left off in our 2020 American Journal of Agricultural Economics article on producer behavior in the face of output price risk. An old theoretical conjecture in the literature is that in the absence of insurance, a risk-averse producer responds to the presence of price risk by cutting back on how much she produces, in an effort to reduce her exposure to income risk; much of agricultural policy (i.e., agricultural insurance) in high-income countries is predicated on that hypothesis.

Here is the abstract:

In a competitive market, a profit-maximizing producer’s total revenue is determined both by the quantity of output she chooses to produce and by the price at which she can sell that output. Of these two variables, only output is in part or wholly within the producer’s control, price being entirely determined by market forces. Given that, it is puzzling that the literature studying the effects of providing insurance to producers in low- and middle-income countries has ignored price risk entirely, focusing instead on insuring output. We run an artefactual lab-in-the-field experiment in Peru to look at the effects of insurance against output price risk on production. We randomize the order of three games: (i) a baseline game in which price risk is introduced at random, (ii) the baseline game to which we add mandatory insurance against price risk sold at an actuarially fair premium, and (iii) the baseline game to which we add voluntary insurance against price risk sold at the actuarially fair premium, but for which we offer a random 0-, 50- or 100-percent discount to exogenize take-up. Our results show that, on average, (i) price risk does not significantly change production relative to price certainty and (ii) neither does the provision of compulsory insurance against price risk, but (iii) the introduction of voluntary insurance causes the average producer on the market to produce more in situations of price risk than in situations of price certainty. Additionally, (iv) purchasing the voluntary insurance causes the average producer to produce more in situations of price risk relative than in situations of price certainty, but when looking only within situations where there is price risk, (v) this is due almost entirely to the insurance rather than to selection into purchasing the insurance. Our findings further suggest that (vi) even in the absence of the discount, the insurance against price risk would have a large (i.e., 70-percent) take-up rate.

Come work with me! My department is looking for an Assistant Professor in the area of Food and Agricultural Economics, ideally with a side of econometrics. Here is the text of our ad on Job Openings for Economists:

The Department of Applied Economics at the University of Minnesota Twin Cities seeks to fill a tenure-track Assistant Professor position in food and agricultural economics. The Applied Economics Department has a distinguished record in food and agricultural economics in both research and teaching.

This position includes responsibilities for research, teaching, and leadership related to Food and Agricultural Economics (F&AE) with a strong emphasis in the application of econometric methods to food and agricultural issues. Possible areas of specialization within F&AE include (i) agricultural finance, (ii) agricultural risk management, (iii) the economics of food, health and nutrition, (iv) the economics of food insecurity, and (v) public policy as it relates to the F&AE areas just enumerated. The University of Minnesota has multiple programs of excellence across campus in the areas of agricultural sciences, environment and natural sciences, public health, and public policy with whom faculty in Applied Economics collaborate. The Department offers both graduate (MS and PhD) and undergraduate degrees. Its graduates have gone on to successful careers in academia, research organizations, government, and the private sector.

Candidates must have a PhD, or expect to complete a PhD by the end of August 2022, in Economics, Applied Economics, Agricultural Economics, or related fields. Preferred qualifications include strong training in economic theory and econometrics, an established publication record in food and agricultural economics, evidence of high quality teaching, and a strong commitment to the advancement of diversity and equity goals. The successful candidate will be expected to publish regularly in high quality journals, provide high quality teaching at the graduate and undergraduate levels, supervise graduate student research, and seek external grant and contract funding.

Applications should be submitted by December 15, 2021 for full consideration. A COMPLETE application will include an application letter, CV, diversity statement, transcript, research paper, and contact information for three references. To view the full position description and application instructions, visit http://employment.umn.edu and search for job #344470.

I am chairing the search committee and am happy to answer any and all questions via email.

For the past year, Jeff Bloem, Sunghun Lim, and I have been hard at work on a chapter for the forthcoming volume 6 of the Elsevier-North Holland Handbook of Agricultural Economics on agricultural value chains in low- and middle-income countries (LMICs). We finally managed to finish writing a draft of it, and so I thought of posting it here. I apologize in advance for any oversight on our part. Given the comprehensive nature of those chapters, and given our blind spots, and given that this is not the pre-print version and that it will be going out to reviewers for comments, we welcome any and all comments if you have them.

Here is the abstract:

We present an overview of the literature on agri-food value chains in low- and middle-income countries. Starting from farmers’ decision of whether to move away from subsistence agriculture to participate in agri-food value chains, we study the process whereby agricultural commodities make their way from the farm-gate to the final consumer, documenting the procurement relationships that arise and the organization of markets at every step of the way. In each step, we take stock of the empirical evidence, critically assess the research so far, and offer a number of directions for future research. We further discuss the challenges and opportunities for global agri-food value chains.

Writing one of these chapters is a lot of work, especially right on the heels of writing a book. Given that, I expect I will be going back to writing plain-old articles for the foreseeable future.