Avian influenza,non‐tariff measures and the poultry exports of China

This paper focuses on the direct impact of avian influenza outbreaks and the impact of the consequent non‐tariff measures (NTMs) on the international poultry trade. Using monthly export data from China and its 122 poultry importing countries, a random‐effect gravity model has been adopted. Emphasising the agri‐food trade in a global value chain context, the research analysis distinguishes between ‘agri‐food goods’ (mostly uncooked poultry products) and ‘processed goods’ (mostly cooked poultry products). The results show that domestic avian influenza outbreaks have a significant negative impact on a country's poultry imports compared with such outbreaks in exporting countries. Moreover, NTMs induced by avian influenza reduce the uncooked poultry trade but temporarily increase the cooked poultry trade. However, with a time‐lag, the cooked poultry trade may soon face increasing NTMs. The results also imply that developing countries that attempt to export agri‐food products to developed countries should increase and enhance processed food production.     

Country‐Specific Determinants of Horizontal and Vertical Intra‐industry Agri‐food Trade: The Case of the EU New Member States

Intra‐industry trade (IIT) has become a widespread phenomenon with a growing role in international trade, though agricultural trade is usually neglected in empirical works. This article identifies the determinants of horizontal and vertical intra‐industry agri‐food trade between New Member States (NMS) and the EU‐27 in 1999–2010, by applying static and dynamic models with different specifications to panel data. Results show that IIT is mainly of a vertical nature in the NMS, though the majority of NMS export low quality agri‐food products to EU‐27 markets. Factor endowments are negatively related to agri‐food horizontal intra‐industry trade (HIIT), but positively to vertical intra‐industry trade (VIIT). Economic size is positively and significantly related to both types of IIT, while distance and IIT are found to be negatively related in both cases. Results also suggest that HIIT and VIIT are greater if a New Member State exports agri‐food products to another NMS while EU accession has had positive and significant impacts on both HIIT and VIIT, suggesting that economic integration fosters IIT.     

Role of international politics on agri‐food trade: Evidence from US–Canada bilateral relations

A well‐functioning trade relationship between Canada and the United States is crucial to the economic vitality of the Canadian agri‐food industry. However, agri‐food trade is more susceptible than other sectors to political interventions. The Trump presidency has strained Canada–US relations and his trade policy actions have significantly increased trade restrictions and trade policy uncertainty and undermined the rules‐based global trading system. We examine the pattern of agri‐food trade between the two countries and find that the upward trajectory of bilateral agri‐food trade ended in 2013. Although this flatlining predates the Trump administration, we show that Trump increased trade policy uncertainty starting in 2017 and likely impacted further expansion of trade. We examine what might change under the Biden presidency and argue that the new administration is likely to restore strong relationships with allies and work to rebuild important international institutions such as the World Trade Organization (WTO). Although protectionist forces will continue to impact bilateral agri‐food trade, we expect closer political ties between a Biden administration and the Canadian Prime Minister. This should have a positive effect on the Canadian agri‐food industry by reducing trade uncertainties, thereby increasing agri‐food trade between Canada and the United States.     

Geographical indication regulation and intra‐trade in the European Union

Protection of indications of geographical origin (GIs) can reduce information asymmetry between producers and consumers, and potentially enhance trade. However, GIs can also possibly divert trade. We rely on panel data about agri‐food trade among the 27 countries of the European Union to investigate these issues using variations of estimators proposed by Head and Mayer ( 2000 ) and Santos Silva and Tenreyro ( 2006 ). Our findings suggest that the protection of GIs creates trade when the importing and exporting countries have GI‐protected products. There is also empirical evidence regarding a trade‐diverting effect when the importing country does not have GIs and a border enlargement effect arising from European GI‐protection.     

Capturing zero‐trade values in gravity equations of trade: an analysis of protectionism in agro‐food sectors

With significant improvements in its theoretical underpinnings, the gravity model has gained renewed interest in the agro‐food trade literature. Notwithstanding, there is a dearth of literature examining the relative trade restrictiveness of tariff barriers across a broad range of agro‐food sectors. This represents an important research gap, which this study sets out to fill. Furthermore, this research reconciles the application of zero‐inflated models with a sectorally disaggregated analysis. More specifically, employing a fully specified gravity equation, a Poisson estimator and variants of the Poisson model (Negative Binomial, Zero‐Inflated Poisson, and Zero‐Inflated Negative Binomial) provide statistically significant and theoretically consistent estimates, while allowing for the inclusion of zero‐trade values. A panel data model with fixed effects is also employed to improve the estimation of the parameters of interest. Estimation results reveal that in the vast majority of sectors examined, import tariffs are found to be statistically significant, whereas export refunds exhibit a statistically smaller role due to the nonsystematic nature of their application in world food markets. Model simulations of tariff barrier eliminations reveal limited trade gains, although there is encouraging evidence of “low” and “lower middle” per capita income country trade gains in wheat, red meat, dairy, sugar, and (particularly) rice markets.     

