Progress 04/28/15 to 09/30/19
Outputs
Target Audience:resreach community, beginning farmers and ranchers and their associations, agricultural banks and financial service providers, local ag community leaders (Florida paper) andpolicymakers. Changes/Problems:
Nothing Reported
What opportunities for training and professional development has the project provided?Developed a PIL with Auburn University to continue to study these issues by adding 2017 Census of Ag Data. How have the results been disseminated to communities of interest?The resreach was published. I was invited to do PIL at ERS with a similar project and on apannel that is planning amajor dissemination even to BFR gorups as well as resreachers but in 2020. What do you plan to do during the next reporting period to accomplish the goals?PIL at ERS, Washington DC to use new Ag Census 2017 data and complete similar work but with even more advanced statistical methods.
Impacts
What was accomplished under these goals?
(2) Evaluate the management strategies, capital needs, and policy impacting the financial performance and long-term sustainability of firms in the food and agribusiness sector The aging of farmers in the US today coincides with fluctuating incomes resulting from recent market price volatility and policy changes. It is essential to understand how both entry of new farmers and exit of retirement age farmers will shape the sector in the forthcoming years. While farmers have been experiencing a sequence of bad years, there is little scientific evidence to tell us if farmers will seem and strop farming or weather the economic storm, not if aging will drive their actions. In two published journal articles together with a (former) graduate student and a colleague at Auburn, I evaluate what factors affect 1/ how farmers' retirement or exit, as well as their disinvestment from farming in preparation for retirement, 2/ entry/exit of beginning farmers and ranchers (BFRs) are affected by economic and demographic factors as well as by climate variability. This work has several innovations: First, it is based on a unique dataset created by merging 5 years of Census of Agriculture data for the 1992-2012, accessed on site at the NASS office in Athens, GA. Second, we adapted an appropriate theoretical framework of analysis and developed an empirical estimation approach to answer our research questions. The results in the retirement age farmers show that larger farms are less likely to exit but more likely to disinvest and scale back, presumably to a new optimal size. For the period up to 2012, demographic factors such as gender, race, and age have statistically significant but relatively small impacts. Regional differences, the size of the non-farm economy, and opportunities to diversify income also affect exit. Our results regarding harsh times are also instructive. The flow economic variables, such as current year return-on-assets and agricultural support payments, are not associated with exit and disinvestment. Given that US farmers are now facing significant income volatility, the findings point to a high level of resilience and show how farmers are able to survive difficult times. The results about beginning farmers also show that flow variables such as profitability and off-farm employment do not affect these farmers exit, while reliance on government payments by BFRs increases the probability of exit. Like retirement age farmers, BFRs with larger asset ownership, sales, and livestock producers have lower probability of exit. Demographic factors are important but of small magnitude for this group possibly due to BFRs that are hobby farmers. For example, an additional year of age is associated with 0.1% higher increase in exit probability at the mean (45 years); non-white minority BFRs are 3-4% less likely to exit than white farmers. Lifestyle preferences are a contributing factor in the decision to be a farmer and family farms are 5.5% less likely to exit. While price variability is shown to affect BFRs' exit, it is largely attributable to weather variability, mostly droughts, but temperature with a non-linear and highly seasonal impact. We estimate that one percent increase in winter Heating Degree Days (or in summer Cooling Degree Days) corresponds to 609 (and 112) farmers exiting over a 5-year census period. Our findings may have policy implications. Policies such as taxes and subsidies, incentives for entering the farming sector and technology adoption, and related environmental standards, can be used to dampen the possible shocks to the farm industry. Similarly, finding that the demographic characteristics matter more than economic variables suggests that policies that encourage more efficient and productive farmers to stay and vice versa should account for the farmer demographics. The climate impacts highlight regional variation in exit rates and help in prediction. Agricultural land has undergone extensive conversion into residential and commercial uses vulnerable to coastal hazards and other natural disasters. We use interval censored survival models while controlling for endogeneity and spatial dependence to examine the dynamics of agricultural to urban land conversion using parcel-level data from Lee County in Southwest Florida over 1988-2008. The results suggest that flood risks slow down farmland conversion while locational attributes, proxies for farming profitability, and regional economic indicators have expected signs and magnitudes. Spatial model specification indicates positive contagion externalities in land conversion, helpful in land-use policy design. In a published study on Agricultural Land Conversion: Impacts of Economic and Natural Risk Factors in a Coastal Area (Land Use Policy, 2019) I and my co-authors contribute to the land use change literature in several ways. First, we provide evidence on the impact of natural hazards on agricultural land conversion in a growing area is heavily exposed to natural hazards with potentially important policy implications. We do that by estimating how flood risks, along with locational and economic attributes, impact agricultural land conversion to developed uses (residential, commercial, and industrial). Second, we examine the natural risk factors' impact in a dynamic setting (when, as opposed to just whether, to convert), in addition to controlling for location-specific and socio-economic parcel attributes and macroeconomic indicators. Third, we do that by applying a new quantitative approach that matches the nature of our data and has the potential to be replicated across disciplines. Agricultural land conversion surveys and data collection are usually not done at equal time intervals, so standard duration analysis cannot be used. Instead, we utilize relatively recent interval censored duration estimation techniques. Fourth, within this approach, we ccontrollfor endogeneity and spatial interdependence by using the control function approach (Wooldridge, 2015) and a spatial autoregressive model that accommodates contagion externalities from spatial proximity (LeSage and Pace, 2010). We find that the parcels located in flood risk zones have a smaller hazard of conversion of agricultural land to developed land uses, which is contrary to conversion from agricultural to less developed uses. Economic and locational attributes are significant and have plausible signs and magnitudes consistent with previous work. Parcels' suitability for farming, as well as distances to amenities, decrease the conversion hazard. ________________________________________________________________________________________ (1) Examine the impact of recent fluctuations in capital and commodity markets on the performance, management, and regulation of agricultural financial institutions In the first, we find that the Dodd-Frank Wall Street Reform and Consumer Protection Act that imposed additional costs to banks because it regulated the use of financial derivatives for hedging in (small) and specializing banks such as agricultural banks is negatively affecting their profitability and by extension the ability to serve more farmers. The negative impact is not easily observable if regulators look at the performance of the banking sector overall because specialist banks (like ag banks) are dominated by the vast number of non-specialist for whom the effect is not negative. The very new policy eliminated that threat is just in time for ag banks to potentially participate in funding the pending farm assets transition... The second and third papers here deals with properly estimating benefits from diversification of lending and savings mobilizations across countries and considering the size of the institution. Results show they both change the estimated costs savings due to diversification.
