Impacts of Exchange Rate Volatility on the U.S. Cotton Exports

A structural time series approach utilizing the state space model is used to analyze the impact of exchange rate volatility on the bilateral U.S. cotton exports to major export destinations. An EGARCH (Exponential Generalized Autoregressive Conditional Heteroskedasticity) model with normal and non-normal errors is used to estimate the volatility of exchange rate. Monthly data from 1995 to 2006 is utilized for the analysis. The results indicate a negative relationship between exchange rate volatility and U.S. cotton exports for most countries. The stochastic process governing the U.S. cotton exports to different countries is found to be permanent as well as transitory. The results support the view that the impact of exchange rate volatility can be better understood by analyzing markets separately.International Relations/Trade, Research Methods/ Statistical Methods,

ESTIMATION OF DEMAND FOR WHEAT BY CLASSES FOR THE UNITED STATES AND THE EUROPEAN UNION

This study estimates demand for wheat differentiated by classes using a dynamic AIDS model for the United States and the European Union (EU). The results suggest that imported wheat is more price responsive than domestic wheat in the U.S. market but not in the EU market. This may suggest that the Canadian policy that reduces prices of Canadian wheat in the U.S. market or U.S. export subsidies that raise prices of U.S, wheat could be expected to give rise to substantial substitution of Canadian for U.S. wheat. It is also found that in the EU, complementary relationships exist between spring and other wheat groups, This complementary relationship between the lower and higher quality wheat in the EU is not surprising because EU millers blend cheaper wheat such as EU common wheat and U.S. other wheat with high protein (spring) to obtain the preferred characteristics.Crop Production/Industries, Demand and Price Analysis,

The Impacts of U.S. Cotton Programs on the West and Central African Countries Cotton Export Earnings

This study uses a stochastic simulation approach based on a partial equilibrium structural econometric model of the world fiber market to examine the effects of a removal of U.S. cotton programs on the world market. The effects on world cotton prices and African export earnings were analyzed. The results suggest that on average an elimination of U.S. cotton programs would lead to a marginal increase in the world cotton prices thus resulting in minimal gain for cotton exporting countries in Africa.Stochastic simulation, partial equilibrium model, United States, Africa, cotton subsidies, export earnings, Crop Production/Industries, International Relations/Trade,

Compliance costs for regulatory approval of c4 rice

So far, most new biotech crops have been developed by transforming one or two genes with preferred traits. Compliance costs for regulatory approval of this type of crop vary among countries and according to whether the new biotech crop is a food or non-food crop. However, whether a new biotech crop with multiple transformed genes would cost significantly more and take much more time to be approved is unknown. This paper estimates the compliance costs for the regulatory approval of C4 rice, a new GM rice plant required several gene transformations, assuming it would be realized simultaneously in the 13 Asian countries in 2035. We found it to be $18.8 million (undiscounted), around 16.3$106 million. These estimated R&D costs could be useful to quantity the net welfare benefits from the introduction of C4 rice. In addition, donors could use this result as a guideline to fund additional investment required to develop C4 rice

European Union Agricultural Reforms: Impacts for Iowa

The European Union’s (EU) Common Agricultural Policy (CAP) is set to undergo comprehensive reforms, known as Agenda 2000, next year. The twofold objective of these reforms is to ensure the sustainability of European agriculture and to protect the livelihood of European farmers. In May 1999, the European Council officially adopted new financial and political guidelines—dubbed the Berlin Accord— that will increase government support to farmers through direct payments while reducing support prices for cereals, beef, and dairy products

PRICE DYNAMICS IN THE U.S. FIBER MARKETS:ITS IMPLICATIONS FOR COTTON INDUSTRY

The paper examines the price dynamics in the U.S. fiber market using error correction version of Granger causality test. Monthly prices are used to examine short-run and long-run price relationships simultaneously. Before specifying causal equations, time series properties of the prices are tested and are found to be first difference stationary and cointegrated. The causality results suggest weak lead-lag relationship between cotton and polyester prices in either direction. However, strongest relation is instantaneous feedback (within a month) between cotton and polyester prices. It may be interpreted from these results that any shock to the equilibrium relationships is mostly restored within a month. In addition, highly significant error correction terms in cotton and polyester equations also suggest the absence of distinct price leader which means both prices respond to restore equilibrium relationships.Production Economics,

PRICE RELATIONSHIPS IN THE U.S. FIBER MARKETS: ITS IMPLICATIONS FOR COTTON INDUSTRY

The paper examined the price relationship between cotton and polyester. The results provide strong evidence of long term price transmissions and granger causality between cotton and polyester price as well as the asymmetry transmissions for cotton on cotton, cotton on polyester, and polyester on polyester price. However, we did not find any evidence that there exists asymmetry transmission for polyester price on cotton price. Our results also did not support the contemporaneous effects hypothesis between polyester price and cotton price.Demand and Price Analysis,

THE IMPACTS OF U.S. COTTON PROGRAMS ON THE WEST AND CENTRAL AFRICAN COUNTRIES COTTON EXPORT EARNINGS

This study uses a stochastic simulation approach based on a partial equilibrium structural econometric model of the world fiber market to examine the effects of a removal of U.S. cotton programs on the world market. The effects on world cotton prices and African export earnings were analyzed. The results suggest that on average an elimination of U.S. cotton programs would lead to a marginal increase in the world cotton prices thus resulting in minimal gain for cotton exporting countries in Africa.Stochastic simulation, partial equilibrium model, United States, Africa, cotton subsidies, export earnings, Agricultural and Food Policy, Crop Production/Industries, Q11, Q17,

Sino-U.S. and Sino-E.U. Textile Safeguard Agreements: Comparing the Effects to Free Market Conditions

The effects of Sino-US and Sino-EU safeguard agreements on US, China and world cotton and textile sectors are investigated using a partial equilibrium model. The effects are compared to a free trade scenario under the provisions of the Agreement on Textiles and Clothing (ATC). The two agreements capping Chinese textile exports would decrease China's textile and apparel exports, production and domestic consumption by an average 1.57 percent, 0.63 percent and, 0.32 percent respectively. The safeguard agreements cause an increase in the U.S. cotton textile price index and a slight decrease in U.S. net textile imports and textile consumption. The agreements cause a decrease in the world cotton price and the quantity of cotton traded, but these trends reverse at safeguard expiration. The results generally support the view that the safeguard agreements forestall the effects of free trade in textiles and apparel rather than creating long lasting shifts in the textile trade.International Relations/Trade,

Cotton Trade Liberalizations and Domestic Agricultural Policy Reforms: A Partial Equilibrium Analysis

This paper analyzed the effects of trade liberalizing reforms in the world cotton market using a partial equilibrium model. The simulation results indicated that a removal of domestic subsidies and border tariffs for cotton would increase the amount of world cotton trade by an average of 4% in the next five years and world cotton prices by an average of 12% over the same time horizon. The findings indicated that under the liberalization policy, the United States would lose part of its export share to Brazil, Australia, and Africa. Furthermore, net cotton importing countries with minimum domestic and trade distortions would import less because of higher cotton prices whereas net cotton importing countries that subsidize domestic production and/or impose border tariffs (China, European Union, Pakistan, and Turkey) would significantly increase their imports.Agricultural and Food Policy,