Marc F. Bellemare Posts

I have been working on the topic of contract farming for 12 years. Although two thirds of my dissertation were about sharecropping, the third and last essay was about contract farming.

Given that it is the topic on which I have written the most so far in my career, at the end of last year, I pitched the idea of writing a review of the empirical economics literature on contract farming to a journal editor colleague. The end result, written with my doctoral student Jeff Bloem, is here.

Here is the abstract:

Although many urban areas around the world have grown steadily in recent years, the structural transformation, wherein an economy goes from relying primarily on agriculture and natural resources to relying primarily on manufacturing, has eluded many developing countries. In those countries, contract farming, whereby processors contract out the production of some agricultural commodity to growers, is often seen as a means of spurring the development of an agribusiness sector, and thus launch the structural transformation. As a result, contract farming has been extensively researched by economists and other social scientists over the last 30 years. We review the findings of the economics literature on contract farming and discuss its implications for development policy and research. In so doing, we highlight the methodological weaknesses that limit much of the literature on contract farming in answering questions of relevance for policy. Despite valiant research effort, many of the core features of contract farming imply substantial challenges for researchers aiming to study the question “Does contract farming improve welfare?” We conclude with a discussion of where we see the literature on contract farming evolving over the next few decades.

Comments are not only welcome, they are eagerly solicited.

One of our PhD student, whose work focuses on the Supplemental Nutrition Assistance Program (SNAP, writes:

I would like your opinion on something. When I presented this [paper] in the past, I have received requests to include more background slides and information on SNAP (history, participation rates, eligibility rules, etc.), the poverty line (how it is calculated, etc.), as well as diff-in-diffs (parallel trends). I did not have these details included as I thought most people know this stuff but that was obviously not the case for a few people who saw me present the paper in the past. Yesterday, however, I have received some feedback about that information being redundant. This is not my job-market paper, but as I prepare for job-market talks, what do you suggest I do? Include background on the more common concepts and methods or skip them? Do you have some general advice in deciding how much of that to include?

It’s been a while since I wrote a post for this series, so I thought I should discuss overcontrolling.

Two of our doctoral students are working together on an article in which they are interested in the effect of a spike in the price of a staple food on the welfare of consumers. The staple they are looking at is primarily sold at two types of retail outlets, let’s call them A and B (Because I did not consult with the students before writing this post, I am remaining purposely vague about the application).

In principle, then, the students are interested in identifying the causal effect of a change in the price of the staple at retailers of type A and the causal effect of a change in the price of the staple at retailers of type B. Let’s denote those prices as [math]p_A[/math] and [math]p_B[/math]. Letting [math]y[/math] denote welfare, the students are interested in the effect of [math]p_A[/math] on [math]y[/math] and on the effect of [math]p_B[/math] on [math]y[/math].

Initially, they estimated the following equation

(1) [math]y = \alpha + \beta_A p_A + \beta_B p_B + \epsilon[/math],