Publications
- Type:
Book Chapters
Status:
Published
Year Published:
2019
Citation:
Hartarska V. and D. Nadolnyak, (2019) Efficiency and Productivity of Microfinance Institutions in Research Agenda for Financial Inclusion and Microfinance by Labie, Szafarz, and Hudon, Edward Elgar Publishing
- Type:
Journal Articles
Status:
Accepted
Year Published:
2019
Citation:
1. Nadolnyak D., V Hartarska, B. Griffin, (2019) The Impact of Weather, Economic, and Demographic Factors on Beginning Farmers Exit, Sustainability,11(16):4280
2. Griffin B., V Hartarska, D. Nadolnyak, (2019) Retirement Age Farmers Exit and Disinvestment from Farming International Journal of Economics and Finance; Vol. 11, No. 12
3. Li, Sheng, D. Nadolnyak, and V. Hartarska, (2019) Agricultural Land Conversion: Impacts of Economic and Natural Risk Factors in a Coastal Area, Land Use Policy. 80(1): 380-390
4. Malikov E., V. Hartarska and R. Mersland (2019), Scope Economies in Microfinance: Evidence from Quantile Estimation on Panel Data, Finance Research Letters DOI: 10.1016/j.frl.2019.07.019
5. Khachatryan, K., V. Baghdasaryan, and V. Hartarska (2019) Is the Model Loans-Plus-Savings Better for Microfinance Institutions? A PSM Comparison, Review of Development Economics, 23 (3), 1309-1330 DOI: 10.1111/rode.12589
Malikov, E. and V. Hartarska, (2018) Endogenous Scope Economies in Microfinance, Journal of Banking and Finance, 93: 162-182. CoAg Outstanding Publication Award, 2018
Shen Xuan, and V. Hartarska (2018) Winners and Losers from Financial Derivatives Use by Community Banks Applied Economics,50(41):4402-4417
- Type:
Theses/Dissertations
Status:
Published
Year Published:
2019
Citation:
Odabasi, Suzan, (2019). Essays on Health, Crime, and Economic Development., (Co-advising with Duffy)
Minglu Xu, 2018 Microfinance and Political Power, Department of Political Science, CLA. Co-directed with Murrey
Jardine.
- Type:
Conference Papers and Presentations
Status:
Accepted
Year Published:
2019
Citation:
1. Cozarenco, Hartarska, and Szafarz, Too Many Cooks Spoil the Broth: The Conflicting Impact of Subsidies and Deposits
on Cost-Efficiency in Microfinance Institutions, FMA International Annual Meeting, New Orleans, October 24-26, 2019.
2. Chen, R., Fang, D., and Hartarska, V. The Affordable Care Act: Does the ACA Mean Less Out-of-pocket Health Care
Expenditure? , AAEA Annual Meeting, Atlanta, July 23-25, 2019
3. Hartarska V. To Diversify or Not to Diversify? (Dis)Economies of Diversification Across Target Clients and Markets in
Microfinance ICORE Research Seminar Series, Montpellier Business School, Montpellier, France, June 13th, 2019.
