Do global trade distortions still harm developing country farmers ?

The authors estimate the impact of global merchandise trade distortions and services regulations on agricultural value added in various countries. Using the latest versions of the Global Trade Analysis Project (GTAP) database and the GTAP-AGR model of the global economy, their results suggest real net farm incomes would rise in developing countries with a move to free trade, thereby alleviating rural poverty. This occurs despite a terms of trade deterioration for developing countries that are net food importers or that enjoy preferential access to agricultural markets of high-income countries. The authors also show, for several large developing countries, the contribution of theirown versus other countries'trade policies.Agribusiness,Economic Theory&Research,Free Trade,Rural Development Knowledge&Information Systems,Trade Law

WTOÂ’s Doha Cotton Initiative: A Tale of Two Issues

Four West African nations have demanded the WTO’s Doha Development Agenda include a Cotton Initiative that involves two issues: cutting cotton subsidies and tariffs, and assisting farm productivity growth in Africa. This paper provides estimates of the potential economic impacts of (a) complete or partial removal of cotton subsidies and import tariffs globally and (b) cotton productivity growth through the adoption of genetically modified (GM) cotton varieties. Use is made of the latest version of the GTAP database and model. Our results confirm that – unlike for other agricultural subsidies and tariffs – for cotton it is subsidy reductions rather than tariff cuts that would make by far the largest impact. For Sub-Saharan Africa the potential gains are huge relative to the effects on them of reforming other merchandise trade policies. And they could be more than doubled if that reform provided the cash for farmers to take advantage of the biotechnology revolution and adopt GM cotton varieties. But those potential gains, and the affordability of switching to costly GM seed, depend crucially on the extent to which high-income countries are willing to lower domestic support to their cotton farmers.subsidy and tariff reform, computable general equilibrium modeling, economic welfare, GMOs, cotton biotechnology

Agricultural Policy as a Barrier to Global Economic Integration

For decades, trade between countries in agricultural products has been distorted by policies of richer countries favoring their farmers with import barriers and subsidies. Agricultural trade has often also been limited by an anti-agricultural, pro-urban bias in many developing country policies. Both sets of policies have reduced national and global economic welfare. They also have added to inequality and poverty in developing countries, because three-quarters of the worldÂ’s billion poorest people depend on farming for their livelihood. Over the past two decades numerous developing country governments have reduced their sectoral and trade policy distortions, while some high-income countries also have begun reforming their farm protectionist policies. Drawing on results from a new multi-country World Bank research project, this paper summarizes estimates of the extent of those distortions to prices of farm products over the past 5 decades, and of their effect in reducing the integration of the worldÂ’s agricultural markets.Distorted incentives, agricultural and trade policy reforms, international economic integration

The World Trade Organization's Doha cotton initiative : a tale of two issues

Four West African nations have demanded that the World Trade Organization's Doha Development Agenda include a Cotton Initiative that involves two issues: cutting cotton subsidies and tariffs, and assisting farm productivity growth in Africa. The authors provide estimates of the potential economic impacts of (1) complete or partial removal of cotton subsidies and import tariffs globally, and (2) cotton productivity growth through the adoption of genetically modified (GM) cotton varieties. They use the latest version of the GTAP database and model. Their results confirm that-unlike for other agricultural subsidies and tariffs-for cotton it is subsidy reductions rather than tariff cuts that would make by far the largest impact. For Sub-Saharan Africa the potential gains are huge relative to the effects on that region of reforming other merchandise trade policies. And they could be more than doubled if that reform provided the cash for farmers to take advantage of the biotechnology revolution and adopt GM cotton varieties. But those potential gains, and the affordability of switching to costly GM seed, depend crucially on the extent to which high-income countries are willing to lower domestic support to their cotton farmers.Economic Theory&Research,Crops&Crop Management Systems,Tax Law,Textiles, Apparel&Leather Industry,Wholesale&Retail Trade Industry

Climate change and food security to 2030: a global economy-wide perspective

The effects of climate change on agriculture raise major food security concerns. We use a global economy-wide model to assess the effects on farm product prices of expected yield changes. Also modelled is an expected adverse effect of higher temperatures and humidity in the tropics on the productivity of unskilled workers in developing countries. Given the degrees of uncertainty about plausible effects of climate change, our modelling accounts for a range of yield productivity and labor shocks. The results entail consequences for international agricultural prices, national food consumption, self sufficiency, net farm income and economic welfare.Climate change, crop and labor productivity growth, global economy-wide model projections, Agricultural and Food Policy, Environmental Economics and Policy, Food Security and Poverty, D58, F17, Q17, Q24, Q54,

