Summary: Using three-year household data on production and consumption from the Pakistan Punjab, this paper shows that household's livestock holding contributes to a reduction in income variability through the negative correlation of livestock income with crop income and through ex post decumulation of livestock assets contingent on a realized income in the crop sector. Further, an analysis of per-capita consumption expenditure shows that the full insurance model is not supported. These results suggest that the rises in the livestock share in agricultural value-added in Pakistan during the 1980s should have improved the welfare position of smaller farm households with substantial livestock holding through reduced income variability.
Kurosaki, Takashi. "Milk, Fodder, and the Green Revolution: The Case of Mixed Farming in the Pakistan Punjab." Pakistan Development Review. 35(4) Part II, Winter 1996: 537-548.
Kurosaki, Takashi. "Government Interventions, Market Integration, and Price Risk in Pakistan's Punjab." Pakistan Development Review. 35(2), Summer 1996F129-144.
Kurosaki, Takashi. "Risk and Insurance in a Household Economy: Role of Livestock in Mixed Farming in Pakistan." Developing Economies. 33(4), December 1995: 464-485.
Kurosaki, Takashi. Risk and Household Behavior in Pakistan's Agriculture (Tokyo: Institute of Developing Economies. I.D.E. Occasional Papers Series No. 34., 1998
Kurosaki, Takashi. "Risk, Household Behavior, and Poverty: A Review." Mimeo. July 1996.
Abstract: This paper analyzes household decisions in producing cereal crops, green fodder crops, and milk, for the case of mixed farming in the Pakistan Punjab. In the Punjab agriculture, increased household income and increased yields of cereal crops after the Green Revolution have resulted in the growing importance of milk in household economy. Using a sensitivity analysis based on a household model of crop choices under uncertainty, this paper emphasizes the constraint that fodder represents for further increases in foodgrain output. Results show that the welfare cost of production risk is significant, it is higher for land-poor households, and its significant part is attributable to green fodder price risk. The welfare and supply effects of more elastic fodder demand and increased fodder yields are investigated. These innovations in fodder technology are suggested to have a higher potential to improve household welfare and to induce a robust supply response of cereal crops with respect to their prices, than a crop insurance scheme to hedge against yield risk.
Abstract: This paper empirically examines the spatial and intertemporal price relations of grains in Pakistan's Punjab. The salient feature of the paper is that quantity variables such as market surplus and government release are incorporated in the price arbitrage model to quantify the effects of government interventions. Regression analysis using household production data shows that the farm-gate prices of wheat after harvest are mostly explained by the government support price while those of Basmati paddy have more unexplained variation. This difference could be due to a difference in the price support mechanism. Investigation on intertemporal price relations shows that wholesale wheat prices regularly increase at the rate of storage costs in the first half of a food year, and that the price rise is repressed by the government release in the second half only in a normal year.
Abstract: This paper proposes an empirical model of profit variability at the individual farm level and applies it to Pakistan's agriculture. Results show that adding idiosyncratic yield shocks and adjusting for input costs make the variability of net profits much larger than implied by the variability of average gross revenues---Pakistan's irrigated agriculture is associated with higher profit variability than semi-arid India. It is also demonstrated that the correlation between green fodder profit and milk profit at the farm level is substantially negative. This negative correlation implies an advantage, in terms of risk diversification, of combining fodder and milk production in one enterprise, which is commonly observed in the mixed farming system in Pakistan's Punjab.
Abstract: Subject to great vagaries of weather, millions of farmers grow crops and raise cattle and buffalo on land irrigated by the water of the Indus River. This millennial picture of rural Pakistan is transformed into a microeconomic analysis of farmers' behavior under risk in this book. Based on my fieldwork, theoretical modeling and empirical testing are applied to agricultural households in Punjab. How do households' characteristics affect their production choices and what is the relationship between their individual decisions and the incompleteness of the rural market structure? These issues, which have generated strong interest in the contemporary microeconomics of development, are the focus of this study.
When faced with substantial income uncertainties, the sample farmers were unable to share risk efficiently with the outside world and they therefore had to diversify risk through individual means such as crop choice and livestock management. As an empirical study of development economics, it demonstrates the effectiveness of modeling households in a theoretically consistent way. As an applied work on Pakistan's agriculture, it sheds new light on the positive role of livestock in enhancing the welfare of households, especially of smallholders. This is the first part of a comprehensive study of risk in Pakistan's agriculture and its incidence in the household economy. Its findings have significant implications for rural development policies in South Asia.
Abstract: This review paper attempts to derive implications to poverty issues from the existing literature on household behavior under risk, with special emphasis on empirical studies on South Asia. The expanding literature on consumption smoothing has given useful insights to the risk-poverty link. Further applications of dynamic models to asset accumulation processes under risk merits more research. Although distinguishing transient and chronic poverty is important, operationalizing their definitions are not straightforward. It is worthwhile utilizing as much information as possible from the existing panel data sets, especially the information on physical and human asset positions.