Bio-based and Applied Economics <p><em>Bio-based and Applied Economics</em> is a free-access on-line journal promoted by the Italian Association of Agricultural and Applied Economics (AIEAA). Although mainly devoted to scholars and well established researchers BAE also encourages submissions by young researchers, teams involved in ongoing research projects and also relevant actors in the field of bio-economy and related public policies. BAE publishes contributions on the economics of bio-based industries, such as agriculture, forestry, fishery and food, dealing with any related disciplines, such as resource and environmental economics, consumer studies, regional economics, innovation and development economics.</p> Firenze University Press en-US Bio-based and Applied Economics 2280-6180 <p>Authors retain the copyright and grant the journal right of first publication with the work simultaneously licensed under a <strong>Creative Commons Attribution 4.0 International Public License (<a href="">CC-BY-4.0</a>)</strong>&nbsp;that allows others to share the work with an acknowledgment of the work's authorship and initial publication.</p> <p><a href="" rel="license"><img src="" alt="Creative Commons License"></a><br>This work is licensed under a <a href="" rel="license">Creative Commons Attribution 4.0 International License</a></p> Agriculture, food and global value chains: issues, methods and challenges <p class="p1">About one-third of trade in food and agriculture takes place within global value chains (GVC). Coffee, palm oil or biofuels production are examples of the modern organization of agri-food production through GVC (de Becker, Miroudot, 2014; Greenville et al., 2016; Baliè et al., 2019). Agricultural raw materials nowadays may cross borders many times before reaching the final consumers, as they are embedded in intermediate and processed goods which are produced in different countries. Agri-food GVC are typically characterized by a strong coordination between farmers, food processors or traders, and between processors and retailers. Value chain coordination can be initiated by downstream buyers, such as supermarkets and food processors, or by upstream suppliers including farmers or farmer cooperatives (Swinnen and Maertens, 2007; Reardon et al 2007). In a number of cases, a group of “lead firms” plays a critical role by defining the terms of supply chain membership and whom the value is added (Scoppola, 2021).<span class="Apple-converted-space">&nbsp;</span></p> <p class="p1">The growth of the agri-food GVC raises new issues for the agricultural and food sectors. Participating to the GVC is expected to have several positive effects, both for countries and farmers, in terms of technology and knowledge spillovers, increased productivity, growth, employment opportunities, and ultimately increase of farmers’ income. On the other hand, market concentration in agri-food GVC raises concerns related to the emergence of market power (Swinnen, Vandeplas, 2014). Further, there are concerns that producing for agri-food GVC may result in the intensification of agricultural production, with negative environmental effects in terms of deployment of natural resources and water stress.</p> <p class="p1">Sound knowledge and evidence about the nature and implications of modern agri-food GVC are relevant for policymaker, firms and civil society. The economic analysis of agri-food GVC challenges agricultural and food economists in several respects. The complex nature of GVC and of the issues they raise makes it essential the use of new and multiple lens of analysis (World Bank, 2020). Country-level (macro) approaches to GVC are needed to investigate the drivers of the world-wide fragmentation of agri-food production and the welfare implications of countries participating to GVC. Recent progresses in the empirical trade analysis of GVC are certainly fundamental to the understanding of agri-food GVC. Industry level (meso) approaches are needed to investigate the relationship among the various stages of the GVC. Analytical tools and approaches from the industrial organization literature are to be used to investigate issues such the price transmission along the agri-food GVC, the drivers of vertical coordination or the distributions of benefits along the GVC. A firm level approach (micro) is needed to investigate the implications of the participation to GVC for farmers.<span class="Apple-converted-space">&nbsp;</span></p> <p class="p1">The 10<sup>th</sup> AIEAA Annual Conference contributes to this debate, by putting together different disciplines and approaches to the analysis of agri-food GVC and of their implications in terms of economic, social, and environmental sustainability. Three keynotes explore these issues from different perspectives.<span class="Apple-converted-space">&nbsp;</span></p> <p class="p1">The keynotes by Silvia Nenci Ilaria Fusacchia, Anna Giunta, Pierluigi Montalbano and Carlo Pietrobelli entitled <em>Mapping global value chain participation and positioning in agriculture and food</em> (Nenci et al., 2022) reviews key methods and data issues arising in country-level analyses of GVC. They overall conclude that improvements in GVC measurements and mapping are currently still severely limited by data availability. Empirical literature to date mostly uses global Input-Output matrices and aggregate trade data to map and measure GVCs; however, sectoral and country coverage remains rather weak. They further review recent evidence about trends of GVC, by using the GVC participation indicator and the upstreamness positioning indicator (measuring the distance of the sector from final demand in terms of the number of production stages) for two sectors, that is “Agriculture” and “Food and Beverages”. They show that at the country level, GVC participation is globally around 30-35 percent for both agriculture and food and beverages; while GVC linkages in agriculture are mostly forward linked, food and beverages are much more in the middle and at the end of a value chain. Furthermore, they show that, unsurprisingly, agriculture has a higher score on upstreamness with respect to the food and beverages sector. They conclude by discussing some critical issues faced by agriculture and food GVC concerning trade policies, technological innovation and the COVID crises.