THE POTENTIAL TRADE FLOW: AN AGREEMENT FOR THE AMERICAS

International Relations/Trade,

Determinants of Food Industry Performance – Empirical Evidence Based on a Survey

This paper empirically investigates the determinants of firms’ performance in the agri-food sector by using recent survey data for Denmark. Treating sales per employee as a proxy for value addition we estimate several bootstrapped regression models to draw conclusions on the marginal effects of potential performance determinants such as the form and nature of ownership, stage of the food chain and commodity sector, new product development, staff quality, firms’ competitive stance, and elements of firms’ strategy. To draw robust inferences we apply, besides the ordinary heteroscedasticity corrected Tobit ML-estimator, a nonparametric least absolute deviations estimator (LAD/CLAD) based on a quantile regression procedure. The results indicate that we cannot reject the hypothesis of no influence of dominant orientation on value added. Rather, firms’ focus on human capital, stage and commodity sector better explains their value addition. We can reject the hypothesis that regional networks have no influence on value added. Differences in location, emphasis on human capital and the negative influence of outsourcing on value added all provide supporting evidence. We reject the hypothesis of no influence of FDI, and moreover propose that FDI has targeted the domestic Danish market as a source of value added.value added, innovation, organizational type, Agribusiness, Q13, O31, O33,

Transformative Change in Agriculture: The Canadian Wheat Board

National policies must be in the interest of all Canadians. Between the 1920s and 1940s when the Canadian Wheat Board (CWB) was first being constructed, the export of wheat from the prairies was an essential component of national policy. In the twenty-first century the CWB has no important role in the development policy of western Canada. Its objectives are totally aimed at earning premiums in the market for prairie farmers. The CWB controls a smaller volume of the prairie crop in 2005 than it did in 1948. Given this diminished role for the CWB, does it need to exist at all? How might it be changed in a transformative way, given the present day realities of trade agreements and domestic pressures, so that it operates in the national interest while still maximizing returns for prairie wheat and barley farmers?Canadian Wheat Board, single-deck selling, trade agreements, Agricultural and Food Policy, International Relations/Trade,

Moral Hazard and GATT Article XVIII(B)

Article XVIII(B) of the GATT code allows developing countries to use tariffs to reduce imports when their balance-of-payments problems result in a low foreign currency reserve. While the intent of this GATT provision is sound, it has led to moral hazard problems. This chapter reviews the history and safeguards of Article XVIII(B0 and identifies some of its specific moral hazard problems. A model addressing these problems is then presented, and alternative policies are suggested to reform the Article

DETERMINANTS OF FOOD INDUSTRY PERFORMANCE – SURVEY DATA AND REGRESSIONS FOR DENMARK

This paper investigates empirically the determinants of firms’ performance in the agrifood sector by using recent survey data for Denmark. Treating sales per employee as a proxy for value added we estimate several bootstrapped regression models to draw conclusions on the marginal effects of potential performance determinants such as the form and nature of ownership, stage of the food chain and commodity sector, new product development, staff quality, firms’ competitive stance, and elements of firms’ strategy. To draw robust inferences we apply, besides the ordinary heteroscedasticity corrected Tobit ML-estimator, a nonparametric least absolute deviations estimator (LAD/CLAD) based on a quantile regression procedure. The results indicate that we cannot reject the hypothesis of no influence of dominant orientation on value added. Rather, firms’ focus on human capital, stage and commodity sector better explains their value addition. We reject the hypothesis that regional networks have no influence on value added. Location in Århus, emphasis on human capital and the negative influence of outsourcing on value added all provide supporting evidence. We reject the hypothesis of no influence of FDI, and moreover propose that FDI has targeted the domestic Danish market as a source of value added.value added, innovation, organizational type, Food Consumption/Nutrition/Food Safety, Q13, O31, O33,

The Doha Talks and the Bargaining Surplus in Agriculture

The Doha Round has been slow to achieve a reduction in the level of agricultural protection. This remains the case notwithstanding the substantial economic benefits that would arise from a more liberal agricultural trading regime. We provide one explanation for this slowness using a simple bargaining model. We demonstrate that the bargaining countries received a substantial fiscal gain from reducing government expenditures in the run-up to the Uruguay Round. This fiscal pressure was sufficient to block rent seekers who wanted farm payments to continue. Since the Uruguay Round these fiscal constraints have been reduced and the same pressure to reach a bargain and control rent-seeking behaviour is not present in the Doha Round.Doha Round, rent seeking, bargaining, International Relations/Trade,

Reversing the road to super farms

The organization of primary agriculture is dependent upon whether the institutions of a country allow for reverse franchising by farmers. If the transaction costs of managing a farm can be minimized by farmers conducting a form of collective action, such as cooperatives, then the size of farms will be smaller. If farms have to make the products in the firm, which are subject to very large economies of scale than super farms will be the result. The key is the existence of institutions, such as collective action and property rights, that allow for the minimization of costs. For this reason the organization of primary agriculture is, among other things, a public policy issue. In this paper we develop this argument, we sketch a theoretical framework based on a model of adaptive relational contracts, and we present two illustrative examples: the Danish cooperative system, and the Canadian Wheat Board.Agribusiness, Farm Management,

RENT SEEKING AND THE COMMON AGRICULTURAL POLICY: DO MEMBER COUNTRIES FREE RIDE ON LOBBYING?

The Common Agricultural Policy is modelled as a club good providing the European Union (EU) farmer with financial benefits. We build an economic model which explains how much farmers in individual EU countries invest in rent-seeking activities in order to test for free-riding behaviour on lobbying costs. For our investigation we group the EU member countries by farm structure, and the type of benefit received. We explain the fees paid by farmers for lobbying by other countries fees, political variables, and country and regional agricultural characteristics. The model shows that some member countries free ride on others. This suggests a form of policy path dependency and leads to a suboptimal investment on lobbying of 7.5%.Free-riding, rent-seeking, Common Agricultural Policy, Agricultural and Food Policy, Institutional and Behavioral Economics,

Agricultural Policy: High Commodity and Input Prices

Because of high commodity prices, beginning in 2006, subsidies to farmers in the United States, the European Union, and Canada have been reduced significantly. However, significant losses have been experienced by the red meat sector, along with escalating food prices. Because of rising input costs, the “farm boom†may not be as great as first thought. Ethanol made from corn and country-of-origin labeling cloud the U.S. policy scene. Higher commodity prices have caused some countries to lower tariff and non-tariff barriers, resulting in freer commodity trade worldwide. Policymakers should attempt to make these trade-barrier cuts permanent and should rethink current policy legislation to deal with the possibility of a collapse of world commodity markets. Agricultural commodity prices have dropped significantly since early 2008.agricultural policy, high commodity prices, input prices, Agricultural and Food Policy,