Decompositions of corn price effects: implications for feed grain demand and livestock supply

This article examines how corn prices affect the demand for feed grains and the supply of livestock outputs. The differential approach to the theory of the multiproduct firm is employed to examine ex ante decisions about feed grain demand and livestock supply. The estimation results suggest that livestock producers have little flexibility in adjusting the demand for corn in response to an increase in corn prices. The substitutable relationship between corn and distillers’ grains contributes to alleviating pressures on feed costs in response to high corn prices. In addition, the estimation results highlight that the composition of livestock supply can be altered by changes in livestock prices. On the basis of the estimated elasticities, the decompositions of profit‐maximizing input demand are conducted to examine the effects of changes in corn prices on feed grain demand and livestock supply. The decomposition results reveal that an increase in corn prices reduces corn demand but raises the demand for distillers’ grains mainly due to the substitution effects of corn price changes. The decomposition results also show that an increase in the price of corn reduces cattle supply but raises the supply of chicken and pork due to the output relationships in supply.     

牧草与粮食安全

随着我国畜牧业的快速发展,饲料用粮对我国粮食安全的影响越来越大。我国牧草资源丰富,在发展节粮型畜牧业中发挥着重要作用,在我国饲料粮供应有较大缺口的情况下,加大优质牧草的生产和利用力度,增加优质牧草的供应总量,提高其在家畜日粮中的比例,补充饲料粮缺口或替代部分饲料粮,是减轻饲料粮对粮食安全压力的有效途径之一。     

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.     

Implications of biofuels mandates for the global livestock industry: a computable general equilibrium analysis

The rapid growth of biofuels production, particularly in the United States, the EU, and Brazil, has had important implications for the global livestock industry—both by raising the cost of feed grains and oilseeds and by forcing onto the market a large supply of biofuel by‐products, most of which end up in livestock feed rations. This article investigates the impact of an expanding biofuels industry on the mix and location of global livestock production. Surprisingly, we find that growth in the U.S. and EU biofuels industries results in larger absolute reductions in livestock production overseas than in those regions, due to the international transmission of grains prices which is offset locally by the lower cost of by‐products. We also find that nonruminant production is cut more than ruminant livestock, because it is less able to use biofuel by‐products in its feed rations. Implementing biofuel mandates increases cropland area, a large portion of which is estimated to come from reduced grazing lands. The biofuel producing regions are expected to reduce their coarse grains exports and increase imports of oilseeds and vegetable oils, while they increase their exports of processed feed materials. In sum, biofuel mandates have important consequences for livestock as well as crops, with net effects influenced by the important role of by‐products in substituting for feedstuffs.     

Productivity growth, catching-up and uncertainty in China''s meat trade

The potential role of China as a major importer of agricultural products, and the likely impact on world markets has been a topic of considerable debate over the past decade. In this paper, we focus specifically on the livestock sector and develop a detailed analysis of productivity growth in China’s pig and poultry production along with projections of China’s likely meat trade in the year 2010. We use a general equilibrium model which permits us to explore the sensitivity of our projections to macro-economic uncertainty as well as uncertainty in livestock productivity growth rates. Our analysis shows that China’s net trade position is very sensitive to both of these factors. With high livestock productivity growth and a slow-down in the rest of the economy, China could be a substantial competitor in export markets by 2010. On the other hand, slow productivity growth in livestock production, coupled with a rapidly growing macro-economy could transform China into a major market for future meat exports.     

Why projections on China’s future food supply and demand differ

This article analyses the macroeconomic assumptions, demand and supply parameters, and structures of the models used in projecting China's future food supply, demand and trade. Projections vary greatly, from China being self-sufficient in grain to being a net importer of 369 million metric tons of grain in 2030. The differences stem mainly from the approaches chosen to model China's grain production and, in particular, the combined effects of land decline and yield growth. The article also points out improvements needed in future work on modelling China's grain economy, which include accounting for the links between agriculture and other sectors, technical change in the livestock industry and infrastructure constraints on grain imports.     

Productivity growth and convergence in crop, ruminant, and nonruminant production: measurement and forecasts

Projections of future productivity growth rates in agriculture are an essential input for a great variety of tasks, ranging from development of an outlook for global commodity markets to the analysis of interactions between land use, deforestation, and ecological diversity. Yet solid projections for these variables have proven elusive—particularly on a global basis. This is due, in no small part, to the difficulty of measuring historical total factor productivity growth. Consequently, most productivity projections are based on partial factor productivity measures that can be quite misleading. The purpose of this work is to provide worldwide forecasts of agricultural productivity growth till the year 2040 based on the latest time series evidence on total factor productivity growth for crops, ruminants, and nonruminant livestock. The results suggest that most regions in the sample are likely to experience larger productivity gains in livestock than in crops. Within livestock, the nonruminant sector is expected to continue to be more dynamic than the ruminant sector. Given the rapid rates of productivity growth observed recently, nonruminant and crop productivity in developing countries may be converging to the productivity levels of developed countries. For ruminants, the results show that productivity levels in developing countries are likely to be diverging from those in developed countries.     

