U.S. Agricultural Trade with Mexico

Abstract

This study examined the effects of exchange rates, economic growth, trade liberalization, and export assistance programs on U.S. agricultural exports to Mexico. The Commodity Credit Corporation's GSM-102 Export Credit Guarantee Program reduces the risk associated with export financing and payment. The impact of the export credit guarantee program on U.S. agricultural exports to Mexico was estimated in an import demand model using quarterly data from 1980 to 1996. The results indicate that for every $1 of export credit guarantees, Mexican imports of U.S. farm products increased $0.30. Real income growth in Mexico, however, was the most important factor in the expansion of U.S. exports. Trade liberalization under NAFTA also increased U.S. exports to Mexico.     

Contractual Relations in Agricultural Credit Markets: A Hedonic Pricing Approach with Application to Poland

We present a micro‐econometric analysis of agricultural credit market outcomes in Poland that investigates the relationship between contractual arrangements and interest rates. An innovative theoretical framework based on a hedonic market model is developed. We interpret the factors that influence interest rates as ‘quality’ components of the credit contract. Using unique data allows us to consider both nominal interest rates and additional bank fees. The results show that banks have preferences for particularly liquid types of collateral, whereas they care little about the purpose for which the loan is used. Furthermore, the analysis allows quantification of the effects of socioeconomic attributes of farmers, different lending sources and government subsidies on interest rates. The latter effect is small compared with the officially declared reduction of the nominal interest rate. A simulation shows that enabling more borrowers to use liquid forms of collateral implies lower rates than those obtained by participating in the subsidy programme.     

Credit Risk and the Demand for Agricultural Loans

This paper uses the lender–borrower relationship to provide insight into the impirical estimation of loan demand/contract curves for agricultural loans. Loan demand is shown to be determined partly by lenders'willingness to provide debt. The implicit solution to the loan contract curve in the lender–borrower relationship is derived from the cumulative probability distribution function of loan losses, which is the same measure used as the dependent variable in credit scoring models. Consequently, empirical estimation of loan demand can be obtained from credit scoring models. This paper presents the theory and then provides loan demand estimates and elasticities using Farm Credit Corporation cross-sectional and time-series data. Empirical estimates indicate the possibility of a backward-bending loan demand curve, which may indicate some credit ationing in agriculture.     

Grain transport and rural credit in Mozambique: solving the space–time problem

This paper shows how credit market failures can lead to large welfare losses in grain markets by inducing increased transport for seasonal storage in locations with low credit costs. The burden of these welfare losses falls primarily on rural households. These conclusions are obtained from a spatial/temporal model solved using a mixed complementarity formulation that easily handles interest rate differentials across space. Efforts to address credit market failures and to improve the efficiency of rural storage should be given priority as opposed to the creation of large, formal sector grain collection centers.     

Access to credit and heterogeneous effects on agricultural technology adoption: Evidence from large rural surveys in Ethiopia

Modern agricultural technologies hold huge potential for increasing productivity and reducing poverty in developing countries. However, adoption levels of these technologies have remained disappointingly low in Africa. This paper analyzes the effect of access to credit on the likelihood of adoption and use intensity of chemical fertilizers using data from large rural surveys in Ethiopia. Using a heteroscedasticity-based identification strategy to address the endogenous nature of access to credit, we find that access to credit has significant positive effects on adoption and intensity of use of chemical fertilizers. However, important heterogeneities are observed. Credit obtained from formal sources is more important for the intensity of use than for the decision to adopt chemical fertilizers. Credit taken with the primary purpose of financing agricultural inputs is more likely to promote adoption of chemical fertilizers than credit taken per se. Furthermore, reported credit effects are larger when estimated against the sample of credit-constrained non-users as compared with the pool of the whole sample of credit non-users. The results remain robust to several sensitivity analyses. Our results yield useful implications for the design, promotion, and targeting of credit services to leverage their effect on adoption of agricultural technologies.     

