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The Yield Dynamics of Perennial Crops: An Application to Sugarcane in Brazil

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  • Tregeagle, Daniel
  • Zilberman, David

Abstract

In 2011-2012 sugarcane yields in the Brazilian south-central region fell 15 percent lower than the average of the previous decade. This corresponded to the end of a decade of uninterrupted growth in sugarcane ethanol production in Brazil. Several explanations for this fall have been proposed including inclement weather, and a low field renewal rate due to the 2008-2009 financial crisis. We gather academic and journalistic evidence to demonstrate the possiblity of the crisis-renewal pathway. We develop a theoretical model of perennial crop yields as a function of the renewal rate. We theoretically derive the number of lags of the renewal rate that should be used in a reduced form specification of perennial crop yields. Using a balanced panel of yields and renewal rates in the South-Central region of Brazil from 2005-2013 we investigate the relevance of these pathways. We find that the yield effects from a renewal rate change in Brazil are consistent with the yield effects predicted by our model. We also find that both pathways are significant, but that the weather pathway is driven by temperature, not rainfall.

Suggested Citation

  • Tregeagle, Daniel & Zilberman, David, 2016. "The Yield Dynamics of Perennial Crops: An Application to Sugarcane in Brazil," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236046, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea16:236046
    DOI: 10.22004/ag.econ.236046
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    References listed on IDEAS

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    1. Crago, Christine L. & Khanna, Madhu & Barton, Jason & Giuliani, Eduardo & Amaral, Weber, 2010. "Competitiveness of Brazilian sugarcane ethanol compared to US corn ethanol," Energy Policy, Elsevier, vol. 38(11), pages 7404-7415, November.
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    3. Mitra, Tapan & Ray, Debraj & Roy, Rahul, 1991. "The economics of orchards: An exercise in point-input, flow-output capital theory," Journal of Economic Theory, Elsevier, vol. 53(1), pages 12-50, February.
    4. Rogério Sobreira & Luiz Fernando de Paula, 2010. "The 2008 financial crisis and banking behavior in Brazil: the role of the prudential regulation," Journal of Innovation Economics, De Boeck Université, vol. 0(2), pages 77-93.
    5. Seppo Salo & Olli Tahvonen, 2004. "Renewable Resources with Endogenous Age Classes and Allocation of Land," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(2), pages 513-530.
    6. Márcia Azanha Ferraz Dias de Moraes & David Zilberman, 2014. "Production of Ethanol from Sugarcane in Brazil," Natural Resource Management and Policy, Springer, edition 127, number 978-3-319-03140-8, March.
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