Policy Regimes and Performance of the Agricultural Sector in Latin America and the Caribbean During the Last Three Decades

In a review of the policy regimes and agricultural output performance in Latin America and the Caribbean (LAC) during the past three decades, the linear sequence of pre-reform, crisis and reform, and post-reform recovery is qualified, focusing on a sample of nine LAC countries. The sector did quite well during the ISI policy regime, criticized for its price discrimination, and does not show the assumed characteristics of the 'lost decade' during most of the 1980s, as even agricultural exports (in constant terms) remained important, only to suffer from drops in international prices. Residually treated in the macro-oriented reforms, it has never regained the growth rates under the SAP policy regime, while it was expected that it would benefit more than others. These unorthodox conclusions are founded on a detailed investigation into agricultural output and export performance, correlating it with a reform index (on a country basis).     

A QUARTERLY MODEL OF THE AUSTRALIAN AGRICULTURAL SECTOR*

Several farm sector econometric models are reviewed initially and the aggregation problem highlighted. A thirty-equation model of the Australian agricultural sector is specified in which farm output, stocks and exports and the domestic demand for farm products are endogenous, as well as farm, export and retail prices. Disaggregation is into food and non-food components of unprocessed output, and the processing of food is traced through to final demand. The model is estimated by a modified 2SLS procedure using quarterly data covering the period 1960-1970.     

The pass-through of exchange rate changes to the prices of Australian exports of dairy and livestock products

Agricultural exports are usually assumed to operate in perfectly competitive international markets, but many are subject to non-tariff barriers to trade that can affect the degree of pass-through of exchange rate changes to foreign currency prices. The present study uses multivariate cointegration techniques to examine the effects of exchange rate changes on the prices of Australian exports of milk products, cheese, beef, sheepmeat, and hides and skins. The results indicate that Australian dairy exports operate in competitive markets in which pass-through is complete, but there is no stable long-run relationship between exchange rates and prices for any of the other livestock products.     

THE EFFECTS OF OIL AND MIGRATION ON BANANAS,COCOA, COFFEE AND COTTON EXPORTS IN LATIN AMERICA

Supply functions are estimated for the principal agricultural exports of Ecuador, Mexico and Venezuela. The domestic price effect is divided into a world price and an exchange-rate (Dutch-disease) effect. The exchange-rate affects both income and foreign exchange payable cost items. Labour costs are introduced through the Todaro migration model. Regression results improve on previous work and suggest that oil-export-induced national currency revaluations provoked very substantial reductions in agricultural exports during the 1960s and 1970s. Both world prices and rural-urban migration seem to have effects comparatively very small, where these effects are present at all.     

Fighting global food price rises in the developing world: the response of China and its effect on domestic and world markets

This article addresses how China is being affected by and is responding to the world food crisis. So far, Chinese officials have responded to higher world prices by drawing down stocks and limiting exports of major grains. These policy instruments were not available for soybeans, so domestic prices of soy and other oilseeds have risen with international prices. Using a global CGE model, we show that the initial world price rise was largely due to higher world oil prices and demand for biofuels as opposed to other factors, especially in maize and soybeans. China's response to this shock has kept domestic grain prices low relative to world grain markets and to domestic soybean prices. As grain stocks are depleted, however, demand growth will push domestic prices back into alignment. Anticipating this pressure on consumers and accelerating supply response through public investment will facilitate adjustment.     

Canadian Exports of Livestock and Meat to the United States

Canadian exports of beef and live cattle to the United States have increased significantly since the late 1980s. Hog and pork exports have increased since the mid-1990s. Major factors affecting exports of beef, pork, cattle and hogs from Canada to the United States include the exchange rate, increased Canadian production, Canada-U.S. price differentials and trade liberalization under the Canada-United States Free Trade Agreement of 1989. Increased Canadian exports have resulted in small but significant reductions in U.S. domestic prices of beef, pork and hogs.     

The trade distorting effects of export refunds: The case of beef exports to Africa

The usual sale of European agricultural products to Africa using export refunds has been heavily discussed in recent decades. At the centre of the discussion are the consequences on the agricultural producers in Western and Southern Africa. There are two different points of view: On the one hand, the European Union's (EU) export policy reduces the prices on these markets and relieves high burdens on local producers; on the other hand are claims that refunds do not influence local prices significantly. Hence, the Common Agricultural Policy (CAP) has no effect on markets of third countries, besides depressing world market prices. This paper focuses on the effects of EU's export subsidies for beef exports on its market share in several developing countries. Twenty-seven African countries were analysed using a fixed-effects model between 1988 and 2000. The results clearly show a highly significant positive impact of the export refund rate on the market and the import share. With its export policy, the EU raises its market position and edges out other competitors.     