Drivers of vertical intra‐industry trade: the case of the Hungarian agri‐food sector

This article investigates the drivers of vertical intra‐industry trade (VIIT) in Hungarian agri‐food trade with the European Union (EU). It identifies three possible ways to measure intra‐industry trade (IIT) flows (GHM, FF, and N methods) and defines six hypotheses to test for the drivers of VIIT with three panel data models (static, dynamic, and FEVD). The results suggest that factor endowments are negatively, while economic size is positively and significantly related to VIIT. Distance and VIIT were found to be negatively related as is commonly the case in the standard gravity model. It was also found that VIIT is greater if a New Member State (NMS) is exporting agri‐food produce to an NMS, while EU accession has ambiguously influenced the share of VIIT. In general, it seems that our results are independent from model estimations and interestingly they do not differ considerably as we a priori expected. Moreover, our results seem surprisingly robust across various measurements of ITT.     

Harmonization of food trade standards and regulations in ASEAN: the case of Malaysia's food imports

Regulatory heterogeneity continues to be identified as a challenge for food trade in the Association of Southeast Asian Nations (ASEAN) as the progress of harmonization of food standards among member states remains slow. Using a new and comprehensive database on nontariff measures (NTMs), this article examines the coverage, frequency, and diversity of NTMs for the food sector in Malaysia, and then estimates their impact on food imports from ASEAN. The food sector in Malaysia is found to be highly regulated, dominated by technical measures, namely, labeling for sanitary and phytosanitary and technical barriers to trade reasons, product quality, and restricted substances. The empirical results subsequently verify that, overall, technical measures are import restrictive. This article therefore contends that harmonization of food standards and regulations at the regional level is important for enhancing trade. However, building common ground for food safety regulations should be NTM‐ and sector‐specific, to realize progress in terms of regulatory convergence. This is particularly true for the food sector, since complete harmonization is not practical and not politically feasible.     

Labour Market Adjustment and Intra‐Industry Trade: The Effects of Association on the Hungarian Food Industry

The structure of Hungary’s food trade expansion over the period 1995–2003 and its implications for labour market adjustment are examined. The contributions of the paper are threefold. First, we test the sensitivity of results to the choice of measurement and their implications for the results. Second, we introduce more industry‐specific control variables. Third, we distinguish the short‐ and long‐run adjustment effects. Our results provide some support for the smooth‐adjustment hypothesis of intra‐industry trade. Estimations confirm that industry‐specific variables may have a significant effect on adjustment costs.     

The Heterogeneous Effects of Standards on Agricultural Trade Flows

This article uses a theory‐based translog gravity model to investigate the heterogeneous effects of food standards on aggregate agricultural trade. We revisit the ‘standards‐as‐barriers‐to‐trade’ debate with a distinctive twist. In contrast to existing works, we show that standards reduce trade but even more so for countries that trade smaller volumes. Our identification strategy exploits the within‐country variation in specific trade concerns. We confirm that stricter importer standards are indeed trade‐restrictive. However, the estimated trade cost elasticity varies depending on how intensively two countries trade. Specifically, it decreases in magnitude with an increasing import share of the exporter in the importing country's total imports. The reason is simple but intuitive; bigger trading partners find it more profitable to invest in meeting the costs of importer‐specific standards. This work is novel in showing that the standards–trade debate misses out on an important heterogeneity driven by existing import shares. Liberalising non‐tariff measures will favour smaller trading partners more than well‐established ones.     

Explaining National Border Effects in the QUAD Food Trade

Using a ‘structural’ gravity‐like model, this paper first provides estimates of bilateral ‘border effects’ in food trade among the QUAD countries (the US, Canada, Japan and the EU) at the ISIC (International Standard Industrial Classification) four‐digit level (18 food sectors). It then investigates the underlying reasons for border effect, assessing the role played by policy barriers (tariffs, non‐tariff barriers to trade (NTBs) and domestic support) with respect to barriers unrelated to trade policy, such as information‐related costs, cultural proximity and preferences. In contrast to several previous findings, our results show that policy trade barriers, especially in the form of NTBs, are part of the story in explaining national border effects. Interestingly, in all country pair combinations, NTBs significantly dominate the trade reduction effect induced by tariffs. However, results show that elements linked to information‐related costs and consumer preferences matter a great deal in explaining the magnitude of border effects. These findings have implications for the economic and welfare‐related significance of national borders.     