The future of food demand: understanding differences in global economic models

Understanding the capacity of agricultural systems to feed the world population under climate change requires projecting future food demand. This article reviews demand modeling approaches from 10 global economic models participating in the Agricultural Model Intercomparison and Improvement Project (AgMIP). We compare food demand projections in 2050 for various regions and agricultural products under harmonized scenarios of socioeconomic development, climate change, and bioenergy expansion. In the reference scenario (SSP2), food demand increases by 59–98% between 2005 and 2050, slightly higher than the most recent FAO projection of 54% from 2005/2007. The range of results is large, in particular for animal calories (between 61% and 144%), caused by differences in demand systems specifications, and in income and price elasticities. The results are more sensitive to socioeconomic assumptions than to climate change or bioenergy scenarios. When considering a world with higher population and lower economic growth (SSP3), consumption per capita drops on average by 9% for crops and 18% for livestock. The maximum effect of climate change on calorie availability is ?6% at the global level, and the effect of biofuel production on calorie availability is even smaller.     

Competition for land in the global bioeconomy

The global land use implications of biofuel expansion have received considerable attention in the literature over the past decade. Model‐based estimates of the emissions from cropland expansion have been used to assess the environmental impacts of biofuel policies. And integrated assessment models have estimated the potential for biofuels to contribute to greenhouse gas (GHG) abatement over the coming century. All of these studies feature, explicitly or implicitly, competition between biofuel feed stocks and other land uses. However, the economic mechanisms governing this competition, as well as the contribution of biofuels to global land use change, have not received the close scrutiny that they deserve. The purpose of this article is to offer a deeper look at these factors. We begin with a comparative static analysis which assesses the impact of exogenously specified forecasts of biofuel expansion over the period: 2006–2035. Global land use change is decomposed according to the three key margins of economic response: extensive supply, intensive supply, and demand. Under the International Energy Agency's “New Policies” scenario, biofuels account for nearly one‐fifth of global land use change over the 2006–2035 period. The article also offers a comparative dynamic analysis which determines the optimal path for first and second generation biofuels over the course of the entire 21st century. In the absence of GHG regulation, the welfare‐maximizing path for global land use, in the face of 3% annual growth in oil prices, allocates 225 Mha to biofuel feed stocks by 2100, with the associated biofuels accounting for about 30% of global liquid fuel consumption. This area expansion is somewhat diminished by expected climate change impacts on agriculture, while it is significantly increased by an aggressive GHG emissions target and by advances in conversion efficiency of second generation biofuels.     

On the resurgent population and food debate

Since Malthus wrote his famous Essay on Population , the world has witnessed great improvements in numerous measures of well–being — life expectancy, infant mortality, incidence of famines and plagues, per capita food consumption as well as real per capita incomes. These improvements have come about during rapid population growth in both industrial and developing countries. Food demand and supply projections suggest that growth of supply will fully meet growth of consumption while grain prices continue to decline. While China may increase grain imports early next century, Central and Eastern Europe is likely to emerge as a major grain exporter and thus help to meet the increase in China's imports.     

The growing importance of the former USSR countries in world agricultural markets

The major countries of the former Soviet Union—specifically Russia, Ukraine, and Kazakhstan—are becoming increasingly important in world agricultural markets. The two main developments are that this region has become a large grain exporter, especially of wheat and barley, and Russia a big agricultural importer, especially of meat. These trends should continue for the next decade. However, policies to expand the livestock sector could mitigate these developments, as increased domestic meat production would reduce both meat imports and surplus feed grain for export. Also, further growth in the region's grain exports will require improvement in the infrastructure for storing and transporting grain.     