The Current State of the Russian Agricultural Sector

Russia's agriculture produces around 3.7 per cent of the country's GDP, employs 9.2 per cent of the national workforce and contributes around 6 per cent of the country's exports. The sector has shown remarkable resilience in the face of wider economic turbulence. Self‐sufficiency rates for the main agricultural commodities are relatively high. Agricultural exports have grown very significantly since 2000 especially for wheat and meslin (wheat and rye mixture). Meat production has been growing steadily, particularly in the poultry and pork sectors. Whilst the agri‐food sector has great potential to play an even more prominent role in Russia's economy, it suffers from relatively low productivity and an outdated technological base. The main drive for efficiency has come mainly from the relatively large‐scale agricultural firms, who generated more than half of the total value of agricultural output in 2016. Foreign policy instability, including economic sanctions, the devaluation of the national currency and declining economic growth have weakened the sector and caused an increase in the prices of imported goods and equipment. At the same time Russian products have replaced high value‐added imports and Russia's agricultural producers are expanding into new markets.     

Linking of U.S. monetary policy and exchange rates to world soybean markets

The linkage between macroeconomic policies and agricultural commodity trade has become an important research issue of agricultural economists. This paper investigates the macroeconomic linkage of soybean trade competition between the exporting countries of the United States, Brazil, and Argentina in the EC-12 and Japan import markets. It is argued that U.S. monetary growth may have important impacts on the competitive position of U.S. soybean exports through exchange rates. Two relationships are investigated: (a) the effects of U.S. monetary growth on the agricultural trade weighted exchange rates, and (b) the responsiveness of agricultural commodity prices and U.S. exports to exchange rate movements. Results indicate that a weak dollar increases imports of soybeans and soymeal significantly which serves to increase the equilibrium world price and increase both U.S. and Brazil/Argentina exports in the long run. However, during periods of more expansionary U.S. monetary policy there is little evidence of significant increases in market share position for U.S. soybeans and soymeal in world markets.     

Biases in Calculating Dumping Margins: The Case of Cyclical Products

A dumping investigation involves comparing export prices with a "normal value" loosely defined as the price in the exporter's domestic market observed in the course of normal trade. However, domestic sales with prices below production costs are excluded from the computation of a normal value. The paper illustrates how price cycles affect the magnitude of estimated dumping margins. The empirical analysis focuses on Canadian hog exports to the United States and U.S. potato exports to Canada. The estimated period and amplitude of each price cycles result in average dumping margins for Canadian hogs and U.S. potato exports of 11.5% and 5.9%, respectively. Biases in dumping margins depend on the nature of the cycle, the period of investigation, and the average production cost estimate.     

Price Asymmetry in the International Wheat Market

Most wheat exports are accounted for by a limited number of countries with different policy regimes and specializing, for the most part, in particular classes of wheat. Under these circumstances, there is likely to be considerable interaction among the major exporting countries in the determination of wheat prices. In this paper, price linkages between the U.S. and other exporting countries (Canada, the European Union, Argentina and Australia) in the world wheat market are investigated. After determining that the direction of causality is from U. S. prices to the prices of other exporting countries, the nature of the price linkages is studied. The results suggest that the major exporting countries respond asymmetrically to U.S. price changes. The degree of asymmetry differs from one exporting country to another, Argentina and the European Union show greater response to falling prices than to rising prices, while the opposite is true for Canada and Australia.     

China and Taiwan access to the World Trade Organization: implications for U.S. agriculture and trade

This paper investigates the impact of China's and Taiwan's accession to the World Trade Organization (WTO) on U.S. and world agricultural trade by means of a 12-region, 14-sector Computable General Equilibrium model for world trade and production. The simulation results show that integrating China and Taiwan into the global trading system could induce more competition on labor-intensive Products and reduce their prices. It could drive up the demand for capital and skill-intensive manufactured goods, thus further improving industrial countries' terms of trade. The expansion of labor-intensive sectors in China could also induce contraction in agricultural exports from China and increase its net agricultural imports by as much as US$9 billion annually, causing food and agricultural exports from other regions to increase. Total U.S. food and agricultural exports could increase by about US$2.4 billion annually, with the non-grain crop sectors gaining the most. The biggest winner from China's WTO accession is China itself. WTO membership could bring a net welfare gain of about US$30 billion a year for China, a substantial benefit compared with the gains for the USA (US$8.5 billion).     

Food crops, exports, and the short-run policy response of agriculture in Africa

The response of agriculture to changes in relative prices is an important factor in the success of structural adjustment programs in Africa. In this paper I estimate supply functions for total agricultural output, food crops and export crops in 14 African countries for the years 1975 to 1990. Food and export crops are substitutes in production in the short run. Total agricultural output responds negatively to increases in export prices and positively to increases in food prices. A plausible explanation is that as farmers shift resources to export crop production, food supply falls in the short run, while the increase in export supply may take several years to materialize. The exchange rate is significant in explaining both food and export crop production and aggregate agricultural supply, suggesting that the exchange rate is acting as a proxy for excluded macroeconomic variables or that changes in the exchange rate are not passed immediately through to prices.     

Effects of Bovine Spongiform Encephalopathy Outbreaks on U.S. Cattle and Beef Prices

U.S. trade of beef and live cattle declined substantially after the discoveries of bovine spongiform encephalopathy (BSE) in Canada and the United States in 2003. In this study, an econometric model is developed to estimate the effects of lifting trade restrictions on U.S. cattle and beef prices. Results show that increases in imports of Canadian cattle and beef would lower prices of slaughter steers, feeder steers, and retail beef, but these negative impacts would be more than negated by the positive effects on prices that would result if beef exports return to near pre-BSE levels.     