An Empirical Investigation of 1983 Farm Mortgagors in Western Canada

Cross-sectional data from the 1984 Farm Credit Corporation (FCC) survey are used to investigate the characteristics of farm operators who participated in the 1983 long-term agricultural credit market and to investigate the determinants of loan size. Discriminant analysis is used to analyze differences in socioeconomic characteristics among FCC clients, borrowers from other government agencies, borrowers from private sources, and nonborrowers, while regression models, adjusted for sampling bias, are used to reveal the determinants of size of long-term loans from the FCC. The results are tentative due to the cross-sectional properties of the data, but they seem to show that the Farm Credit Corporation is fulfilling its stated aims both in its selection of clients and in its tendency to grant larger loans to the clients it is mandated to serve. Les données sectorielles du sondage en 1984 de la Société du crédit agricole (SCA) sont utilisées pour examiner les caractéristiques des opérateurs d'exploitations agricoles qui ont participé au marché du crédit agricole è long terme en 1983 et pour examiner les déterminants de l'importance de l'emprunt. Une analyse discriminante est utilisee pour étu-dier les différences dans les caractéristiques socioéconomiques parmi les clients de la SCA, les emprunteurs è d'autres agences gouvernementales, les emprunteurs à des sources privées, et ceux qui n'empruntent pas, tandis que les modeles de regression, reajustes pour le biais de llechantillonnage, sont utilises pour reveler les determinants de 1'importance des emprunts a long terme à la SCA. Les resultats sont provisoires du aux qualites sectorielles des donnees, mais ils indiquent que la Societe du credit agricole semble accomplir ses objectifs enonces à la fois dans sa selection de clients et dans sa tendance à accorder de plus gros emprunts aux clients qu'elle doit servir.     

Commodity price bubbles and macroeconomics: evidence from the Chinese agricultural markets

This article investigates the links between commodity price bubbles and macroeconomic factors, with an application to the agricultural commodity markets in China from 2006 to 2014. Price bubbles are identified using a newly developed, recursive right‐tailed unit root test. A Zero‐inflated Poisson model is used to analyze the factors contributing to bubbles. Results show that (a) there were speculative bubbles in most Chinese agricultural commodity futures markets during the sample period, though their presence was infrequent; (b) economic growth, money supply, and inflation have positive effects on bubble occurrences, while interest rates have a negative effect; and (c) among all macroeconomic factors considered, economic growth and money supply have the greatest impact in triggering bubbles. Our findings shed new light on the nature and formation of bubbles in the Chinese agricultural commodity markets.     

对地勘单位事企分体运行与管理的思考和探索

依法构建和规范地勘单位的事企分开管理模式,是地勘单位适应事业单位分类改革的迫切需要,更是地勘单位实现科学发展、走向现代地勘企业的必由之路。地勘单位事企分体运行管理,首先要进行事企分离,搭建分体运行平台;其次要理清事企主线,明确职能定位,分体运行管理。     

Credit Risk Assessment and the Opportunity Costs of Loan Misclassification

This paper investigates the opportunity costs of loan misclassification in credit risk assessment, and develops a model that directly incorporates the opportunity costs of loan misclassification into the risk assessment criteria. The performance of this model is assessed by comparing the empirical results with the results of the logit credit scoring model using data provided by the Farm Credit Corporation of Canada. Results indicate that if both the models make a Type I and Type II error with a $1-million loan, the expected costs of error would be $600 and $6, 500 less, respectively, in the cost minimization model compared with the logit model. The expected lenders's profit for a $1-million loan would be $17, 000 more in cost minimization model compared with the logit model. The cost minimization model performed better than the logit model, both in prediction accuracy and also in reducing the costs associated with the errors in classification.     

Macroeconomic policy impacts on United States agriculture: A simulation analysis

United States monetary and fiscal policies influence the domestic agricultural economy directly and, through international linkages, indirectly. This study estimates the magnitude and statistical influence of coefficients relating U.S. macroeconomic policy to the U.S. agricultural economy through domestic and foreign markets. Specific objectives are to specify and estimate a general equilibrium quarterly econometric model of the U.S. macroeconomy and simulate the impact of federal deficit spending on real interest rates, real exchange rates, and net exports of agricultural products. Three hypotheses were tested. The first hypothesis that an increase in federal deficit spending increases the real interest rate could not be rejected; a $100 billion reduction in the U.S. deficit was estimated to reduce real interest rates by two percentage points or more. The second hypothesis that an increase in real interest rate increases the real value of the U.S. dollar in foreign exchange markets had strong support and could not be rejected. A third hypothesis that a rise in the real value of the dollar reduces net exports of U.S. farm products also could not be rejected. Results indicate that the U.S. agriculture would benefit from the lower exchange value associated with an ‘optimal’ macroeconomic policy. That policy initially made the overall U.S. economy perform less satisfactorily but that performance improves over time.     

