Export Restrictions and Smooth Transition Cointegration: Export Quotas for Wheat in Ukraine

We extend previous modelling approaches to identify domestic price effects of export controls. We allow for smooth transition between free‐trade price transmission regimes and those under export restricting regimes, using a smooth transition cointegration (STC) approach, rather than the more common assumption that regime changes are abrupt. Our approach has the advantage that the switch in the price transmission regime may be induced not only by an actual but also by an expected policy change. Results confirm the gradual nature of the transition between the regimes, which reflect trader heterogeneity and wheat storage decisions. We find that the STC approach outperforms alternative model approaches in terms of both regime classification and goodness of fit, when explaining Ukrainian domestic wheat prices under export controls. In particular, application of the Markov‐switching error correction model (MSECM) to the same data generates results which do not reflect any identifiable economic reality (in contrast to Götz et al., 2013 ).     

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.     

Price Discrimination in the Context of Vertical Differentiation: An Application to Canadian Wheat Exports

The ability of the Canadian Wheat Board (CWB) to price discriminate in wheat exports is examined. The conceptual model shows that the CWB's ability to exploit cost differences in pricing depends on the extent of differentiation between Canadian and U.S. wheat. This model is implemented using monthly confidential price data for exports to four markets from 1982 to 1994. The empirical results support the conclusions that (1) the CWB has market power emerging from product differentiation, (2) the CWB price discriminates across export markets, and (3) Alchian–Allen effects are important in pricing in markets valuing quality such as Japan and the United Kingdom.     

中国海水贝类进出口贸易变动趋势研究

论文旨在从进出口量、额和均价的角度,理清过去一段时期中国海水贝类进出口贸易的变动趋势,并简要分析其影响因素。研究结果显示：1984—2009年,中国海水贝类进出口贸易呈现出波动上升的趋势,前期（1984—1993）波动较为平缓,后期（1994—2009）随国内经济深度融入世界经济,波动幅度逐步加大;同一时期,中国海水贝类进口价格虽然变化不大,但出口价格增长较快;分阶段看,1994—2003年是中国海水贝类进出口贸易增长最快的时期;分物种看,蛤类、牡蛎、扇贝、贻贝以及鲍螺类又各自显现出不同的变动特征。     

Pricing‐To‐Market Analysis: The Case of EU Wheat Exports

The EU is a major player in the global wheat market. This paper examines the pricing behaviour of EU wheat exporters using a pricing‐to‐market (PTM) analysis. Wheat is an exemplary product for testing PTM theories as it is widely and frequently traded, and largely unbranded. We estimate the relationship between export unit values and exchange rates using quarterly panel data for 11 EU export destinations for 2000–2013. Results show that there is a meaningful long‐run relationship between export unit values and exchange rates, but there is little evidence of differential mark‐ups between EU export markets. Belarus and Iceland are exceptions where exporters from the EU appear to exercise local currency price stabilisation.     

Grain price stabilization in India: Evaluation of policy alternatives

Stabilization of prices is an important element of food policy in India as in most other countries — both developing and eveloped. However, since the magnitude of grain stocks held for this purpose as well as the costs of physical storage have become prohibitively high, there is now a need for finding cost-effective alternatives including non interventionist and market-oriented methods for price stabilization. In this paper we consider the case of rice and wheat which are staple foodgrains in India. We make a comparison between alternative price stabilization policies including that of holding buffer stocks in terms of their impact on domestic price stability, producer and consumer welfare and government costs. A multi-market equilibrium framework is used where private storage, consumption, supply and prices of rice and wheat are determined simultaneously. Indian exports and imports are assumed to affect world prices. The alternative price stabilizing mechanisms are ranked according to both the criteria, welfare and price stability achieved. The main findings are as follows. The ranking of alternatives varies with the criterion used. Greater price stability need not necessarily imply greater welfare. The option of variable levies on private external trade turns out to be the most inexpensive and that of domestic buffer stocks the costliest in achieving price stability. Further, the efficacy of buffer stocks and subsidy to private storage in stabilizing prices is lower under free trade as compared to the case where the economy is closed to private external trade.     

Cross country maize market linkages in Africa: integration and price transmission across local and global markets

In order to study short‐run price shock propagation, we model twenty seven Sub‐Saharan Africa (SSA) domestic maize markets within a Global Vector Autoregression framework. The main purpose is to fully embed multilateral trade flows as a way to better structure local price transmission dynamics and interdependencies, and get a more comprehensive picture of food price shocks propagation. We found significant between‐country market contagion and prompt regional price shock propagation when trade connection exists. Yet, the integration of SSA domestic maize markets within the continent and with global markets remains generally weak. Furthermore, under regular market conditions, most local price series appear to be more responsive to regional neighbors than to global shocks.     