4. Chen*, Rui, V. Hartarska, and D. Nadolnyak, Banking Crises and Microfinance Performance 9th International
Conference of the Financial Engineering and Banking Society University of Economics, Prague, 30 May - 1 June 2019
5. Cozarenco, Hartarska, and Szafarz, Too Many Cooks Spoil the Broth: The Conflicting Impact of Subsidies and Deposits
on Cost-Efficiency in Microfinance Institutions, 9th International Conference of the Financial Engineering and Banking
Society University of Economics, Prague, 30 May - 1 June 2019
6. Chen*, Rui, V. Hartarska, and D. Nadolnyak, Banking Crises and Microfinance Performance 6th European Research
Conference on Microfinance, Paris June 3-5th, 2019
7. Cozarenco, Hartarska, and Szafarz, Too Many Cooks Spoil the Broth: The Conflicting Impact of Subsidies and Deposits
on Cost-Efficiency in Microfinance Institutions, 6th European Research Conference on Microfinance, Paris June 3-5th,
2019
8. Hartarska V, and C Parmeter, Do Women Make the (MFIs) World Go Round? 6th European Research Conference on
Microfinance, Paris June 3-5th, 2019
9. Minglu Xu*, V. Hartarska, and Murey Jardine, Culture, Politics and Microfinance, 6th European Research Conference
on Microfinance, Paris June 3-5th, 2019
10. Machata, C., and V. Hartarska Scope Economies form Serving Rural and Urban Areas, 6th European Research
Conference on Microfinance, Paris June 3-5th, 2019
11. Obadasi S. and V. Hartarska, Climate Variability and Crime in the Southern States Southern Agricultural Economics
Association (SAEA) Annual Meeting, Birmingham, Alabama, February 2-5, 2019
12. Cozarenco, Hartarska, and Szafarz Too Many Cooks Spoil the Broth: The Conflicting Impact of Subsidiesand Deposits on Cost-Efficiency in Microfinance Institutions, ASSA Annual Meeting, Atlanta, GA January 3-5, 2019
Winner of Warren Samuels Prize for Outstanding Research, Society of Social Economics, ASSA Meeting, Atlanta, 2019
- Type:
Other
Status:
Other
Year Published:
2019
Citation:
An Economic Analysis of Productivity and Efficiency of Alabama Cattle Industry: Best Management Practices and Growth Opportunities, brochure distributed via Alabama Cattle Producer Association meeting
- Type:
Theses/Dissertations
Status:
Other
Year Published:
2019
Citation:
1. Jinfang Wang (current PhD student) Essays in Financial Economics, co-advising with Malikov
2. Thien Quy Lam (current PhD) Essays on Gender and Leadership
3. John Musah (current PhD student), Essays in Development Economics
4. Nisha Sehrawat (current PhD student), Essays on Financial Inclusion
|
Progress 10/01/18 to 09/30/19
Outputs
Target Audience:Target audiences have been Economic Resrecah Service, USDA resreachers, NC1177 collageagues,Alabama Cattlement Association members, beginning farmers and ranchers,as well as general ag economics research community. Changes/Problems:
Nothing Reported
What opportunities for training and professional development has the project provided?2) Developed a PIL with Auburn University to continue to study these issues by adding 2017 Census of Ag Data. How have the results been disseminated to communities of interest?The resreach waspublished. I was invited to do PIL at ERS with a similar project and on apannel that is planning amajor dissemination even to BFR gorups as well as resreachers but in 2020. What do you plan to do during the next reporting period to accomplish the goals?PIL at ERS, Washington DC to use new Ag Census 2017 data and complete similar work but with even more advanced statistical methods.
Impacts
What was accomplished under these goals?
(2) Evaluate the management strategies, capital needs, and policy impacting the financial performance and long-term sustainability of firms in the food and agribusiness sector The aging of farmers in the US today coincides with fluctuating incomes resulting from recent market price volatility and policy changes. It is essential to understand how both entry of new farmers and exit of retirement age farmers will shape the sector in the forthcoming years. While farmers have been experiencing a sequence of bad years, there is little scientific evidence to tell us if farmers will seem and strop farming or weather the economic storm, not if aging will drive their actions. In two published journal articles together with a (former) graduate student and a colleague at Auburn, I evaluate what factors affect 1/ how farmers' retirement or exit, as well as their disinvestment from farming in preparation for retirement, 2/ entry/exit of beginning farmers and ranchers (BFRs) are affected by economic and demographic factors as well as by climate variability. This work has several innovations: First, it is based on a unique dataset created by merging 5 years of Census of Agriculture data for the 1992-2012, accessed on site at the NASS office in Athens, GA. Second, we adapted an appropriate theoretical framework of analysis and developed an empirical estimation approach to answer our research questions. The results in the retirement age farmers show that larger farms are less likely to exit but more likely to disinvest and scale back, presumably to a new optimal size. For the period up to 2012, demographic factors such as gender, race, and age have statistically significant but relatively small impacts. Regional differences, the size of the non-farm economy, and opportunities to diversify income also affect exit. Our results regarding harsh times are also instructive. The flow economic variables, such as current year return-on-assets and agricultural support payments, are not associated with exit and disinvestment. Given that US farmers are now facing significant income volatility, the findings point to a high level of resilience and show how farmers are able to survive difficult times. The results about beginning farmers also show that flow variables such as profitability and off-farm employment do not affect these farmers exit, while reliance on government payments by BFRs increases the probability of exit. Like retirement age farmers, BFRs with larger asset ownership, sales, and livestock producers have lower probability of exit. Demographic factors are important but of small magnitude for this group possibly due to BFRs that are hobby farmers. For example, an additional year of age is associated with 0.1% higher increase in exit probability at the mean (45 years); non-white minority BFRs are 3-4% less likely to exit than white farmers. Lifestyle preferences are a contributing factor in the decision to be a farmer and family farms are 5.5% less likely to exit. While price variability is shown to affect BFRs' exit, it is largely attributable to weather variability, mostly droughts, but temperature with a non-linear and highly seasonal impact. We estimate that one percent increase in winter Heating Degree Days (or in summer Cooling Degree Days) corresponds to 609 (and 112) farmers exiting over a 5-year census period. Our findings may have policy implications. Policies