Spatial determinants of productivity growth on agri‐food Spanish firms: a comparison between cooperatives and investor‐owned firms

This study analyses the effect of the spatial factor, location, and interaction effects among peer companies, on the productivity growth of agri‐food companies in Spain. With this aim, we build a productivity growth index and apply a multiequational Seemingly Unrelated Regression on a sample of 344 Spanish cooperatives and investor‐owned firms for the period 2010–2012. Our findings show that agri‐food firms are influenced by spatial factors finding interesting differences between cooperatives and investor‐owned firms. With regard to the geographical location, cooperatives in the western of Spain show higher productivity growth rates, whereas investor‐owned firms in the northeast of Spain present better results. The interaction effect among closer peer companies is also a relevant factor to determine the productivity growth in agri‐food companies. This factor is more relevant for cooperatives than for investor‐owned firms.     

Quality Upgrades of EU Agri‐Food Exports

We investigate determinants of quality upgrades in EU agri‐food exports using panel data models for the period 2000–2011. By employing highly disaggregated data we show that the unit value of exports is positively correlated to level of economic development and size of population. Our results highlight the negative impacts of comparative advantage and trade costs on upgrades in export quality. Our analysis partly confirms the role of income distribution in quality specialisation, that greater income inequality increases specialisation in quality upgrades. Findings are robust when applied to alternative subsamples, including vertically specialised and final agri‐food products.     

Economics and politics of food standards,trade, and development#

Standards have played an important role in food trade for a very long time. Their rapid growth in recent years has triggered vigorous debates on their impacts on international trade and development, with many arguing that standards are “non‐tariff barriers” to trade and that standards are marginalizing the poor. I present conceptual frameworks and review empirical evidence on the equity and efficiency effects and the political economy of standards. Models which incorporate essential aspects of standards yield complex theoretical results and nuanced conclusions. Careful empirical analyses support such nuanced arguments and find complex effects. For trade, standards can create welfare gains but also involve rent redistribution which induces lobbying by interest groups to set the standards at their preferred level. This makes it difficult to distinguish socially desirable standards from those resulting from political rent‐seeking. For development, it is crucial to explicitly account for (a) the endogeneity of the institutional organization of value chains and (b) both smallholder contracting and employment creation on large scale farms when considering the impact of standards on development and poverty.     

European Agriculture after Brexit: Does Anyone Benefit from the Divorce?

The UK exited the EU on 31 January 2020, with a transition period agreed as part of the Withdrawal Agreement. During this transition period the UK and the EU will decide on their future trading relationship. No matter what form this relationship takes, there will be disturbances to agri‐food markets. This study analyses four different scenarios with increasing barriers to trade, ranging from a very close relationship similar to the European Economic Area to a distant relationship in which the UK and EU trade on Most Favoured Nation terms, using the EU focused global agricultural sector model CAPRI. In the UK, food prices will increase in all scenarios, making consumers in the UK the biggest losers. Only in a free trade agreement scenario does the UK show an unambiguous positive net welfare gain in just the agri‐food sector. In the case of the European Economic Area scenario, which assumes continued access to the single market, the net welfare impact would depend on the size of the UK’s continued contribution to the EU. In the EU, declining food prices would benefit consumers but the sum of the loss in farmers’ incomes and the UK’s EU CAP contribution would be much greater than the consumer’s gain. These impacts in agricultural markets under different future trade arrangements will also be influenced by the UK’s agricultural policy changes in direct payments as well as by possible further UK trade liberalisation after the end of the transition period.     

EU Food Safety Standards,Pesticide Use and Farm‐level Productivity: The Case of High‐value Crops in Kenya

This article provides an empirical analysis of the impact of European Union (EU) private food safety standards on pesticide use and farm‐level productivity among small‐scale vegetable producers in Kenya. We apply an extended three‐stage damage control production framework, accounting for multiple endogeneity problems, to farm‐level data collected from a random cross‐sectional sample of 539 small‐scale producers. Estimation results show that farmers producing vegetables for the domestic market use significantly lower quantities of pesticides than do export farmers. However, contrary to findings elsewhere, the econometric evidence here shows that both domestic and export‐oriented vegetable farmers in Kenya use pesticides at levels below the economic optimum. The results also show that the adoption of standards by export farmers does not have any significant impact on total pesticide use. However, adopter categories are distinguishable in terms of types of pesticide used, i.e. adopters use safer pesticides based on World Health Organization (WHO) classification. The third‐stage structural revenue model results demonstrate that adoption of standards has a positive and significant impact on revenue raised in vegetable production. Nevertheless, farmers producing for the export market are indistinguishable from those producing for the domestic farmers in terms of the total revenue earned from producing vegetables during the rainy season, on a ‘per acre’ basis. Although standards can potentially prevent resource‐poor smallholders from maintaining their position in the lucrative export markets, they can also result in positive changes in the production systems of those small‐scale farmers who adopt it, as shown by these results.     