FTA,Exchange rate pass‐through and export price behavior – Lessons from the Australian dairy sector

The growing number of bilateral and regional free trade agreements (FTAs) alongside exchange rate volatility has raised a question on whether these affect exporters’ pricing behaviors, hence competitiveness. This study contributes to this topic by examining Australian dairy export price behavior across eight major markets taking into account the extent of pass‐through of exchange rate and tariff as well as FTAs between Australia and its trading partners. Commodity‐level dairy trade data from 1996 to 2016 and the feasible generalized least squares methods are employed. The study finds incomplete pass‐through at the industry level. The dairy export prices decrease by 1.7% if Australian dollar depreciates by 10%, while 10% tariff reduction is associated with 0.7% export price cut. Results at the commodity level show different pricing behaviors across destination and commodity markets. Overall, apart from the tariff effects, there is minimal evidence of the impacts of FTAs on dairy export prices.     

How would global trade liberalization affect rural and regional incomes in Australia?

Agricultural protection in rich countries, which had depressed Australian farm incomes via its impact on Australia’s terms of trade, has diminished over the past two decades. So too has agricultural export taxation in poor countries, which has had the opposite impact on those terms of trade. Meanwhile, however, import protection for developing country farmers has been steadily growing. To what extent are Australian farmers and rural regions still adversely affected by farm and non‐farm price‐ and trade‐distortive policies abroad? This paper draws on new estimates of the current extent of those domestic and foreign distortions: first, to model their net impact on Australia’s terms of trade (using the World Bank’s Linkage model of the global economy); and second, to model the effects of that terms of trade impact on output and real incomes in rural versus urban and other regions and households within Australia as of 2004 (using Monash’s multi‐regional TERM model of the Australian economy).     

中国松香产品对外贸易特征与结构分析——基于2001~2011年数据

对2001²011年中国松香产品对外贸易特征及结构进行实证分析研究的结果表明:中国松香产品贸易以出口为主,进口量相对较小;近年来松香出口额增长迅猛,但进口额增长乏力;国际松香价格一路高涨,而中国松香产品出口价格远低于进口松香价格;松香进出口均主要集中于380610和380690两类松香,出口主要集中于欧盟、美国、日本和韩国,出口市场集中率较高。因此,提出主动实施松香深加工和品牌战略、控制松香出口规模、多元化出口市场战略、关注新兴市场等对策建议。     

A structural time series analysis of US broiler exports

A structural time series model is used to determine the dynamic characteristics, forecasting properties, and policy implications of factors affecting the US broiler export market. The emphasis is on international market responsiveness. The analysis indicates that in addition to the explanatory variables a trend component has been vital in the expansion of the broiler industry during the study period. The results indicate that export markets are more price responsive than the domestic markets, that interventions in the Canadian and Mexican markets reduce their imports, and exchange rate changes have significant impacts on US exports.     

IMPACTS OF THE COMMON AGRICULTURAL POLICY ON INTERNATIONAL WHEAT PRICES

The emergence of the EC as a major exporter of cereals in the 1980s and the escalation of international agricultural trade confrontations emphasize the importance of understanding the effects of EC policy actions. Several important features of the EC wheat market are incorporated in an analytical and empirical model including imperfect substitutability in demand between imports and domestic supplies, the simultaneous import and export of wheat by the EC, the distinct impact of threshold versus intervention policy prices, MCAs, and the imperfect transmission between market and intervention prices. Results indicate that EC policies have a smaller impact on world price than found in previous studies.     

The Value of Dairy Quota under a Commercial Export Milk Program

This paper argues that under a commercial export milk program, the market value of quota will be determined by the spread between the domestic market price and the export price, rather than the conventional wisdom that it is determined by the spread between the domestic milk price and the marginal cost of production. Under this new economy, it is argued that ultimately the market price of dairy quota will be priced independently of firm marginal costs, which implies that low-cost (or high-margin) producers will not hold an economic advantage in bidding for quota over higher-cost producers. Regression results are consistent with the hypothesized positive relationship between quota values and the difference between domestic and export milk price. The average export price has generally increased over time and is approximately equal to the marginal cost for an average producer. The results have implications for a World Trade Organization (WTO) challenge. New Zealand and the United States feel the domestic program acts as an export subsidy by cross-subsidizing production of commercial export milk. The results here suggest that the prices for the filled export contracts are approximately the marginal cost of production for the average producer and not lower, as suggested by the challenge. Export contracts were found to have higher price risk than domestically produced milk. The risk is compounded by the short-term nature of most export contracts. The increase in risk for the commercial export milk program (CEM) implies that it is unlikely many farmers will greatly diversify into CEM contracts unless the uncertainty is reduced.     

World market integration for export and food crops in developing countries: a case study for Mali and Nicaragua

Using a generalized error correction model, this article measures and compares market integration for export cash crops versus imported food crops for Mali and Nicaragua, and computes transmission elasticities between changes in the goods’ border and domestic prices. Both Mali and Nicaragua obtain the bulk of their export revenue from a particular agricultural commodity—cotton for Mali and coffee for Nicaragua—and both import the same key staple food of rice. To reap the economic gains from this trade specialization, the two countries’ agriculture must be well‐integrated into world markets. The two countries present an important policy contrast that affects their degree of world market integration and price transmission. In Mali, a parastatal enterprise controls its cotton industry, while Nicaragua has less state direction over agriculture. Reflecting this difference, the results show that for both its main export and import commodity, Nicaragua is more integrated into world markets and has higher price transmission than Mali. The results for Nicaragua also show much higher integration and price transmission for its main agricultural export (coffee) than its major import (rice).     