Projecting the World Economy to 2050: Agriculture in the Economy-wide GTAP Model

Recent analyses of the possible adverse effects of climate change and policy responses on agriculture and mining have raised food and energy security concerns in both rich and poorer countries. Analysing possible effects of ways of dealing with those concerns requires first projecting the world economy forward to 2050 and beyond. This paper provides as background a set of projections to 2050, drawing on the global economy-wide model known as GTAP. The projection is calibrated to ensure the real prices of primary products remain broadly unchanged from their levels in the model's base year of 2004. Alternative scenarios could have been calibrated to show (a) rising real prices for both food and energy raw materials (consistent with forecasts of several international agencies), by assuming some slowdown in productivity growth in primary sectors, or (b) declining real prices for agricultural and mining products (consistent with the experience of most of the 20th century), by assuming somewhat faster productivity growth in primary sectors. The set of projections shown for 2030 and 2050 is thus an intermediate set. The key impacts on international prices, agricultural self-sufficiency, sectoral shares of national economies and national shares of the global economy are highlighted. The paper concludes with implications for R&D spending and research policy.Global computable general equilibrium model projections, crop and labour productivity growth

Agricultural and Trade Policy Reforms in Latin America: Impacts on Markets and Welfare

For decades, earnings from farming in Latin American countries have been depressed by pro-urban and anti-trade biases in own-country policies and by governments of richer countries favoring their farmers with import barriers and subsidies. These policies have reduced national and global economic welfare, hampered agricultural trade and economic growth, and may well have added to income inequality and poverty in the region. Since the mid-1980s, however, the region has reduced its sectoral and trade policy distortions and some high income countries also have begun reducing market-distorting aspects of their farm policies. This paper synthesizes results from a World Bank research project that provides (a) price comparison based measures of the extent to which national policies have changed farmers‘ price incentives since the 1960s in eight Latin American countries, (b) partial equilibrium indexes of the impact of national farm policies on agricultural trade and economic welfare, (c) general equilibrium estimates of national trade, welfare and poverty effects of global reforms retrospectively since the early 1980s and prospectively as of 2004, (d) comparisons with similar estimates for Asia, Africa and high-income countries, and (e) a discussion of prospects for further pro-poor policy reform of agricultural price and trade policies.Latin America, agricultural and trade policy reforms, trade restrictiveness indexes, CGE modeling, economic welfare

Climate Change and Food Security to 2050: A Global Economy-wide Perspective

Recent analyses of the possible adverse effects of climate change on agriculture in developing countries have raised food security concerns, especially for farm households whose crop productivity is expected to fall. The present study uses the GTAP global economy-wide model to capture at the same time the expected positive effects on temperate zone crop productivity, which will more or less offset the upward pressure on farm product prices from yield falls in developing countries. Also modelled is an expected adverse effect of higher temperatures and humidity on the productivity of unskilled workers in the tropics, but since they work in nonfarm as well as farm activities the net effect of that shock on agriculture’s competitiveness is an empirical matter. The results suggest there may be less cause for concern over food security than some earlier studies indicated, but the degrees of uncertainty involved in such modelling are sufficient to warrant a precautionary approach.Climate change, crop and labour productivity growth, global computable general equilibrium model projections, Productivity Analysis, D58, F17, Q17, Q24, Q54,

Agricultural and Trade Policy Reforms in Latin America: Impacts on Markets and Welfare

Farm earnings in Latin America have been depressed by pro-urban and anti-trade biases in national policies and by agricultural support policies of richer countries. These policies have reduced economic welfare, hampered trade and growth, and may well have added to income inequality. Since the 1980s, however, the region has reduced its sectoral and trade policy distortions; and some high-income countries also have begun reducing market-distorting aspects of their farm policies. This paper synthesizes results from a World Bank project that provides: price-comparison based measures of the extent to which national policies have changed farmersÂ’ price incentives; partial equilibrium indexes of the impact of farm policies on trade and economic welfare; general equilibrium estimates of trade, welfare and poverty effects of global reforms retrospectively and prospectively; comparisons with similar estimates for Asia, Africa and high-income countries; and a discussion of prospects for pro-poor policy reform of agricultural price and trade policies.

Poverty Vulnerability and Trade Policy: Are the Likely Impacts Discernable?

Trade policy reform prospects have generated debate about the impacts on poverty. Some critics assert that price changes induced by trade reform are minimal and may not be distinguishable from price fluctuations induced by other shocks to the global economy. This paper addresses this issue by developing an approach to assess whether poverty changes induced by trade reform can be statistically discernable, based on a comparison in the grains sector. Fluctuations in grains markets are implemented by incorporating stochastic simulations into a CGE model of the global economy. The resulting price distributions are inputted to a micro-simulation based on national household surveys. The conclusions are based on the comparison of the resulting poverty distributions from the weather-induced variability only, versus the combined effect of the latter and trade reform. Results indicate that, in this conservative approach of evaluating only the global grains markets, the short-run impacts on poverty of trade liberalization can not be distinguished from market volatility in some countries.International Relations/Trade,