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Changing the Risk at the Margin Smallholder Farming and Public Policy in Developing Countries

Camilla Andersson ()
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Camilla Andersson: Department of Economics, Umeå University, Postal: Umeå University, S 901 87 Umeå, Sweden

No 810, Umeå Economic Studies from Umeå University, Department of Economics

Abstract: This thesis consists of a summary and four self-contained papers. Paper [I] examines whether the implementation of a social safety net programme in Ethiopia has affected the value, risk and composition of farmers’ crop portfolios. The empirical analysis suggests that the value and risk of the crop portfolio have not been altered due to the programme. However, the programme seems to have brought about some changes in the land allocated to different crops. Paper [II] studies how a social safety net affects farmers’ (dis)investments in productive assets. More specifically, it studies how the Productive Safety Net Programme in Ethiopia has changed livestock and tree holdings. The results indicate no significant effect on livestock holdings, but a significant increase in tree holdings. Paper [III] investigates if there is a problem of adverse selection in formal microlending in rural Bangladesh. The results indicate that farmers who only borrow formally have a shadow price of capital that is substantially higher than the average informal interest rate. This suggests that farmers that only borrow formally are perceived as poor credit risks by informal lenders. Paper [IV] explores the economic incentives surrounding the cultivation of opium poppy in Afghanistan. Specifically, it examines the impact of eradication policies when opium is used as a means of obtaining credit, and when the crops are produced in sharecropping arrangements. The results indicate that both these features are likely to affect the outcome of eradication policies.

Keywords: Smallholder farming; Public policy; Informal risk strategies; Microcredit; Opium eradication; Development economics; Food policy (search for similar items in EconPapers)
JEL-codes: O22 Q12 Q18 Q28 (search for similar items in EconPapers)
Pages: 135 pages
Date: 2010-05-19
New Economics Papers: this item is included in nep-afr, nep-agr, nep-dev and nep-mfd
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