such as taxes and subsidies, incentives for entering the farming sector and technology adoption, and related environmental standards, can be used to dampen the possible shocks to the farm industry. Similarly, finding that the demographic characteristics matter more than economic variables suggests that policies that encourage more efficient and productive farmers to stay and vice versa should account for the farmer demographics. The climate impacts highlight regional variation in exit rates and help in prediction. Final and separate contribution: Agricultural land has undergone extensive conversion into residential and commercial uses vulnerable to coastal hazards and other natural disasters. We use interval censored survival models while controlling for endogeneity and spatial dependence to examine the dynamics of agricultural to urban land conversion using parcel-level data from Lee County in Southwest Florida over 1988-2008. The results suggest that flood risks slow down farmland conversion while locational attributes, proxies for farming profitability, and regional economic indicators have expected signs and magnitudes. Spatial model specification indicates positive contagion externalities in land conversion. These findings may be helpful in land use policy design. In a published study on Agricultural Land Conversion: Impacts of Economic and Natural Risk Factors in a Coastal Area (Land Use Policy, 2019) I and my co-authors contribute to the land use change literature in several ways. First, we provide evidence on the impact of natural hazards on agricultural land conversion in a growing area is heavily exposed to natural hazards with potentially important policy implications. We do that by estimating how flood risks, along with locational and economic attributes, impact agricultural land conversion to developed uses (residential, commercial, and industrial). Second, we examine the natural risk factors' impact in a dynamic setting (when, as opposed to just whether, to convert), in addition to controlling for location-specific and socio-economic parcel attributes and macroeconomic indicators. Third, we do that by applying a new quantitative approach that matches the nature of our data and has the potential to be replicated across disciplines. Agricultural land conversion surveys and data collection are usually not done at equal time intervals, so standard duration analysis cannot be used. Instead, we utilize relatively recent interval censored duration estimation techniques. Fourth, within this approach, we are able to address another important concern in the economics literature, namely controlling for endogeneity and spatial interdependence by using the control function approach (Wooldridge, 2015) and a spatial autoregressive model that accommodates contagion externalities from spatial proximity (LeSage and Pace, 2010). We find that the parcels located in flood risk zones have a smaller hazard of conversion of agricultural land to developed land uses, which is contrary to conversion from agricultural to less developed uses. Economic and locational attributes are significant and have plausible signs and magnitudes consistent with previous work. Parcels' suitability for farming, as well as distances to amenities, decrease the conversion hazard. (1) ?Examine the impact of recent fluctuations in capital and commodity markets on the performance, management, and regulation of agricultural financial institutions Three papers to report here. In the first, we find that the Dodd-Frank Wall Street Reform and Consumer Protection Act that imposed additional costs to banks because it regulated the use of financial derivatives for hedging in (small) and specializing banks such as agricultural banks is negatively affecting their profitability and by extension the ability to serve more farmers. The negative impact is not easily observable if regulators look at the performance of the banking sector overall because specialist banks (like ag banks) are dominated by the vast number of non-specialist for whom the effect is not negative. The very new policy eliminated that threat is just in time for ag banks to potentially participate in funding the pending farm assets transition... The second and third papers here deals with properly estimating benefits from diversification of lending and savings mobilizations across countries and considering the size of the institution. Results show they both change the estimated costs savings due to diversification.
Publications
- Type:
Journal Articles
Status:
Published
Year Published:
2018
Citation:
Quaye F., Nadolnyak D., and V. Hartarska (2018) Climate Change Impacts on Farmland Values in the Southeast, Sustainability, 10 (10), 3426
Nadolnyak D., V Hartarska, B. Griffin, (2019) The Impact of Weather, Economic, and Demographic Factors on Beginning Farmers Exit, Sustainability,11(16):4280
Griffin B., V Hartarska, D. Nadolnyak, (2019) Retirement Age Farmers Exit and Disinvestment from Farming International Journal of Economics and Finance; Vol. 11, No. 12
Li, Sheng, D. Nadolnyak, and V. Hartarska, (2019) Agricultural Land Conversion: Impacts of Economic and Natural Risk Factors in a Coastal Area, Land Use Policy. 80(1): 380-390
Malikov E., V. Hartarska and R. Mersland (2019), Scope Economies in Microfinance: Evidence from Quantile Estimation on Panel Data, Finance Research Letters DOI: 10.1016/j.frl.2019.07.019
Khachatryan, K., V. Baghdasaryan, and V. Hartarska (2019) Is the Model Loans-Plus-Savings Better for Microfinance Institutions? A PSM Comparison, Review of Development Economics, 23 (3), 1309-1330 DOI: 10.1111/rode.12589
Malikov, E. and V. Hartarska, (2018) Endogenous Scope Economies in Microfinance, Journal of Banking and Finance, 93: 162-182. CoAg Outstanding Publication Award, 2018
Shen Xuan, and V. Hartarska (2018) Winners and Losers from Financial Derivatives Use by Community Banks Applied Economics,50(41):4402-4417
- Type:
Book Chapters
Status:
Accepted
Year Published:
2019
Citation:
Hartarska V. and D. Nadolnyak, (2019) Efficiency and Productivity of Microfinance Institutions in Research Agenda for Financial Inclusion and Microfinance by Labie, Szafarz, and Hudon, Edward Elgar Publishing
- Type:
Conference Papers and Presentations
Status:
Accepted
Year Published:
2019
Citation:
1. Cozarenco, Hartarska, and Szafarz, Too Many Cooks Spoil the Broth: The Conflicting Impact of Subsidies and Deposits on Cost-Efficiency in Microfinance Institutions, FMA International Annual Meeting, New Orleans, October 24-26, 2019.
2. Chen, R., Fang, D., and Hartarska, V. The Affordable Care Act: Does the ACA Mean Less Out-of-pocket Health Care Expenditure? , AAEA Annual Meeting, Atlanta, July 23-25, 2019
3. Hartarska V. To Diversify or Not to Diversify? (Dis)Economies of Diversification Across Target Clients and Markets in Microfinance ICORE Research Seminar Series, Montpellier Business School, Montpellier, France, June 13th, 2019.