对近期与中长期中国粮食安全的再认识

粮食安全始终是国家经济、社会稳定与发展的基础,突如其来的新冠疫情在影响中国与全球经济发展的同时,也引起社会各界对粮食安全问题的广泛关注。本文分析了中国粮食安全保障现况、近期各界关注粮食安全的主要问题和未来面临的挑战,并预测中长期主要粮食供需变动趋势。分析表明,近期和中长期中国口粮绝对安全,未来饲料粮(玉米和大豆等)进口将逐渐增长以保障国内畜产品的供给安全;而笼统的粮食安全概念往往误导社会各界和政府。口粮安全、饲料或畜产品安全是中国粮食安全已至食物安全的关键问题。最后,本文提出保障国家粮食安全的相关政策建议。     

On the Use of Price Ratio in Aggregate Supply Response: Some Evidence from the Poultry Industry

The specification of supply/demand relationships has received considerable attention in agricultural economics (Heien 1977). Economic theory has helped provide a basis for the specification of such relationships, one of its contributions being the proposition that prices should be interpreted only in relative terms. This has had a profound influence on model building in agricultural economics, leading a number of researchers to avoid the use of absolute prices in economic analysis. For this reason, numerous market models of the agricultural economy use price ratios as explanatory variables (e.g., Chen; Chen et al.; Heien, 1976; Gerra; Kulshreshtha and Wilson; Rahn; Talpaz; Morzuck et al.; Houck and Gallagher; Wilson et al.); these examples suggest that the use of such ratios is fairly widespread in econometric modeling of the crop and livestock sectors. One of the best examples of price ratios is the "feed cost to price" ratio commonly used in the analysis of livestock supply response. Indeed, since feed cost constitutes a major part of the total production cost in livestock activities, the "feed cost to price" ratio is often considered a proxy for profitability. For this reason, data on such ratios are regularly published for various livestock activities (e.g., USD A). Also, "feed cost to price" ratios are often employed in the specification of models of livestock supply response, (e.g., Chen; Chen et al.; Heien 1976; Gerra; Kulshreshtha and Wilson; Rahn; Talpaz). However, not all models of aggregate supply response follow this approach. For example, Freebairn and Rausser, and Arzac and Wilkinson, use prices as separate variables rather than in ratio forms in their models. In particular, they do not employ price ratios in their livestock and crop supply equations. The existence of these different approaches raises questions about the appropriateness of the use of price ratios in the modeling of aggregate supply.     

Forecast performance of WASDE price projections for U.S. corn

We conduct a comprehensive evaluation of the season‐average price projections for U.S. corn as published by the U.S. Department of Agriculture's World Agricultural Supply and Demand Estimates (WASDE), an important issue given reduced resources and increased program scrutiny within the Federal Government. This study is the first in the literature to evaluate the WASDE corn projections relative to futures adjusted forecasts throughout the forecasting cycle using a lengthy evaluation period (1980/81–2012/13). We find that WASDE projections provide lower RMSEs relative to futures adjusted forecasts for 9 of the 16 forecast periods, 4 of which are statistically different. Encompassing tests show that WASDE projections often provide incremental information not present in the futures adjusted forecasts. Composite forecasts based on futures adjusted forecasts and WASDE projections reduced the RMSEs over all forecast periods by an average 12–16%. Favorable average trading profits may be generated for some forecast months using WASDE projections. Overall, our results suggest that WASDE projections of the U.S. corn season‐average price provide useful information to the market and could enhance the efficiency of the agricultural sector.     

Climate change and Australia's comparative advantage in broadacre agriculture1

Australia has long been a major exporter of the products of broadacre agriculture, a production system well suited to the economic and climatic conditions of the country. Presumably, it holds a comparative advantage in these products, among which grain crops and grazing livestock predominate. However, the future plausibility of this proposition is sensitive to the projected impacts of climate change. This article develops a framework to quantify the future patterns of comparative advantage in broadacre agriculture, given the projections of several global climate models. We find empirical support for the conventional wisdom, and note substantial resilience and robustness in Australia's comparative advantage under a number of scenarios.     

One Man's Meat … 2050? Ruminations on Future Meat Demand in the Context of Global Warming

This Address considers a range of issues relating to the contribution of meat consumption and livestock production to global warming, given the need highlighted by the Committee on Climate Change (CCC) to reduce global GHG emissions by over 50% by 2050. The IPCC Climate Change 2014 report recognised that demand oriented measures may also contribute to GHG mitigation. The paper reviews a number of studies which examine demand‐led mitigation potentials, and concludes that such estimates ignore the market effects of changes in meat consumption habits or demand oriented policies. A simple partial equilibrium model of beef, poultry, pig and ovine meats is developed for the major regions of the world to explore the impact of a range of scenarios which might reduce meat consumption and GHG emissions. These include emissions taxation, long‐term trends in reduction of red meat consumption in developed economy regions, and supply side improvements in livestock emissions intensities. The paper discusses problems associated with many published demand elasticities suitable for incorporation into a market model, problems of selection from widely varying published estimates and their appropriateness for longer‐run projections. The dearth of published supply elasticity estimates is also highlighted. The modelling concludes that economic and population growth to 2050 without any mitigation measures will lead to a 21% increase in per capita meat consumption and a 63% increase in total consumption and GHG emissions by 2050. However, the mitigation projections from the scenarios explored only generate a 14% reduction in cumulative emissions from the baseline 2050 projections, insufficient to meet the CCC target.     