<span class="Apple-converted-space">&nbsp;</span></p> <p class="p1">The keynote by Tim Lloyd entitled “<em>Price transmission and imperfect competition in the food industry</em>”<span class="Apple-converted-space">&nbsp; </span>aims at providing insights on how information is conveyed by means of prices between food consumers and agricultural producers along the agri-food value chains. After presenting some basic insights from theory, the keynote addresses the issue of how to detect the degree of market power by reviewing theory-consistent empirical models as well as the approaches developed in the New Empirical Industrial Organisation literature. The increased use of highly detailed retail (‘scanner’) data reveals that the food industry (retailing, manufacturing, and processing) is a major source of the price changes and that it also mediates price signals originating in other parts of the food chain in increasingly nuanced ways; the author concludes that agricultural and food economists should be wary of inferring too much about the competitive setting based on prices alone.</p> <p class="p1">The keynote by Miet Maertens entitled “<em>A review of global and local food value chains in Africa: Supply chain linkages and sustainability” </em>highlights the expansion of agri-food GVC in low- and middle-income countries and how GVC are modernizing rapidly through institutional, technical, and commercial innovations. While a large body of literature focusses on the development implications of participation in GVC, the development of local food supply chains in low- and middle-income countries has received less attention. The review assesses potential linkages between global and local value chains in African countries, and the sustainability outcomes of supply chain innovations. The keynotes emphasizes that market competition as well competition for land, labour, water, and other resources may create negative linkages between the development of global and local food value chains. Spill-over effects, such as investment, technical or institutional spillovers, may create positive linkages and complementarities in the process of supply chain development. The existence of such linkages importantly depends on the type of crop and the structure and organisation of supply chains and entail important consequences towards socio-economic and environmental sustainability.<span class="Apple-converted-space">&nbsp;</span></p> Margherita Scoppola Copyright (c) 2022 Margherita Scoppola 2022-08-30 2022-08-30 11 2 91 92 10.36253/bae-13517 Mapping global value chain participation and positioning in agriculture and food: stylised facts, empirical evidence and critical issues <p class="p1">This paper aims to overview the recent body of empirical work on the importance of Global Value Chains (GVCs) in international production and trade. We begin by reviewing different approaches and levels of GVC analysis. We then consider developments in methods and data. Focusing on the agriculture and food sector, we present a map of GVC measures - at the country and sectoral level - computed using trade in value added data to allow researchers to better assess the countries’ engagement in GVCs. We also apply this data to show some stylized facts on GVC participation and positioning in agriculture and food and provide empirical evidence of the economic impact of the GVCs on these sectors. We conclude with some critical issues and speculative thoughts regarding the future of GVCs.</p> Silvia Nenci Ilaria Fusacchia Anna Giunta Pierluigi Montalbano Carlo Pietrobelli Copyright (c) 2022 Silvia Nenci, Ilaria Fusacchia, Anna Giunta, Pierluigi Montalbano, Carlo Pietrobelli 2022-08-30 2022-08-30 11 2 93 121 10.36253/bae-12558 On the relationships among durum wheat yields and weather conditions: evidence from Apulia region, Southern Italy <p class="p1">The weather index-based insurances may help farmers to cope with climate risks overcoming the most common issues of traditional insurances. However, the weather index-based insurances present the limit of the basis risk: a significant yield loss may occur although the weather index does not trigger the indemnification, or a compensation may be granted even if there has not been a yield loss. Our investigation, conducted on Apulia region (Southern Italy), aimed at deepening the knowledge on the linkages between durum wheat yields and weather events, i.e., the working principles of weather index-based insurances, occurring in susceptible phenological phases. We found several connections among weather and yields and highlight the need to collect more refined data to catch further relationships. We conclude opening a reflection on how the stakeholders may make use of publicly available data to design effective weather crop insurances.