Distortions to Agricultural Incentives in Russia

Distorted incentives, agricultural and trade policy reforms, national agricultural development, Agricultural and Food Policy, International Relations/Trade, F13, F14, Q17, Q18,

Russia's Transition to Major Player in World Agricultural Markets

Russia, Agriculture, Trade, Grain, Meat, WTO Accession, International Development, F14, P33, Q17,

Measuring the Success of Agricultural Transition: An Application to Russia

The paper presents a model of the agro-food system in a transition economy, which shows how the move from a planned to a market economy affects the production and consumption of goods and economic welfare. The model is then used to identify two complementary approaches for measuring the success of agricultural transition, where success is defined as increasing consumer welfare. The first approach is to identify and measure quantitative indicators of economic gain. The second is to identify the policies that would lead to greater welfare, and then measure the extent to which these policies have been implemented. An assessment of Russian agricultural reform using the two evaluation approaches shows that only modest progress has been made. Russia has not met the (perhaps overly optimistic) expectations of many observers that transition would substantially increase farm efficiency and productivity.transition, agricultural reform, Russia, efficiency, productivity, comparative advantage, Agricultural and Food Policy,

Decomposing Changes in Agricultural Producer Prices

This paper develops a method for decomposing changes in agricultural producer prices. The method builds on a procedure used by the World Bank, with the key variables in the decomposition being trade prices, exchange rates, and agricultural trade policies. The main ways by which we expand on the World Bank decomposition procedure are by broadening the analysis of policy effects, and by adding the effect from incomplete transmission of changes in border prices and exchange rates to producer prices, and the effect on prices from interactions between variables as they change simultaneously. We demonstrate the decomposition method by using the Russian poultry market in the late 1990s, and find that the dominant factor in changing the producer price was the large depreciation of the ruble. Many developing and transition economies have fluctuating exchange rates. The decomposition method presented in this paper could be used to test the hypothesis that exchange rate movements are the main cause of changes in these countries' agricultural commodity prices. Another hypothesis that the method could help test is that an important factor in affecting countries' agricultural prices is incomplete transmission of changes in trade prices and exchange rates to domestic prices, where the incomplete transmission is mainly caused not by policy, but rather by undeveloped market infrastructure.agricultural prices, price transmission, exchange rates, trade policy, Russian agriculture, developing economies, transition economies, Agricultural Finance, F13, O13, 024, Q11, Q17,

Price and Exchange Rate Transmission in Russian Food Markets

The paper estimates price and exchange rate elasticities in Russia during 1994-2000 for the country's major agricultural traded goods. The calculations not only can be used for trade forecasting, but also serve as indicators of the degree to which Russia is integrated into world agricultural markets. The results show that the transmission of changes in world trade prices and the exchange rate to changes in Russian domestic food prices is generally low, though highest for Moscow and St. Petersburg.Marketing,

The Transmission of Exchange Rate Changes to Agricultural Prices

Movements in countries’ exchange rates can substantially change the prices of goods faced by producers and consumers and thereby affect incentives to produce, consume, and trade goods. Exchange rate changes, however, might not be completely transmitted (passed through) to domestic prices. Empirical evidence shows that price and exchange rate transmission for agricultural products is low in most developing economies, partly because of trade policies but also because of inadequate infrastructure and other market deficiencies. During the last 20 years, developed and developing countries generally have moved away from support policies that impede price and exchange rate transmission toward trade policies that allow transmission, such as tariffs. The Uruguay Round Agreement on Agriculture of 1994 strongly encouraged this development. Despite these policy changes, market deficiencies remain as a cause of incomplete transmission. Incomplete transmission weakens countries’ integration into world agricultural markets and thereby reduces agricultural trade potential. Low transmission in developing countries also decreases their own benefits from trade, including the gains they could realize if there is further global agricultural liberalization.Agricultural infrastructure, agricultural policy, agricultural trade, exchange rates, exchange rate transmission, imperfect markets, institutions, price transmission., Agribusiness, Agricultural and Food Policy, Agricultural Finance, Financial Economics,

CHANGES IN AGRICULTURAL MARKETS IN TRANSITION ECONOMIES

Economic reform in the transition economies of the former Soviet bloc has transformed the volume and mix of these economies' agricultural production, consumption, and trade. Output drops in most countries have ranged from 25 to 50 percent. The livestock sector has been hit particularly hard, all but eliminating U.S. grain exports to the region. This report concludes that the output decline has been an inevitable part of market reform and that the main goal of agricultural policy in the transition economies should not be to return output to pre-reform levels but to increase the productivity of input use. Although reform has created a food security problem in some countries, the cause of the problem is not insufficient food supplies, but rather inadequate access to food by segments of the population and regions within countries.Russia, Ukraine, former Soviet Union, Central and Eastern European countries, transition economies, agricultural production, livestock sector, food consumption, trade, policy reform, productivity, International Relations/Trade,

Decomposing Changes in Agricultural Price Gaps

The paper develops a procedure for decomposing changes in agricultural price gaps, defined as the difference between a commodity's domestic producer and border prices. Two decomposition approaches are presented, depending on whether policy allows transmission from changes in trade prices and exchange rates to domestic prices. The methods allow one to isolate and measure the effect on the price gap of changes in agricultural policy versus non-policy variables. The decomposition procedure is demonstrated in an example involving the price gap for Russian poultry in the late 1990s. The results are consistent with the argument that for developing and transition economies, the main cause of changes in price gaps is incomplete transmission of changes in exchange rates to domestic prices, resulting not from policy intervention, but rather from undeveloped market infrastructure.Demand and Price Analysis, International Relations/Trade,

TRANSITION AND FOOD CONSUMPTION

This paper examines why transition from planned to market economies in the countries of the former Soviet bloc has changed their mix and volumes of food consumption. During transition, consumption of high value products, such as meat and dairy products, has plummeted, while consumption of staple foods such as bread and potatoes has remained steady, or even increased. The paper shows that in the pre-reform planned economy, planners "desired" the production and national consumption of high value (and cost) foodstuffs more than consumers. When market reform resulted in consumer prices adjusting to reflect the full cost of production, consumer demand switched from high cost foods to other goods and services. The demand-driven nature of food restructuring in these countries has implications for food security, reinforcing the argument that any food security problems are not mainly the result of inadequate aggregate supplies of agricultural products.Food Consumption/Nutrition/Food Safety,

Economic Reform in the Newly Independent States of the Former USSR: Effects on Agricultural Production and Trade to 2005

International Relations/Trade,