Macroeconomic Policy Impacts on United States Agriculture: A Simulation Analysis

United States monetary and fiscal policies influence the domestic agricultural economy directly and, through international linkages, indirectly. This study estimates the magnitude and statistical influence of coefficients relating U.S. macroeconomic policy to the U.S. agricultural economy through domestic and foreign markets. Specific objectives are to specify and estimate a general equilibrium quarterly econometric model of the U.S. macroeconomy and simulate the impact of federal deficit spending on real interest rates, real exchange rates, and net exports of agricultural products. Three hypotheses were tested. The first hypothesis that an increase in federal deficit spending increases the real interest rate could not be rejected; a $100 billion reduction in the U.S. deficit was estimated to reduce real interest rates by two percentage points or more. The second hypothesis that an increase in real interest rate increases the real value of the U.S. dollar in foreign exchange markets had strong support and could not be rejected. A third hypothesis that a rise in the real value of the dollar reduces net exports of U.S. farm products also could not be rejected. Results indicate that the U.S. agriculture would benefit from the lower exchange value associated with an ‘optimal’ macroeconomic policy. That policy initially made the overall U.S. economy perform less satisfactorily but that performance improves over time.     

RURAL CREDIT POLICY AND BANK RURAL LENDING*

A model of bank rural lending in Australia for the period 1950/1973 is constructed to measure the effects of various rural credit policies on bank rural advances. Results indicate that rural sector bank deposits did not influence the rural sector's share of advances; Farm Development Loan Fund loans simply replaced overdraft advances; rural borrowers were not discriminated against in periods of tight credit; interest rate concessions induced a greater proportionate reduction in the rural share of advances.     

Pricing to market behaviour of India's high value agri‐food exporters: an empirical analysis of major destination markets

The pricing behaviour of India's high value agricultural and food exporters in their major destination markets is examined using a pricing‐to‐market (PTM) model for noncompetitive and exchange rate related pricing behaviour. The analysis was undertaken in a context where India is showing high commodity concentration in agricultural trade. The econometric analysis employed is panel corrected standard errors (PCSE) estimation technique. The results indicated evidence of a greater degree of imperfect competition either through price discrimination across destinations or through imperfect exchange rate pass‐through. The analysis of exchange rate effects showed that the local currency price stabilization by the Indian exporters were more prominent than the amplification of exchange rates. The analysis of the asymmetric effects of exchange rates on export prices showed that in most cases the depreciation of Indian rupee had a greater impact than the appreciation. Moreover the results showed that the exchange rate pass‐through is sensitive to the kind of exchange rate index utilised. In our analysis we found that the commodity specific exchange rate better predicts the pricing to market behaviour in most cases.     

Mobile Phones and Radios: Effects on Transactions Costs and Market Participation for Households in Northern Ghana

The literature on agricultural markets suggests that transactions costs are the main obstacles preventing households from participating in agricultural markets. We examine the impact of the recent massive penetration of information communication technologies (ICTs), particularly mobile phones and radios, in developing countries to investigate the role of information in economic transactions and participation in food crop markets. To fully capture market participation behaviours, the current theoretical framework on market participation and transactions costs is extended to include those households that sell and buy in the same time period. We correct for endogeneity and selectivity throughout our models. We used a novel dataset of 393 households in northern Ghana with detailed information on market transactions and ICTs usage. Results show that receiving market information via mobile phones has a positive and significant impact on market participation, with a greater impact for households with a surplus of food crops. We find that radios have a larger impact on the quantity traded. This may reflect the nature of mobile phones in reducing searching costs, whereas radios provide an updated and regular flow of information which affects the pattern of crops consumed and sold. We also emphasise that the most significant factor is how ICTs are used, rather than their ownership.     