</p> Marco Tappi Gianluca Nardone Fabio Gaetano Santeramo Copyright (c) 2022 Marco Tappi, Gianluca Nardone, Fabio Gaetano Santeramo 2022-08-30 2022-08-30 11 2 123 130 10.36253/bae-12160 A choice model-based analysis of diversification in organic and conventional farms <p class="p1">Diversification is a polymorphic strategy to increase agricultural income and reduce the risks deriving from the surrounding environment. This strategy can also be successfully adopted in the context of organic farming. However, there is a lack of confirmation in this regard given the scarcity of studies that explicitly focus on diversification in organic farms. The objective of this paper is to analyse the influence of some territorial, socio-economic, and political factors on the probability of diversifying in both organic and conventional farms. To this aim, multinomial and binary logit models are applied to the Italian case. Results suggest that on-farm diversification requires specific competences and adequate organization. However, the reasons for diversifying differ depending on the production model. In conventional farming, farmers diversify to achieve income levels comparable with those of a more competitive agriculture. Conversely, for organic farmers, diversification represents an integrated part of the production model to take advantage of synergies between organic production and diversification. From these results, some policy implications are drawn. <span class="Apple-converted-space">&nbsp;</span></p> Andrea Bonfiglio Carla Abitabile Roberto Henke Copyright (c) 2022 Andrea Bonfiglio, Carla Abitabile, Roberto Henke 2022-08-30 2022-08-30 11 2 131 146 10.36253/bae-12206 Financial performance of connected Agribusiness activities in Italian agriculture <p class="p1">The Rural Development Policy combines measures that favour the growth of the productive dimension of farms and their specialization, and measures aimed at supporting diversification paths, with the expansion of the productive functions performed. The evaluation of the economic and financial results of farms engaged in activities of the second type can help to calibrate the intervention between the two options. To this end, we have studied a constant sample of FADN farms in the period 2014-2016, identifying the units engaged in organic farming or other forms of quality production, or engaged in direct sales or processing of their products or, again, in the management of farmhouses. We discuss the condition of financial sustainability of the farms involved in those activities by evaluating their ability to generate cash flows to offset for the depreciation of the farm production system. We used the ratio Free Cash Flow on Equity on Depreciation to compare the results of farms engaged in those activities and farms which are limited to conventional agriculture. The analysis of this comparison and of some structural, technical, and economic characteristics of the farms involved in those types of activities resulted in various considerations on their characteristics and conditions of financial sustainability. Our attention has focused above all on the financial results of farms within the sectors of Italian agriculture in greater financial difficulty. The main objective was, in fact, to verify whether to diversify the farm’s commitment with these activities has contributed to improving the financial sustainability in those agricultural sectors. Various considerations have arisen that can help fine-tune policies to support the types of diversification examined in this study.</p> Gabriele Dono Rebecca Buttinelli Raffaele Cortignani Copyright (c) 2022 Gabriele Dono, Rebecca Buttinelli, Raffaele Cortignani 2022-08-30 2022-08-30 11 2 147 169 10.36253/bae-12211 Pesticides, crop choices and changes in well-being <p class="p1">This study investigates how Pesticide Risk Indicators (PRIs) can be applied to help develop sound economic policies. We modified one of the numerous PRIs proposed over the years, the Environmental Impact Quotient (EIQ), originally developed for the fruit industry, to consider co-formulants and adjuvants. The new formula includes three components representing the externalities of farm worker risk, consumer risk, and ecological risk. It also considers the potential externalities of the use of pesticides on residents living near the farms where these products are used. We applied the modified EIQ to two areas located in central Italy (the Chiana Valley in Tuscany and the Tiber and Upper Tiber Valleys in Tuscany/Umbria), surveying a sample of farms to determine the quantity and types of pesticides used on five crops: durum wheat, soft wheat, corn, tobacco, and olives. After calculating the impact quotient, we used data from a survey conducted in a different Italian region regarding the willingness to pay (WTP) for a pesticide-free environment and determined the WTP for even minimal changes in that quotient. Using those results, we simulated the changes in welfare (calculated as changes in willingness to pay) that would result from modifying the amount of land used for each crop. Our findings indicate that the proposed WTP indicator may have broad utility and that its application may lead to enhanced awareness of the consequences of pesticide use in farming.<span class="Apple-converted-space">&nbsp;</span></p> Geremia Gios Stefano Farinelli Flavia Kheiraoui Fabrizio Martini Jacopo Gabriele Orlando Copyright (c) 2022 Geremia Gios, Stefano Farinelli, Flavia Kheiraoui, Fabrizio Martini, Jacopo Gabriele Orlando 2022-08-30 2022-08-30 11 2 171 184 10.36253/bae-10310