4. Chen*, Rui, V. Hartarska, and D. Nadolnyak, Banking Crises and Microfinance Performance 9th International Conference of the Financial Engineering and Banking Society University of Economics, Prague, 30 May - 1 June 2019
5. Cozarenco, Hartarska, and Szafarz, Too Many Cooks Spoil the Broth: The Conflicting Impact of Subsidies and Deposits on Cost-Efficiency in Microfinance Institutions, 9th International Conference of the Financial Engineering and Banking Society University of Economics, Prague, 30 May - 1 June 2019
6. Chen*, Rui, V. Hartarska, and D. Nadolnyak, Banking Crises and Microfinance Performance 6th European Research Conference on Microfinance, Paris June 3-5th, 2019
7. Cozarenco, Hartarska, and Szafarz, Too Many Cooks Spoil the Broth: The Conflicting Impact of Subsidies and Deposits on Cost-Efficiency in Microfinance Institutions, 6th European Research Conference on Microfinance, Paris June 3-5th, 2019
8. Hartarska V, and C Parmeter, Do Women Make the (MFIs) World Go Round? 6th European Research Conference on Microfinance, Paris June 3-5th, 2019
9. Minglu Xu*, V. Hartarska, and Murey Jardine, Culture, Politics and Microfinance, 6th European Research Conference on Microfinance, Paris June 3-5th, 2019
10. Machata, C., and V. Hartarska Scope Economies form Serving Rural and Urban Areas, 6th European Research Conference on Microfinance, Paris June 3-5th, 2019
11. Obadasi S. and V. Hartarska, Climate Variability and Crime in the Southern States Southern Agricultural Economics Association (SAEA) Annual Meeting, Birmingham, Alabama, February 2-5, 2019
12. Cozarenco, Hartarska, and Szafarz Too Many Cooks Spoil the Broth: The Conflicting Impact of Subsidies and Deposits on Cost-Efficiency in Microfinance Institutions, ASSA Annual Meeting, Atlanta, GA January 3-5, 2019
Winner of Warren Samuels Prize for Outstanding Research, Society of Social Economics, ASSA Meeting, Atlanta, 2019
- Type:
Theses/Dissertations
Status:
Published
Year Published:
2019
Citation:
Odabasi, Suzan, (2019). Essays on Health, Crime, and Economic Development., (Co-advising with Duffy)
Initial Placement: Faculty position at a University in Turkey
Minglu Xu, 2018 Microfinance and Political Power, Department of Political Science, CLA. Co-directed with Murrey Jardine.
- Type:
Theses/Dissertations
Status:
Other
Year Published:
2019
Citation:
1. Jinfang Wang (current PhD student) Essays in Financial Economics, co-advising with Malikov
2. Thien Quy Lam (current PhD) Essays on Gender and Leadership
3. John Musah (current PhD student), Essays in Development Economics
4. Nisha Sehrawat (current PhD student), Essays on Financial Inclusion
|
Progress 10/01/17 to 09/30/18
Outputs
Target Audience:Academic community Alabama Cattlemen Associaton Members Changes/Problems:
Nothing Reported
What opportunities for training and professional development has the project provided?helped one doctoral student to complete her dissertation. How have the results been disseminated to communities of interest?results were published in high impact SSCI journals What do you plan to do during the next reporting period to accomplish the goals?Continue work on the Alabama Cattlement project, publish simple results in Alabama Cattlemen Magazine and more academic results in an academic journal. Complete several more work ion progress on rural banking .
Impacts
What was accomplished under these goals?
1. Examine the impact of recent fluctuations in capital and commodity markets on the performance, management, and regulation of agricultural financial institutions a/ work on microfinance insitutions shows that the benefits from offering both savings and loans as oposed to loans-only as estimated previously without accounting for self-selection into deposit collecting are too large. After self-selection correction, our results show that such benefits (scope economies) are found for only half of the samples. Previous work has significantly overestimated these cost-savings fromscope economies b/ work with FED reserve data for banks shows that proposed changes in the enforcement of the Dods-Frank Regulation may not have impact for the community banks as a whole but that banks specialising in various activities (specialists, such as agricultural banks) would have been hurt abstract This article provides empirical evidence on how profitability of small community banks was affected by derivatives use before and after the 2008 crisis. We use an endogenous switching regressions model to estimate the sensitivity of bank profitability to risks and control for the endogenous choice to use or not to use derivatives. We then compute counterfactual effects and show how profitability would have looked without derivatives use for banks that used derivatives and how it would have looked with derivatives for banks that did not use derivatives. The results show that derivatives helped reduce the sensitivity of profitability to credit risks and improved profitability for most specialists. However, for the largest number of banks which are non-user, non-specialists use ofderivates would have resulted in lower return on assets had they used derivatives post 2008. Therefore, our evidence suggests that implementation of the Volcker Rule, imposing high compliance costs on community banks and, thus, discouraging hedging, may have a negative impact on profits of specialists banks such as agricultural banks, but overall, a neutral effect on profits in the community banks industry as a whole. 2.Evaluate the management strategies, capital needs, and policy impacting the financial performance and long-term sustainability of firms in the food and agribusiness sector a/ Worked on describing management practices by Alabama Cattlement using ARMS data for 10 years. Tried to evaluate if there were scope economies, or economies of diversification of jointly producing cattle and hay or individually each of these b/ evaluated how farmland prices in the Southeast were affected by climate change. Found that 2.5-5 % drop of farmland prices can be expected due to climate change, varing by state with Florida having the largest losses, while Virginia would have significant gains. Abstract of published article In our work we used the Ricardian (hedonic) modeling approach to estimate the impact of potential climate change on agricultural farmland values in the Southeast US as a distinct agricultural region. Using the Agricultural Resource Management Survey and seasonal county-level climate and data, we find that regional farmland values increase with spring and fall temperatures and fall precipitation and decrease with winter and summer temperatures. Long-term climate change projections predict aggregate farmland value losses of 2.5-5% with differential state-level impacts, ranging from large losses in Florida to significant gains in