Journal Articles

Are farmers better stewards of the land they own than the land they rent from others? We answer this question using a data set that identifies Ontario farmers’ conservation practices on their own land as well as the land they rent. Using a fixed‐effects regression approach, we find that the role of tenure varies for different types of conservation practices. Farmers were found to be just as likely to adopt a machinery‐related practice such as conservation tillage on their rented land as that land which they own. On the other hand, farmers were found to be less likely to adopt site‐specific conservation practices such as planting cover crops on rented land. However, this effect diminishes as the expected length of the rental relationship increases when the landlord has a farming background.

Agricultural policy frameworks such as Growing Forward are intended to enhance the productivity and competitiveness of the Canadian agricultural sector and to stabilize farm income. This paper examines the relationship between production efficiency and government program payments. First, we find evidence of heterogeneity in production efficiency across farms. Second, we find a negative correlation between production efficiency and the share and level of program payments. The result of this study underscores the importance of understanding the link between technical inefficiency and government payments.

Canadian Agricultural Policy in the Twenty-First Century: Looking Back and Going Forward

This paper considers the current and possible institutions (programs, policies, participants, etc.) that govern public Business Risk Management (BRM) in Canada. This is an important policy topic for two reasons: BRM spending accounts for the vast majority of public monies funneled to Canadian agricultural producers and the upcoming Canadian Agricultural Partnership includes a mandated BRM review and thus presents an opportunity to change these institutions in meaningful ways. We pay particular attention to the rhetoric surrounding greater involvement of private insurance, the lack of rhetoric regarding the use of crown corporations, and issues of subsidization. We conclude with policy recommendations favoring commodity-specific revenue versus whole-farm net margin insurance, a possible reduction in subsidy levels, and a call to reconsider the role of crown corporations. We also make programming recommendations regarding the discontinued use of private reinsurance, a reduction in the level of program reserves, and greater transparency.

In stark contrast to financial markets, relatively little attention has been given to modeling agricultural commodity price volatility. In recent years, numerous methodologies with various strengths have been proposed for modeling price volatility in financial markets. We propose using a mixture of normals with unique GARCH processes in each component for modeling agricultural commodity prices.

While a normal mixture model is quite flexible and allows for time varying skewness and kurtosis, its biggest strength is that each component can be viewed as a different market regime and thus estimated parameters are more readily interpreted. We apply the proposed model to ten different agricultural commodity weekly cash prices. Both in-sample fit and out-of-sample forecasting tests confirm that the two-state NM-GARCH approach performs better than the traditional normal GARCH model. A significant and state-dependent inverse leverage effect is detected only for pork in the regime where the price is expected to drop, indicating the volatility in this regime tends to increase more following a realized price rise than a realized price drop.