My dissertation chapters are:
1. The Effects of High Feed Costs and Increased Energy Consumption on Optimal Farm Decisions: A Dynamic Modelling Approach (Job Market Paper).
As food systems rapidly transform in developing countries, one manifestation is in changing dietary patterns, particularly increased animal protein consumption. In Africa, this increase in animal protein consumption has seen the rise of numerous poultry farms of different sizes. Despite the realities of high input costs in many countries, there is limited rigorous empirical evidence of the effects of such costs on the viability of poultry farms. No studies in Africa have explored these effects or how they vary with scale of operation. Consequently, with data from Nigeria, the largest country in Africa, this paper uses a discrete time, discrete state dynamic model to explore the heterogeneous profitability of commercial medium and large poultry enterprises facing rising input costs. To parametrize the model, an extensive cross-sectional dataset and a one-year weekly panel dataset of farm input and output prices are used. In the presence of high feed and energy costs, while the optimal decision for medium farms is largely to sell and exit the industry, it remains profitable for large firms to remain. This indicates that broiler farms need larger flock sizes to withstand negative input price shocks. These findings reveal the importance of accounting for farm size differences when exploring the effect of input cost shocks on livestock production in developing countries. They also reveal the importance of maintaining low and stable input prices for more inclusive growth in livestock industries in such contexts.
2. The Effect of Electricity Fluctuations on Firm Investment Decisions: Evidence from Nigeria (Dissertation Chapter).
To fully enjoy the benefits from the adoption of cold storage technologies, famers need stable and ample access to electricity. However, stable electricity remains a challenge across Sub-Saharan Africa (Alby, Dethier, and Straub 2012; Cole et al. 2018). Consequently, this paper studies the effect of energy supply fluctuations on large investment decisions and firm profitability. We study this within the context of commercialized poultry production in Nigeria, Africa’s most populous country and largest economy. We employ a novel discrete space, discrete time combined replacement and storage dynamic programming model to derive optimal decision rules. This is the first study (the authors are aware of) to combine these two models into one. The replacement portion of the model focuses on finding optimal decision rules regarding the options to feed, sell and restock broiler chickens, or to sell and exit the industry each period. The storage model expands the original choice set to include the option to store and maintain stocks of both frozen and live birds. When we consider the necessary investments for a farmer to store (in this case of poor and unstable electricity) which include generators and cold storage units, the model transcends to a real options problem
3. Persistent Poverty among Subpopulations in the United States: Poverty Trap or Conditional Convergence ? (Dissertation Chapter).