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The IUP Journal of Agricultural Economics

July '08
Focus

This issue presents six papers covering various issues relating to agriculture and its allied activities such as consumer preferences for integrated pest management produce

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Consumer Preferences in the United States for Integrated Pest Management Produce: An Econometric Analysis
A Complete Demand System of Food in Malaysia
Food Processing in India: Opportunities and Constraints
Rural Credit, Market Reform and Interventionist Institutions: A Micro study of West Bengal
Income Diversification in Rural Households: Measurement and Determinants
Efficiency of the Small Farm Swidden System: Cases from Orissa
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Consumer Preferences in the United States for Integrated Pest Management Produce: An Econometric Analysis

-- Ramu Govindasamy and Venkata S Puduri

Food safety is one of the top issues for consumers, especially with regard to pesticide usage. The Integrated Pest Management (IPM) has been receiving immense response from the consumers and producers due to its cost effectiveness and reduced risk from pesticide usage. It is expected to take a significant place and influence the agricultural reforms and environmental policy issues in the future. The paper documents the determinants of consumer demand for IPM produce. Determinants such as demographic variables and behavioral variables are used in a logit framework to examine the preference for IPM produce. A survey was conducted during 2004 at Rutgers University to collect data on the preference of New Jersey Residents for IPM produce. The results indicate, about 32% of the respondents would like to buy IPM produce. In general, small households of four or less are more willing to buy IPM produce than the larger households. This study identifies segments of population who are aware of the IPM produce and who are willing to buy IPM products.

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A Complete Demand System of Food in Malaysia

-- Tey Yeong Sheng, Mad Nasir Shamsudin, Zainalabidin Mohamed, Amin Mahir Abdullah and Alias Radam

There has been a notable success in the Malaysian economy, with its countrymen getting wealthier and food consumption undergoing transitional changes. This study intends to analyze the complete demand system of food in Malaysia by using the Household Expenditure Survey 2004/2005 via the Linear Approximate Almost Ideal Demand System (LA/AIDS) model. As expected, the estimated own-price elasticities for all foods follow the law of demand. The empirical results show that the demand for all foods in response to the income is relatively positive, with expenditure elasticities of meat (1.110), fruits (1.341), vegetables (1.341), sugar and beverage (1.039) and other foods (1.115) being elastic. This study shows that the Malaysian food consumption pattern is not only moving towards higher value food products (especially meats) but also functional foods (fruits and vegetables) as the per capita income of Malaysians increases.

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Food Processing in India: Opportunities and Constraints

-- Khushdeep Dharni and Sonika Sharma

For providing remunerative prices for the agricultural produce it is important that the production advantage available to India is transformed into the processing advantage. The Indian food industry has no dearth for market opportunities on account of thriving domestic consumption and new avenues of foreign demand. Food processing is an important link between agriculture and industry. Scale of operations along with a fragmented supply chain is the major impediment in the path of speedy growth of food processing in India. Concentration at the level of production, processing and retailing can provide the much needed impetus for the sector. The Government of India has identified food processing sector as the sunrise sector. A number of initiatives are being put in place for promoting primary as well as secondary processing. For an unhindered growth it becomes important to address the demand and supply side constraints of food processing in India. Agriculture will keep on playing a vital role in the Indian economy and food processing will go a long way for providing opportunities for sustainable and profitable agriculture in time to come.

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Rural Credit, Market Reform and Interventionist Institutions: A Micro study of West Bengal

- Sudipta Bhattacharyya

This paper analyzes some policy issues on rural credit against the backdrop of the International Monetary Fund (IMF)-World Bank directed market economic reform that the Indian agriculture witnessed during the 1990s. Two Committees appointed by the Government of India recommended for liberalization of the rural credit market. Following the recommendations, the share of priority sector and agriculture were slashed down. The main empirical part of this paper is based on a primary field survey conducted in two agro-ecological regions of West Bengal. The central hypothesis of the market reformers that there must be a negative association between default of credit and the ascending status of households, has not been approved by the survey findings. A big section of households are denied credit while the other sections of households voluntarily avoid banking habits. A greater proportion of the households are involved in the Integrated Rural Development Program (IRDP) loan that they think as a kind of dole, while comparatively a lower proportion of households are involved in crop loan. This is due to the dismal state of cooperative movement in West Bengal as well as at the all India level. Panchayat or local self-government is also partially responsible as they failed to inculcate banking habits among the poor people. This study reveals that poor people have themselves formed credit cooperatives, but this initiative is not integrated with any formal network.

