Elsevier

Food Policy

Volume 45, April 2014, Pages 1-13
Food Policy

A farm household model for agri-food policy analysis in developing countries: Application to smallholder farmers in Sierra Leone

https://doi.org/10.1016/j.foodpol.2013.10.012Get rights and content

Highlights

  • A farm household model was developed to ex-ante assess poverty alleviation policies.

  • Based on Positive Mathematical Programming and generalized maximum entropy.

  • Tested for 400 small farms in Sierra Leone to evaluate rice seed policy impacts.

  • Policy effect is positive for most farms although not sufficiently to fight poverty.

  • The model can be re-used as a comprehensive tool for future policy analysis.

Abstract

This paper presents a generic farm household model for use in the context of developing countries to gain knowledge on food security and rural poverty alleviation under different policy options. It is a static positive programming model which simultaneously solves a set of microeconomic farm models reproducing the behaviour of representative individual farm households. This model is designed to capture key features of developing countries’ agriculture such as the non-separability of production and consumption decisions due to market imperfections, the inter-linkage between transaction costs and market participation decisions, the interaction among farm households for factor markets and the seasonality of resource use. Model use is illustrated in this paper by simulating the impact of rice seed policy on the livelihood of representative smallholder farmers in Sierra Leone. Results show that the seed policy would improve farm productivity and boost household income but that it is not sufficient to fight poverty since 90% of the surveyed farm households would continue to live below the extreme poverty line of 1 USD-equivalent per person per day.

Introduction

Food security has become one of the most important items on today’s international political agenda and a serious issue for governments around the world. Guaranteeing sustainable and equitable food in the context of climate change, price volatility and global financial crisis is, in fact, a challenging task. Even if food availability has grown significantly and consistently over time, both globally and in developing countries, access to food is still limited particularly in many low income economies. According to the 2008 World Development Report (World Bank, 2008), three-quarters of the world’s poor live in rural areas and most of them are farming. Although there are food security challenges across the world, major progress is yet to be made in Africa and South Asia’s rural areas where most of the population is extremely poor (i.e. with less than 1 USD-equivalent per person per day at their disposal) and dependent on small holdings. To reduce rural poverty and improve food security both national governments and the international community have developed several policies and programs. These support policies have taken different forms such as: (i) increasing agricultural productivity through the support of agricultural inputs (mainly improved seeds and fertilizers), training and mechanization; (ii) facilitating the use of agricultural knowledge and technologies; (iii) improving infrastructure (rural roads, storage facilities, processing, etc.); (iv) facilitating access to credit markets; etc. Impact assessments of such supports upon the food security of farm households are however scarce and not always founded on solid science-based methods. Most studies have focused on the food security issue at the national level which may mask food insecurity at the household level. For a better understanding of farm household food security status, it is preferable to use methods and tools working at micro-level, capable of providing detailed results on a farm household scale and of capturing heterogeneity across households. Within this context, the main aim of this paper is to present FSSIM-Dev (Farm System Simulator for Developing Countries), a decision support tool to be used in the context of low income developing countries to improve knowledge on food security and rural poverty alleviation under different policy options. FSSIM-Dev is a generic farm household model that enables to (i) capture five key features of developing countries and/or rural areas; (ii) to provide detailed disaggregation regarding commodities and technology choices; and (iii) to smoothly integrate results from bio-physical models needed to improve knowledge on land degradation, land resources tenure and use.

Model use is illustrated in this paper with an analysis of the impacts of rice seed policy on the livelihood of 400 smallholder farmers in Sierra Leone. The aim is to improve knowledge on farmers’ livelihood strategies and to assess the microeconomic effects of the seed policy, using a set of FSSIM-Dev indicators1 such as land use, production and consumption of basic food commodities, farm household income and poverty gap.

The paper is structured as follows: in Section ‘Literature review on farm household models’, an overview of farm household models is provided. In Section ‘The farm household model: FSSIM-Dev’, the proposed FSSIM-Dev model is described. In Section ‘Empirical application’, the model is applied to a representative sample of farm households in Sierra Leone. In Section ‘Results and discussion of the application’, the results of the application of FSSIM-Dev are described. In Section ‘Conclusions’, we conclude on the added value of our results compared to other studies and discuss the relevance and the limitation of the proposed model and study.

Section snippets

Literature review on farm household models

Farm household models are a sample of micro-research on rural economies. They are often applied to family-run or peasant agriculture where production, labour allocation and consumption decisions are linked due to market imperfection (De Janvry et al., 1991, Taylor and Adelman, 2003). As long as markets are perfect, households are indifferent to consuming own-produced and market-purchased goods. The household model is then said to be separable and the optimization program can be solved

General features

FSSIM-Dev is a farm household model for use in the specific context of low income developing countries where farm household production, consumption and labour allocation decisions are non-separable due to market imperfections. Contrary to most well-known household models which are econometric based, FSSIM-Dev is a non-linear optimization model which relies on both the general household’s utility framework and the farm’s production technical constraints, in a non-separable regime. This model is

The case study area

For this study, FSSIM-Dev is applied to a representative sample of smallholder farmers belonging to the Northern Province of Sierra Leone. One of the West African countries, Sierra Leone has a total area of 71,740 km2 and an estimated population of 6.7 million in 2008 (World Bank, 2009). In economic terms, Sierra Leone is one of the poorest countries in the world (WFP, 2008). Its gross domestic product (GDP) per capita was estimated to be only slightly more than 300 US dollars (USD) in 2010. The

Results and discussion of the application

The impacts of simulated scenarios are represented by the following set of structural and economic indicators computed at individual (i.e. farm household) and regional levels: land use, cropping pattern, production and consumption of basic food commodities, farm household income and poverty gap. In order to ease interpretation of the results and their comparison across scenarios, most impacts were measured as percentage changes to the baseline.

Conclusions

In this paper, a farm household model has been presented as a generic tool designed to simulate farm households’ response to food security policies in the context of low income economies. The model’s capabilities are illustrated with an analysis of the combined effects of rice seed policy and reduction of the fallow period on the livelihood of farm households in Sierra Leone. The main findings of this application in terms of policy impacts are that: (i) the rice seed policy will improve the

Acknowledgements

The authors would like to thank Dr. Guillermo Flichman, Dr. Allen Thomas and Dr. Jacques Delincé for valuable discussions on this topic.

The views expressed in this paper are the sole responsibility of the authors and do not reflect those of the European Commission which has not reviewed, let alone approved, the content of the paper. The paper does not reflect the views of the institutions of affiliation of the authors either.

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