新一轮国际粮食价格上涨：原因及对中国市场的影响

[目的]随着中国粮食进口不断增加,国内外市场联系越来越紧密。2020年下半年以来,国际市场粮食价格快速上涨,对国内粮食市场产生一定影响,分析国际市场价格上涨的原因和影响对确保国内粮食供应稳定、保障国家粮食安全具有重要意义。[方法]文章分析了2019年以来小麦、大米、玉米、大豆4种粮食产品的国内外价格走势,从供需状况、贸易政策、气候变化等因素分析国际市场价格波动的原因,并探讨了国际价格对国内价格的影响。[结果]当前全球主要粮食品种供应充足,库存仍处于较高水平,此轮国际粮食价格上涨主要是受到美国等发达国家宽松的货币政策以及疫情后全球消费逐步回暖的影响;但国际市场价格上涨对中国市场的影响总体有限,国内小麦、大米、玉米价格上涨的主因是国内消费回暖和生猪产能恢复带动的饲用需求快速增长,油用大豆受国际市场的影响较大。[结论]为稳定国内粮食市场,避免国际市场的冲击,中国要进一步提升粮食综合生产能力,强化科技支撑,加强粮食储备管理,健全政策支持体系,并引导居民建立科学的消费观念。     

China's agriculture,smallholders and trade: driven by the livestock revolution?*

China's sustained rapid economic growth and development has contributed to the surge in consumption and production of livestock in that country  termed the livestock revolution. Consumption trends are first reviewed, and changes in food consumption patterns include a marked shift away from grains and towards meats and dairy products. A question is to what extent this rapid increase in demand for livestock products is reflected in China's agri‐food trade statistics? While her agri‐food imports have dramatically increased since China's accession to the WTO, livestock products have not made a noticeable contribution, although the import of certain animal feedstuffs has. This implies China's continuing self‐sufficiency in most livestock products. The paper next considers developments in China's livestock farming sector and policies that have been contributing to these supply‐side developments. The paper concludes with an examination of issues that may be important to the future development of China's, and the world's, livestock situation;  this includes future demand developments, and the question of whether future demand growth in China might be met with local production, imports of final product, and/or imports of feedstuffs.     

Land degradation, drought and food security in a less-favoured area in the Ethiopian highlands: a bio-economic model with market imperfections

This paper presents a bio‐economic model of Andit Tid, a severely degraded crop‐livestock farming system with high population density and good market access in the highlands of Ethiopia. Land degradation, population growth, stagnant technology, and drought threaten food security in the area. Drought or weather risk appears to have increased in recent years. The bio‐economic model is used to analyse the combined effects of land degradation, population growth, market imperfections and increased risk of drought on household production, welfare and food security. We find that the indirect effects of drought on household welfare through the impact on crop and livestock prices are larger than the direct production effects of drought. Provision and adoption of credit for fertiliser, although risky in itself, may lead to increased grain production and improved household welfare and food security. Provision of credit may have a negative effect on conservation incentives but this effect may be mitigated by linking a conservation requirement to the provision of credit for fertiliser.     

Economic growth,convergence, and agricultural economics

After nearly two centuries of lagging behind the industrial countries, growth in many developing countries has surged since the early 1990s. This outperformance has major implications for almost all areas of agricultural economics and, if continued, will likely do so into the future. This article aims to identify the key ways in which the changes in rich and poor country growth rates matter for agricultural economists, as a basis for formulating better research agendas. A key impact arises through sharp increases in demand for agricultural resources as demand for livestock products increases. This changing structure of food demand has important implications for nutrition studies and policies, with the emergence of a double burden of malnutrition. On the supply side, growth in developing countries tends to increase domestic food supply, which is also boosted by increases in research and development spending. Growth in developing countries both stimulates and benefits from increases in infrastructure investment, evaluation of which requires new analytical tools. Negative impacts include the contribution of increased demand for livestock products to global greenhouse gas emissions. In terms of trade policy, growth in developing country is tending to lead to convergence of agricultural policies with the pattern of assistance seen in today's developed countries, raising concerns about the future need to deal with collective action problems, particularly those that increase the volatility of world prices.