Virginia. The results are consistent with recent research and can be helpful in policy design and forecasting land use change. c/ Food Policy journal article Re-evaluated the impact of seafood import regulation with a better method, trully capturing causality, not correlation. We find that requiring importes to comply with these resulation had no impact on th import of seafood from developed or developing countriesas as vious resreach have indicated. Thus, imposing similar regulations does not affect imports negatively while ensuring safety of seafood consumed in the US. Results are probably due to the fact that this non-tariff regulation change (HACCP) was announced in advance and all importing countries had sufficient time to adjust to expectations and requirements. We offer a difference-in-differences (DID) approach to assess the causal effect of Hazard Analysis by Critical Control Points (HACCP), a food safety regulation, on U.S. seafood imports with a gravity model and event-specific changes. With a panel database of U.S. seafood imports from 217 partner countries from 1991 to 2006, we employ a causal framework of analysis with a "treatment group" of U.S. seafood imports and two alternative control groups (U.S. food imports outside of HACCP rules and the European Union's 15 seafood imports). Further, we assess the effects of HACCP on the intensive and extensive margins of U.S. seafood imports. Contrary to previous work, we find that HAACP implementation has no effect on the flow of U.S. seafood imports, while the estimates of the other key variables are consistent across the models seen in previous work. Thus, we find evidence that non-tariff measures like HACCP had net null effect on imports, though the distribution of imports shifted.
Publications
- Type:
Journal Articles
Status:
Accepted
Year Published:
2018
Citation:
Quaye* F., Nadolnyak D., and V. Hartarska (2018) Climate Change Impacts on Farmland Values in the Southeast, Sustainability, 10 (10), 3426
Malikov, E. and V. Hartarska, (2018) Endogenous Scope Economies in Microfinance, Journal of Banking and Finance, 93: 162-182. CoAg, Outstanding Publication Award
Shen Xuan,* V Hartarska (2018) Winners and Losers from Financial Derivatives Use by Community Banks Applied Economics DOI: 10.1080/00036846.2018.1450484
Chen, R*, Hartarska V., and Wilson, (2018) The Causal Impact of HACCP on Seafood Imports in the U.S.: An Application of Difference-in-Differences within the Gravity Model Food Policy, 79: 166-178.
Shen Xuan,* V Hartarska (2018) Winners and Losers from Financial Derivatives Use by Community Banks Applied Economics DOI: 10.1080/00036846.2018.1450484
|
Progress 10/01/16 to 09/30/17
Outputs
Target Audience:Scientific community of agricultural economist, graduate students, as well as agricultural finance companies, cooperatives and banks Changes/Problems:
Nothing Reported
What opportunities for training and professional development has the project provided?Annual meeting of the group provides good opportunities for networking and exchanging ideas about the project. How have the results been disseminated to communities of interest?The results have been disseminated via publication, presentations and uploaded to several websites that collect and share latest scientific papers. What do you plan to do during the next reporting period to accomplish the goals?The planned work includes accessing ARMS data anew and finishing a few research projects needed
Impacts
What was accomplished under these goals?
(1)Several resrearch papers and published and presentations were made. The resreach found that financial insitutions (agricultural banks as well as Farm Credit System Insitutions) providing agricultural credit have contributed significantly to the economic growth in rural areas in the past 20 years. Another resreach project has found that both financial insitutions and thier clients are affected by climate and weather variability; these effects are measurable through changes in teh defaults rates of portfolios of financail isnititions as well as through changes in repayment rates by farm operators. Since we can measure these, banks and farmers can improveprovisioning for teh negative impacts of expected bad weather. (2) Reserach during the period identified teh factors that affected delinquency of agricultural loans in US based on ARMS dataand these icnlude not only prioce variations but also changes in weather, although these have very small magnitudes. Additional work published and presented shows that temperature variability affects non-linearly farmers' labor supply while precipitation has a less clear posisbly linear ipact. SPECIFIC FINDINGS OF PUBLIHSED WORK Climate Variability and Agricultural Loan Delinquency in the US Inter-annual climate variability in the Southeastern US that affects farm productivity and cash flows is largely dependent on the predictable El Nino Southern Oscillation (ENSO) phenomenon. In this paper, we estimate the association between the ENSO anomalies and the performance of agricultural loan portfolios of the Farm Credit System (FCS) institutions - the largest agricultural lender in this region. We find that, compared to neutral years, the share of delinquent loans in the FCS portfolio decreases by 1.5 to 2 percentage points following La Nina years and increases by 1.5 to 2 percentage points following El Nino years. These delinquencies are generally resolved because the impact on loan write-offs is much smaller, although statistically significant which suggests that the FCS institutions have well-diversified portfolios. The results also suggest that agricultural insurance markets are complementary to credit markets, that land values at loan origination have a positive impact on delinquencies, and that loan write-offs decrease with the lender?s size. The Effect of Weather on Agricultural Labor Supply Recent work shows that the weather affects U.S. labor productivity and supply (e.g., Deryugina and Hsiang, 2016). Although agricultural economists have identified factors that affect farmers' allocation of labor between on- and off- farm work, they have not related labor supply to weather. We estimate the impact of temperature and precipitation on individual on-farm labor supply using 10 years of the Agricultural Resource Management Survey data. We find that temperature and farm operator labor supply have a parabolic relationship with a minimum at 61oF. We compute that one 1oF increase in annual temperature translates into 8.5 million hours of reduced country-wide farm operator labor valued at about $188 million. Precipitation has a statistically significant but negligible marginal impact on the operator labor supply, consistent with the existing literature. Factors Affecting Farm Loan Delinquency in the Southeastern USA (2016) This study