Importing High Food Prices by Exporting: Rice Prices in Lao PDR

Lao PDR has extensive export controls on its staple food, glutinous rice, which keep domestic prices low relative to international prices. Using price, harvest, and export data this paper analyses how glutinous rice prices in Laos PDR are related to those in its trading partners, Thailand and Vietnam. We find that rice prices in Lao PDR are more likely to rise following a good harvest year than a bad or a normal year. This is consistent with export controls being relaxed after good harvests, leading to an increase in exports early in the season and rising prices later as stocks are depleted. There is thus a case for removal of trade restrictions since they give rise to price spikes while keeping the long‐term price of glutinous rice low, and thereby hinder increases in income from agriculture. However, since high rice prices are likely to affect the poor negatively in the short to medium term, a combination of an export tax and cash transfers is recommended during the transition period. Although this is a case study of Lao PDR, the findings may equally apply to other developing countries that export their staple food.     

Bioelectricity in Malaysia: economic feasibility,environmental and deforestation implications

We investigate the economic feasibility of bioelectricity production from biomass in Malaysia and its impact on greenhouse gas (GHG) emissions and storage, agricultural prices, agricultural employment and deforestation. For this purpose, we develop a partial equilibrium model that projects agricultural prices, production, imports, exports, domestic consumption and land use in 5‐year increments between 2015 and 2065. Our results show that by 2030 biomass‐generated electricity can supply 36.5 per cent of the electricity generated in Malaysia, 16 times more than the 2016 electricity supply from biomass. Increased bioelectricity production from biomass will significantly reduce GHG emissions and will help Malaysia meet its commitment in the Paris Agreement to mitigate GHG emission by 45 per cent before 2030. Our modelling shows that biomass‐generated electricity creates a derived demand for waste biomass that expands the area of oil palm plantations. The expansion lowers agricultural prices, boosts agricultural employment and leads to some deforestation as landowners clear rainforest to plant oil palm trees. Nonetheless, the deforestation does not increase GHG emissions since GHG gains from bioelectricity significantly exceed GHG losses from deforestation.     

Marketing,cooperatives and price heterogeneity: evidence from the CIS dairy sector

Drawing on survey data, this article identifies the determinants of variations in farm gate milk prices for three CIS countries (Armenia, Moldova, and Ukraine). We apply a multi‐level modeling approach, specifically a bootstrapped mixed‐effects linear regression model. The analysis suggests three main strategies to improve the price received by farmers for their output: consolidation, competition for output, and stable supply chain relationships. In Armenia and Ukraine selling through a marketing cooperative has a significant, positive, albeit modest, effect on farm gate milk prices. In all three countries studied, the size of dairy operations, trust, and contracting also affect positively the prices received by farmers.     

THE EFFECTS OF FLEXIBLE EXCHANGE RATES ON AUSTRALIAN WOOL PRICES*

The implication of price stabilisation under a volatile exchange rate is an increasingly volatile price denominated in a foreign currency. Time series analysis is used to model the relationship between exports, prices and AWC stocks. This model is used to assess the distribution of the impact of exchange rate shocks on prices denominated in local and foreign currencies. It is found that the AWC has significantly reduced the impact of exchange rate shocks on domestic prices.     

Yield Variability and Harvest Failures in Russia,Ukraine and Kazakhstan and Their Possible Impact on Food Security in the Middle East and North Africa

Exports from Russia, Ukraine and Kazakhstan (RUK) help to improve global wheat availability and, hence, global food security. During the past 15 years, however, RUK wheat exports have shown high variability, mainly because they have been repeatedly diminished by severe harvest failures. We present an outlook for RUK wheat production and exports up to 2027, taking into account possible yield variability and harvest failures, and focusing on the impact on food security in the Middle East and North Africa (MENA), the world’s major wheat importing region. For the analysis we use the stochastic version of the Aglink-Cosimo model. Simulation results show that wheat yields in RUK are a major source of uncertainty for international wheat markets. The projected substantial increases in world market prices due to limited RUK wheat exports threaten food security in MENA and highlight the need for both stabilising RUK yields and novel complementary food security approaches to decrease MENA’s vulnerability to disruptions in agricultural world markets.     

Impacts of WTO restrictions on subsidized EU sugar exports

The study evaluates the impact of World Trade Organization (WTO) restrictions on the European Union (EU) sugar sector and the world sugar market. A small reduction in production quotas would be sufficient to satisfy the export subsidy limitations of the Uruguay Round agreement. Complete elimination of export subsidies by 2005 would require either a 10% reduction in production quotas or the combination of an 8% reduction in quotas and an 11% reduction in intervention prices. Higher world prices resulting from reduced EU exports would result in increased production of unsubsidized C‐sugar, with different impacts across EU member countries explained by differences in institutional pricing arrangements and marginal production costs.