Are Russian Wheat Exporters Able to Price Discriminate? Empirical Evidence from the Last Decade

Significant changes have taken place in the world wheat market in the last decade. Russia, a former net wheat importer, has become a leading exporter with a world market share of 11.2% in 2009. This increasing importance and the discussion about the establishment of a grain‐OPEC consisting of Ukraine, Kazakhstan and Russia has raised the issue of pricing behaviour of Russian wheat exporters. Although there are several studies on the pricing behaviour of Canadian and US wheat exporters, there is none so far for Russian wheat exporters. This study provides a quantitative analysis of the pricing behaviour of Russian wheat exporters, explicitly taking account of the export tax imposed between 2007 and 2008. We employ a pricing‐to‐market (PTM) model on quarterly Russian wheat‐export data, covering the period from 2002 to 2010 and 25 export destinations. Our findings indicate that (i) Russian wheat exporters exercised PTM in only a few importing countries over the whole time period, and (ii) PTM behaviour was more pronounced in the aftermath of the export tax period (i.e. 2008–2010) than before.     

Deregulation of the Australian Wheat Export Market: What Happened to Wheat Prices?

ABSTRACT

This report investigates whether deregulation of the Australian wheat export market induced a structural change in the price data generation process. We analyze the unit root properties of Western Australian wheat price series by testing for the possibility of single and double structural breaks. Daily spot prices for the period of May 20, 2003, to September 14, 2010 are used. We find the wheat price series has a unit root with two structural breaks but neither breaks coincides with the time when the Wheat Export Marketing Act 2008 came into effect on July 1, 2008. The implication of our results is that deregulation was not the main cause of structural breaks in the price series in the sample period.     

Higher fuel and food prices: impacts and responses for Mozambique

Rising world prices for fuel and food represent a negative terms‐of‐trade shock for Mozambique. The impacts of these price rises are analyzed using various approaches. Detailed price data show that the world price increases are being transmitted to domestic prices. Short‐run net benefit ratio analysis indicates that urban households and households in the southern region are more vulnerable to food price increases. Rural households, particularly in the North and Center, often benefit from being in a net seller position. Longer‐term analysis using a computable general equilibrium (CGE) model of Mozambique indicates that the fuel price shock dominates rising food prices from both macroeconomic and poverty perspectives. Again, negative impacts are larger in urban areas. The importance of agricultural production response in general and export response in particular is highlighted. Policy analysis reveals difficult trade‐offs between short‐run mitigation and long‐run growth. Improved agricultural productivity has powerful positive impacts, but remains difficult to achieve and may not address the immediate impacts of higher prices.     

MARKETING AUSTRALIAN BEEF AND EXPORT DIVERSIFICATION SCHEMES*

The Australian Meat Board (AMB) can influence the quantities sent to and the prices received for Australian beef and veal in the domestic and various export markets. Through its power to grant export licences and the conditions to be met in obtaining export licences the AMB can adopt the role of a price discriminating monopolist without supply control. This paper evaluates the price, quantity, efficiency and distribution effects of the export diversification scheme introduced by the AMB in 1968, of some modified schemes proposed in 1976, and of an alternative system whereby rights to export to premium export markets with quota restrictions are auctioned.     

The optimal export tax for a primary commodity in a vertical market

The conventional formula for the optimal export tax (derived from a partial equilibrium model that ignores importers’ welfare) is extended to include the deadweight loss to the domestic economy associated with the tax. Applying the extended formula to the tax Russia imposes on its exports of logs, results suggest ignoring the marketing channel causes the optimal export tax for a primary commodity to be understated. The degree of understatement increases as the supply of logs and processing/marketing inputs become less price elastic, and as buyer and seller power in the downstream (lumber) industry increases. For plausible values of model parameters, however, the degree of understatement is modest, less than 19%.     

Food Price Pass‐Through and the Role of Domestic Margin Services

The recent volatility in international agricultural markets has drawn attention to the impact of rising international agricultural prices and the induced price‐insulating measures on consumer food prices. Analyses based on simulation models on this topic typically ignore the role of domestic margin services. We extend the standard Global Trade Analysis Project (GTAP) model to allow for variations in the share of domestic margin services in consumed food across countries. This approach enables us to differentiate consumer prices from producer prices. Following the extension, the results show that domestic margin services reduce the consumer food price volatility for all countries, especially in high‐income countries, where the share of domestic margin services in final food consumption is higher. The effect of price‐insulating border policies is also reduced in the extended model. We find that our extension of the GTAP model greatly improves simulations of the 2007 surge in international agricultural prices. We validate our extension of the GTAP model by showing that the econometrically estimated food price pass‐through is decreasing with income and thus, is smaller in high‐income countries.