Growing Demand for Animal-Protein-Source Products in Indonesia: Trade Implications

New elasticities were estimated from Indonesia's 1996, 1999, and 2002 National Socio-Economic Survey, or SUSENAS, data using a double-hurdle demand specification. The estimates suggest that major changes in Indonesian household diets are expected in the coming years, as income growth is sustained and as urbanization proceeds at a fast pace. The consumption "trading-up" pattern for animal-protein source products observed in many countries may also occur in Indonesia. In this particular case, households will shift from fish to dairy and meat products. The trade impacts of this emerging consumption pattern will be determined by the cost of adjustment in Indonesia's domestic productive capacity and the influence of the country's predominantly Islamic tradition.demand, household consumption, trade, International Relations/Trade,

WELFARE IMPROVING COLLUSION IN THE JAPANESE PORK IMPORT MARKET

Underlying parameter estimates suggest that reduction in pork exporters' profit is three times higher when the Japanese GATT safeguard is invoked, providing incentive to foreign suppliers to collude to avoid exceeding the trigger. This collusion is welfare-improving since the safeguard induces more inefficiencies. Workable and efficient allocation rules are constructed with a multi-plant monopolist structure that allows trade of quota.GATT Safeguard, gate price, collusion, International Relations/Trade,

IMPACT OF GATT IN THE FUNCTIONING OF AGRICULTURAL MARKETS: AN EXAMINATION OF MARKET INTEGRATION AND EFFICIENCY IN THE WORLD BEEF AND WHEAT MARKET UNDER THE PRE-GATT AND POST-GATT REGIMES

Although the GATT compliance record is mixed, this study finds consistent evidence that GATT reforms improved market efficiency and integration in the beef and wheat market. Cointegration analysis shows much improved price transmission and speed of adjustment. Variance decomposition analysis reveals larger and quicker impacts in prices of non-fundamental shocks originating from other markets. Results make a stronger case for more reforms in the current revisitation of the Agreement.International Relations/Trade,

AN ECONOMETRIC DECOMPOSITION OF AGGREGATE DATA: APPLICATION TO THE EU-15 AVERAGE CATTLE SLAUGHTER WEIGHT

Decomposition method was developed to disaggregate EU cattle slaughter weight. Model has good fit, no correlation, significant coefficients, consistent signs, and desirable Theil-validation statistics. Estimates for calves, cows, and other cattle are very close to reported weights. Application for New Zealand, Mexico, sheep sector, and dairy-beef calving rates were also successful.Livestock Production/Industries, Research Methods/ Statistical Methods,

A NEW GENERAL CONCEPTUAL APPROACH TO MODELING THE LIVESTOCK SECTOR: AN APPLICATION TO THE JAPANESE SWINE-PORK SECTOR

Many livestock sector models have limited coverage of relevant variables, and are somewhat ad hoc in their choice of what should be specified as behavioral equations. This study develops a generic conceptual approach to modeling the livestock sector that provides consistent rules of specification and better coverage of variables. This approach is then applied to the swine-pork sector of Japan. The new approach departs significantly from existing models. The structure clearly differentiates stock and flow variables; only flow variables have behavioral specifications and stock variables are accounting identities; flow variables are expressed in rates rather than levels; logistic functions are used in most flow variables to automatically impose biological-technological limits; and swine slaughter number and weight are disaggregated into sow and other swine (i.e., gilt-barrow). The estimated Japanese swine-pork model has good fit, no serial correlation, significant coefficients, correct signs, and is better able to capture both the mean and variability of all endogenous variables.Livestock Production/Industries, Research Methods/ Statistical Methods,

Distillers Dried Grain Product Innovation and Its Impact on Adoption, Inclusion, Substitution, and Displacement Rates in a Finishing Hog Ration