establishes which factors affect Southeast US farmers' ability to meet their loan repayment obligations within the stipulated loan term. The study uses a 10-year (2003-2012) pooled cross-sectional data from the USDA ARMS survey data (Phase III). A probit model is used to regress delinquency against various borrower-specific, loan-specific, lender-specific, macroeconomic and climatic variables for the first part. The results show that farmers with larger farms, those with insurance and higher net income, farmers with smaller debt to asset ratio, with single loans, and those that take majority of their loans from sources other than commercial banks are less likely to be delinquent. Climate variables such as temperature and precipitation also affect outcomes, but by minute magnitudes. Performance and Capital Structure of Microfinance Institutions in Eastern Europe and Central Asia Recent trends in microfinance, such as commercialization and deposit mobilization, highlight the importance of investigating the link between sources of funds and performance by microfinance institutions (MFIs). This article estimates the joint impact of seven categories of capital on three dimensions of performance, using a seemingly unrelated regressions (SUR) method and panel data from MFIs in Eastern Europe and Central Asia during the period 2005-2009. The results suggest that performance is influenced by the preferences of the stakeholders who provide the capital. Grants are associated with a better depth of outreach. Concessional loans are useful in improving outreach without affecting financial results. Loans from social investors are related to a lower return on assets but also an improvement in outreach to lowerincome clientele. The evidence regarding the influence of savings on financial performance is less clear, but the results are interpreted to mean that savings should be encouraged to serve the needs of the poor as well as to lower the cost of capital.
Publications
- Type:
Journal Articles
Status:
Accepted
Year Published:
2017
Citation:
1. Quaye,*F., D. Nadolnyak, and V. Hartarska 2017. Factors Affecting Farm Loan Delinquency in the Southeast, Research in Applied Economics, Vol 9(4): 75-92.
2. Lee, Jaehyuk,* D. Nadolnyak, and Hartarska,V. (2017) The Effect of Weather on Agricultural Labor Supply Spring Journal of Agribusiness. 35(1):15-27
3. Khachatryan, K., Hartarska, V., Grigoryan, A. (2017), Performance and Capital Structure of Microfinance Institutions in Eastern Europe and Central Asia, Journal of Eastern European Economics, 55(5):pp 395-419. doi:10.1080/00128775.2017.1336064
4. Nadolnyak, D., Hartarska, V., and X Shen (2017) 'Farm Credit System Credit and Farm Income and Output' Agricultural Finance Review,77(1):95-110.
http://dx.doi.org/10.1108/AFR-03-2016-0020
5. Nadolnyak, D., Hartarska and Shen (2016) Climate Variability & Agricultural Loan Delinquency in the US, International Journal of Economics and Finance 8 (9): 238-249.
- Type:
Conference Papers and Presentations
Status:
Published
Year Published:
2017
Citation:
1. Quaye, F.*, D. Nadolnyak, and V. Hartarska. 2017. Climate Change Impacts on Farmland Values in the Southeast United States, Selected poster at the 23 Annual Conference of the European Association of Environmental and Resource Economists. June 28 July 1, 2017
2. Roshini Brizmohun, Gender Wage Gap in Small Islands: The Case of Mauritius, SEA Meeting November, 2017, Tampa
3. Khachatryan, K., Hartarska, Vardan Baghdasaryan, Deposit-taking versus lending-only MFIs in ECA: a PSM comparison of outreach and sustainability, 5th European Research Conference on Microfinance, 12th - 14th June 2017, Portsmouth Business School, University of Portsmouth, UK
4. Khachatryan, K, V. Hartarska, A. Grigoryan Performance and Capital Structure of Microfinance Institutions in Eastern Europe and Central Asia European Financial Management Association, 2017 Annual Meeting, June 28-June 1 2017, Athens
5. Chen, Rui and Valentina Hartarska. The Impact of the 2008 Financial Crisis on Microfinance Institutions. Southern Agricultural Economics Association (SAEA) Annual Meeting, February 4-7, 2017. Mobile, Alabama
6. Bailey, R. Valentina Hartarska, Womens Property Rights and Outreach of Microfinance Institutions Targeting Women, . Southern Agricultural Economics Association (SAEA) Annual Meeting, February 4-7, 2017. Mobile, Alabama
5. Chen, Rui and Valentina Hartarska. The Impact of the 2008 Financial Crisis on Microfinance Institutions. Southern Agricultural Economics Association (SAEA) Annual Meeting, February 4-7, 2017. Mobile, Alabama
6. Bailey, R. Valentina Hartarska, Womens Property Rights and Outreach of Microfinance Institutions Targeting Women, . Southern Agricultural Economics Association (SAEA) Annual Meeting, February 4-7, 2017. Mobile, Alabama
- Type:
Journal Articles
Status:
Submitted
Year Published:
2018
Citation:
1. Sheng Li, D. Nadolnyak, V. Hartarska, Agricultural Land Conversion in Lee County, Florida: Impacts of Economic and Natural Risk Factors in a Coastal Area, JAAE resubmitted
2. Malikov E, and V Hartarska Endogenous Scope Economies in Microfinance Institutions, Journal of Banking and Finance, resubmitted (SSCI)
3. Rui Chen,* Valentina Hartarska, and Norbert L. Wilson, The Impact of HACCP Implementation, Food Policy(SSCI)
4. Khachatryan, K., Hartarska, Vardan Baghdasaryan, Deposit-taking versus lending-only MFIs in ECA: a PSM comparison of outreach and sustainability, World Development (SSCI)
5. Shen Xuan., V Hartarska Winners and Losers from Financial Derivatives Use by Community Banks Applied Economics (SSCI)
6. Griffin,* B., Nadolnyak D., and V. Hartarska, Retirement Age Farmers Exit and Disinvestment Canadian Journal of Agricultural Economics (SSCI)
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Progress 10/01/15 to 09/30/16
Outputs
Target Audience:agricultural economists, farmers Changes/Problems:
Nothing Reported
What opportunities for training and professional development has the project provided?The PD trained 1 PhD student on how to do research on related topics such as credit constraints of beginning farmers and ranchers and exit and entry as a consequence of access to loans. How have the results been disseminated to communities of interest?3 journal articles were published one more is under review. The PD has presented this work tothe annual to NC1177 annual meeting and has filed the results as part of the annual report. The PD is also contacting directly the FCS Council to disseminate to that constituencies the published results. What do you plan to do during the next reporting period to accomplish the goals?In the next period, there are several more results that need to be submitted for publications. All these papersare the resultfrom a collaboration with a PhD student on BFRs and farm entry and exit.