Impact of agricultural innovation adoption: a meta‐analysis

The impacts of adopting agricultural innovation and technology are widely examined. This paper synthesises 154 studies, which yielded a total of 600 estimates of the impact of adopting agricultural innovation and technology on production, social and economic outcomes. Using meta‐regression analysis, the empirical results show that the reported impact of adopting agricultural innovation and technology rises significantly over time, notwithstanding a significant publication bias. Whether studies find significant impacts of adopting agricultural innovation and technology depends on the use of experimental research designs, parametric method, endogenous switching regression and region. Our results show a large bias in the literature towards agricultural innovations and technologies that focus on high‐yielding varieties and thus, neglect other forms of complementary innovations and technologies.     

To Cheat or Not To Cheat: Moral Hazard and Agri‐environmental Policy

This Address examines the moral hazard problem in agri‐environmental policy. It begins with a theoretical analysis of moral hazard in this context, including the identification of eight potential causes of cheating behaviour among farmers. But is cheating behaviour among farmers actually a problem for agri‐environmental policy? And if it is, which are the statistically significant causes of concern? The answer seems to be: “we don't know” as there are currently no empirical analyses of the moral hazard problem and its causes in agri‐environmental policy. On this basis I analyse a set of policy solutions – to a problem for which we have no evidence of its causes or extent!     

Global rice trade competitiveness: a shift‐share analysis

Changes in country shares of global rice exports from 1997 to 2008 are analyzed using an econometric, shift‐share analytical framework. This framework estimates growth rates and disaggregates these rates of change into geographical structure effects and performance effects. The performance effect is further decomposed into two subeffects accounting for adaptation to changes in the geographical structure of the marketplace and a competitiveness effect. A restricted, weighted, two‐way fixed effects model is specified for estimating the geographical structure and performance effects. Results indicate a growing concentration among a few exporting countries in the global rice market, and the competitiveness effect is often significant. Government policies affecting rice trade and the competitiveness of trading partners are important factors for the shifts in rice trade patterns. In particular, Vietnam is an emerging, major player in global rice trade in competition with Thailand.     

Introduction to a Symposium on Global Finance and the Agri‐food Sector: Risk and Regulation

This symposium introduction brings together two debates; the debate on global food prices and speculation, and the debate on so‐called global ‘land investment’ or ‘land grabbing’. Both debates are examining two sides of the same phenomenon – the growing role of private financial investors in the global agri‐food value chains and the myriad consequences of it. The symposium moves beyond the identification of finance as an exogenous factor to the trends in the sector. It examines real‐life incarnations of finance in the sector by looking at investment arrangements, including connections with the state, and its (regional) variations. The symposium addresses three main themes. First, it explores the interplay of the state and private finance. It shows that the effect of regulation is limited in the face of increasingly mobile and complex investment flows. Second, it addresses the shifts and transfigurations of risk in the agri‐food sector due to financialization. Third, the symposium discusses to what extent, and how, the origins and identity of farmland investors still matters within an increasingly globalized financial sector. The paper concludes by identifying some related areas for further research.     

Are In‐House and Outsourcing Innovation Strategies Correlated? Evidence from the European Agri‐Food Sector

We analyse European agri‐food firms’ choices about innovation in‐house or through outsourcing and provide empirical evidence about the correlation between these strategies. The relationship between the innovation strategy and firm‐, industry‐ and innovation‐specific characteristics is analysed through a bivariate probit model, which uses firm data from the EFIGE Bruegel‐UniCredit dataset. Transaction cost, resource base and knowledge governance arguments are used to explain the choice of innovation strategy. Our results show that the decisions to innovate in‐house or through outsourcing are independent from each other. In addition, we find that several organisational characteristics such as communication systems, human resource practices and specialisation are likely to influence both strategies. Conversely, organisational characteristics such as the allocation of authority and the business network do not seem relevant in determining the innovation strategies of the European agri‐food sector.