Are We Moving Towards Functioning Agricultural Markets and Trade Relations?

We introduce a special feature on the functioning of international agricultural markets. This feature is motivated by the increased interest in the functioning of commodity markets raised by unprecedented price turbulences since 2008, major structural changes through changed roles of emerging economies and related concerns regarding food security. We argue that the delineation of non‐functioning markets from markets that adequately adjusted to adverse framework conditions lacks theoretical foundation. We discuss the relevance of some results on institutions for agricultural markets in emerging and transition countries. A synthesis of the articles included in the special feature is provided by highlighting the selection of topics that span a topical range covering price formation on world and domestic markets, market power and trade policy modelling.     

The interaction of speculators and index investors in agricultural derivatives markets

Through the analysis of the weekly Commodity Futures Trading Commission reports on 12 US traded agricultural commodities, we revisit the heated debate on the impact of index flows on commodities prices. After introducing a novel stock‐to‐use proxy that may be used to represent inventory variations at the intra‐month level, we show that speculators, contrary to index investors, are sensitive to commodity‐specific fundamental information. Their endogeneity to commodities markets hinders the estimation of their market impact. Regarding the market impact of index flows, the endogeneity problem is alleviated in two ways: first, we restrict the scope to agricultural commodities, for which index flows are more exogenous to market prices; second, we introduce two novel instrumental variables that are computed from index flows outside the market under analysis. We find that index investment flows are offset by commercial players, not speculators. The serial correlation of index flows may explain the tendency of speculators to synchronize with index investors. There is strong evidence of an index flows' impact in those commodities markets where speculative and index positions are the most correlated. The market impact of index flows is located in periods of liquidity stress, as is the correlation between speculative and index positions. Overall, our results demonstrate an impact of index investors on some agricultural prices and suggest that the synchronicity between speculative and index positions is an important determinant of this impact.     

基于历史数据的水利工程建设市场主体信用动态评价与预测模型

针对水利工程建设市场主体信用评价周期不等、评价周期过长、评价方法不够科学等问题,参考现有水利工程建设市场主体信用评价指标,采取综合赋权法确定指标权重,以确保指标权重的合理性;利用模糊综合评价法得到某水利施工企业的综合信用评价值,并基于历史数据得到最终的信用动态评价值,最后,利用马尔科夫模型(Markov Model)计算信用动态预测值。研究结果表明,水利工程建设市场主体信用动态评价模型对水利施工企业的信用评价有效可行,利用马尔科夫模型得到的信用动态预测值可以为选择水利施工企业提供参考。     

Asset Pricing in Created Markets

We investigate the applicability of the present-value asset pricing model to fishing quota markets by applying instrumental variable panel data estimation techniques to 15 years of market transactions from New Zealand's individual transferable quota (ITQ) market. In addition to the influence of current fishing rents, we explore the effect of market interest rates, risk, and expected changes in future rents on quota asset prices. The results indicate that quota asset prices are positively related to declines in interest rates, lower levels of risk, expected increases in future fish prices, and expected cost reductions from rationalization under the quota system.     

Credit market access and profitability in Tunisian agriculture

This work develops an econometric model that links credit access with agricultural profitability and investment. Using data collected from rural Tunisia, this work provides direct estimates of credit access and its effects. Econometric estimates are run for agricultural investment and profitability as a function of credit access. The investigation of credit access and its effect suggests that the presence of credit market constraints does impinge significantly on farm profitability, but not on investments.     

PORTUGAL ON THE BRINK OF EUROPE: THE CAP AND PORTUGUESE AGRICULTURE

Portuguese policy-makers assumed an active interest in agricultural sector development after the 1974 Revolution. However, the policy instruments used-output price supports, input subsidies, land market regulations, and agricultural credit programmes-have done little to facilitate technical or structural change in much of the sector. This pattern of development may have adverse medium-term impacts on agriculture, because for most commodities, accession to the CAP will substantially reduce farm profitability. If Portugal is to avoid sharp declines in income for a sector that is already relatively low in income terms, reform of factor market policies and investment in research and development are essential.