Impacts
What was accomplished under these goals?
During the period several issues were explored:In a paper published in Agricultural Finance Review, we showthat for the 1991-2010 period, agricultural credit in rural countries was associated with next period positive growth rates (per rural resident). In particular, the results show that an additional one-third increase of agricultural credit by would be associated with about 10 percent increase in the growth rate in rural countries. Another article in the same journal focused on the impact of the Farm Credit System and itsInstitutions, which in 2016 celebrated 100 years oflending to US farmers and ranchers. In this work, the impact of credit is related to farmers incomes and outputs and loansare separated by lender, and by loan type: real-estate backed or not. Overall, theresultssuggest a segmentation of lending, in that it is the real-estate credit by FCS that drives higher incomes and farm output while non-real estate loans increase output but not incomes.These two journal articles address goal (1). Further looking into lending by FCS institutions and specifically in the Southeasternregion, we evaluate if climate variability due to climate change affect FCS loan portfolios'performance. Weather extremes that affect farm productivity and cash flows are driven by the largely predictable El Nino Southern Oscillation (ENSO), particularly in the Southeast U.S. We find 1.5% to 2% lower delinquencies following La Nina and 1.5% to 3% higher defaults following El Nino years compared to Neutral years but minimal effect on lender losses. These results suggest that FCS are managing this risk relatively well. The results also suggest that ENSO predictions, available largely before planting and production loan are agreed on, can be used by farmers to manage their risks better and by lenders to develop better ways to manage their loan portfolios. The research meets directly goals (2) and (1). During the period, the PD supervised a PhD dissertation focused on the financial and management needsneed of Beginning farmers and ranchers and on farm entry and exit of two other types of farmers- - activefarmers and retirement-age farmers. This researchshouldbe published in thenext year or two.
Publications
- Type:
Journal Articles
Status:
Published
Year Published:
2016
Citation:
Nadolnyak, D., Hartarska and Shen (2016) Climate Variability & Agricultural Loan Delinquency in the US, International Journal of Economics and Finance 8 (9): 238-249.
- Type:
Journal Articles
Status:
Accepted
Year Published:
2017
Citation:
Nadolnyak, D., Hartarska, V., and X Shen (2017) 'Farm Credit System Credit and Farm Income and Output' Agricultural Finance Review,77(1).
- Type:
Journal Articles
Status:
Published
Year Published:
2015
Citation:
Hartarska, V.,D. Nadolnyak, and X Shen (2015) Agricultural Credit and Economic Growth in Rural Areas Agricultural Finance Review,75(3): 302 - 312
- Type:
Journal Articles
Status:
Submitted
Year Published:
2017
Citation:
Lee Jaehook Hartarska, Nadolnyak Labor supply and weather Journal of Agribusiness
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Progress 04/28/15 to 09/30/15
Outputs
Target Audience:Target audience was scientific and professional community. Changes/Problems:
Nothing Reported
What opportunities for training and professional development has the project provided?Thsi project helped one student to complete thier PhD dissertation.The student is currently a tenure faculty member at a College. How have the results been disseminated to communities of interest?academic publications What do you plan to do during the next reporting period to accomplish the goals?From the PhD dissertation that a student completed, we hope to publish at least 3 academic papers.
Impacts
What was accomplished under these goals?
Under these goals we studied whetehr availability of financial capital by FCS insitutions and commercial agricultural banks have contributed to per capital economic growth in rural counties and found a strong staitistically significant result.
Publications
- Type:
Journal Articles
Status:
Published
Year Published:
2015
Citation:
. Hartarska, V.,D. Nadolnyak, and X Shen (2015) Agricultural Credit and Economic Growth in Rural Areas Agricultural Finance Review,75(3): 302 - 312
- Type:
Book Chapters
Status:
Published
Year Published:
2015
Citation:
. Caudill SB, Gropper DM, Hartarska V, and Franklin G., (2015) , Economic Freedom and Microfinance Efficiency in Eastern Europe and Central Asia in Economic Behavior, Economic Freedom, and Entrepreneurship, edited by Richard J. Cebula, C. Hall, Franklin G. and James Payne., Edward Elgar Publishing, ISBN: 978 1 78471 822
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