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Income Diversification in Rural Households: Measurement and Determinants

-- P S Sujithkumar

This study attempts to measure the income diversification among different sections of rural households based on the data collected from three villages of K V Kuppam Block in Vellore district of Tamil Nadu. Income diversification was measured by Simpson index and the prominent factors that determine income diversification were identified by using the OLS regression. It is argued that there is a significant difference in the income diversification among different groups of rural households with respect to their major income source, total income, per capita income and landholdings. But, the difference in income diversification is not significant with respect to the community they belong. Assets such as cultivating land and cattle determine the income diversification. Household demographic characters like gender composition of the household, sex and age of the head of the household and the number of workers in the household influence income diversification.

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Efficiency of the Small Farm Swidden System: Cases from Orissa

- Amalendu Jyotishi

This study is based on field survey of households involved in Swidden in Orissa, India. Conventionally, swidden agricultural system has been interpreted as inefficient (economically), destructive (ecologically) and an inflexible static form (institutionally) of agriculture. The economic efficiency in swidden, in particular poses an analytical problem, largely due to the institutional structures and multiple crop situations involved in this system. Conventionally, efficiency of farm performance is understood through the ratio of output and inputs wherein productivity per unit of input is the undercurrent of efficiency. In this context, the paper attempts to clarify some of the concepts relating to economic efficiency in swidden agricultural system, measure technical efficiency and identify the key factors affecting efficiency of swidden agricultural system practiced in the region. Results suggest that swidden in particular is not an inefficient form of agriculture, particularly from energy use point of view.

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Automated Teller Machines (ATMs): The Changing Face of Banking in India

Bank Management
Information and communication technology has changed the way in which banks provide services to its customers. These days the customers are able to perform their routine banking transactions without even entering the bank premises. ATM is one such development in recent years, which provides remote banking services all over the world, including India. This paper analyzes the development of this self-service banking in India based on the secondary data.

The Information and Communication Technology (ICT) is playing a very important role in the progress and advancement in almost all walks of life. The deregulated environment has provided an opportunity to restructure the means and methods of delivery of services in many areas, including the banking sector. The ICT has been a focused issue in the past two decades in Indian banking. In fact, ICTs are enabling the banks to change the way in which they are functioning. Improved customer service has become very important for the very survival and growth of banking sector in the reforms era. The technological advancements, deregulations, and intense competition due to the entry of private sector and foreign banks have altered the face of banking from one of mere intermediation to one of provider of quick, efficient and customer-friendly services. With the introduction and adoption of ICT in the banking sector, the customers are fast moving away from the traditional branch banking system to the convenient and comfort of virtual banking. The most important virtual banking services are phone banking, mobile banking, Internet banking and ATM banking. These electronic channels have enhanced the delivery of banking services accurately and efficiently to the customers. The ATMs are an important part of a bank’s alternative channel to reach the customers, to showcase products and services and to create brand awareness. This is reflected in the increase in the number of ATMs all over the world. ATM is one of the most widely used remote banking services all over the world, including India. This paper analyzes the growth of ATMs of different bank groups in India.
International Scenario

If ATMs are largely available over geographically dispersed areas, the benefit from using an ATM will increase as customers will be able to access their bank accounts from any geographic location. This would imply that the value of an ATM network increases with the number of available ATM locations, and the value of a bank network to a customer will be determined in part by the final network size of the banking system. The statistical information on the growth of branches and ATM network in select countries.

Indian Scenario

The financial services industry in India has witnessed a phenomenal growth, diversification and specialization since the initiation of financial sector reforms in 1991. Greater customer orientation is the only way to retain customer loyalty and withstand competition in the liberalized world. In a market-driven strategy of development, customer preference is of paramount importance in any economy. Gone are the days when customers used to come to the doorsteps of banks. Now the banks are required to chase the customers; only those banks which are customercentric and extremely focused on the needs of their clients can succeed in their business today.

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