This study finds that the use of distillers dried grain with solubles (DDGS) as feed is greatly influenced by the development of DDGS products that are available in the market. We find that newer-generation DDGS products have a higher optimal inclusion rate, reaching the maximum allowable rate of 20% for swine, and they have a higher displacement rate of 0.23 for soymeal and 0.93 for corn. Although both traditional and newer-generation DDGS products are primarily used as a corn substitute for energy, it will take only a relatively small change in the price or matrix A (or both) for the newer-generation DDGS to primarily substitute for soymeal for the limiting amino acid, lysine. In contrast, traditional DDGS products have a lower optimal inclusion rate of 7%, and they have a lower displacement rate of 0.75 for corn and 0.08 for soy meal. This product is primarily used as a corn substitute for energy. When traditional DDGS is introduced in a feed ration, total feed cost declines by 2.64%, or a reduction of $0.29 per cwt of feed. This translates into a$2.17 per head savings in feed cost in a feeder-to-finish operation. Using newer-generation DDGS reduces feed cost by 9.88%, or a reduction of $1.08 per cwt of feed, saving feeder-finisher operations$8.06 per head. This study suggests that as a substitute product, the price of DDGS will track the price of both corn and soymeal. It will be more of the former until new-generation DDGS can be used as a primary substitute for soymeal and take a dominant share of the market. Finally, this study clearly points to the critical importance of DDG product innovation to promote widespread and optimal use of DDGS as a feed ingredient, thereby alleviating the food-feed-fuel trade-off

The Food-Away-from-Home Consumption Expenditure Pattern in Egypt

This study characterizes the household food-away-from-home (FAFH) expenditure pattern in Egypt. Specifically, a standard Tobit model was estimated to quantify the responsiveness of Egyptian household FAFH expenditures to changes in their income and selected household demographic characteristics. We found that the proportion of households with a positive FAFH expenditure is small, at 36% to 38% of the total number of households. These households spent 5% to 8% of their total expenditure on FAFH. Households that are located in urban areas, with more family members, and whose household head is young and male had generally higher levels of FAFH expenditure. The estimated conditional income elasticity is only 0.02, and the unconditional income elasticity is 0.52, suggesting that most of the growth in this sector will be driven by new households participating for the first time in FAFH expenditures. These elasticity estimates are relatively low when compared to those of other countries. However, preliminary estimates from more recent data seem to suggest a higher income elasticity, which is consistent with the expansion of the sector of hotels, restaurants, and other institutions in Egypt

What Effect Does Free Trade in Agriculture Have on Developing Country Populations Around the World?

Highlighted in the battle in Seattle in 1999, anti-trade sentiments still persist, even with development considerations placed at the core of reform negotiations at the World Trade Organization, in which two-thirds of the members are developing countries. In this paper, the impact of agricultural trade liberalization on food consumption through changes in income and prices is considered. First, agricultural trade liberalization is estimated to raise economic growth by 0.43% and 0.46% in developing and industrialized countries, respectively. Since food consumption of households with lower income are more responsive to changes in income, their food consumption increases more under a trade liberalization regime. Second, trade liberalization is expected to raise world commodity prices in the range of 3% to 34%. Since, in general, border protection is much higher in developing countries and the level of their tariff rates are likely to exceed the rate of price increases, 87% to 99% of the 83 to 98 countries examined would have lower domestic prices under liberalization. Again, given that low-income countries are more responsive to changes in prices, food consumption in these countries would increase more. Finally, empirical evidence shows that if there is any harm on small net selling producers in a net importing country, it is neither large in scale nor widespread because the substitution effect dominates the net income effect from the lower domestic prices

Westernization of the Asian Diet: The Case of Rising Wheat Consumption in Indonesia

With sustained income growth and fast urbanization, Indonesia will see a major shift in the growth of grain consumption from rice to wheat products. New demand estimates from consumption survey data give a relatively high income elasticity of demand for wheat-based products, in the range of 0.44 to 0.84, with 26% to 34% of this response coming from the impact of income on the probability of consumption for non-consuming households and the remaining impact coming from the response on the level of consumption for households currently consuming wheat products. Urban location of households also contributes an increase of 0.11% to 0.13% to consumption. In contrast, elasticities in rice show a negative impact of income and urbanization on the probability of consumption and a positive but small impact on the unconditional mean. A partial liberalization scenario shows the domestic wheat flour price declining by 13.66%, inducing consumption to increase by 7.06%, which translates into 7.04% growth in imports. This exerts an upward pressure on the world price, increasing it by 0.23%. A faster income growth scenario shows higher consumption (2.60%), imports (2.59%), and prices (0.09%). Countries with a proximity advantage such as Australia, China, and India will benefit from the growth in this market. But, with dependable supply, product quality assurance, and credit availability, North American suppliers may still remain in this market