Impacts of Soybean Imports on Indian Processors, Farmers, and Consumers

India is one of the world’s largest importers of vegetable oils in part because of low domestic oilseed production, and tariff and nontariff barriers preventing oilseed imports. Simulation results indicate that India could lower its barriers to soybean imports without adversely affecting farmers, since imports are economically attractive to crushers even when subject to modest tariffs which sustain pre-liberalization farm and wholesale prices. Soybean processors in India achieve higher rates of capacity utilization and lower unit costs using imported oilseeds. Moreover, it is possible to partially redistribute to consumers the sizable gains processors experience by lowering the soybean oil tariff.India, oilseeds, processing cost, soybeans, trade liberalization, Agribusiness, Agricultural and Food Policy,

BEHAVIORAL IMPLICATIONS OF COUNTER-CYCLICAL PAYMENTS AND BASE ACREAGE UPDATING UNDER THE 2002 FARM ACT

The introduction of counter-cyclical payments (CCPs) and a base acreage updating option under the 2002 Farm Act have potential supply response implications. To gain insight into the economic incentives and efficiency implications of these provisions, this paper presents the design of a 3-stage experimental market used to gauge the actual response of economic agents under conditions simulating those faced by U.S. farmers. When completed, the results of the experiment will be used to assess the impact of the CCP system and of policy uncertainty regarding future base-updating options, relative to a market revenue-only baseline.Agricultural and Food Policy,

U.S. Peanut Markets Adjust to Policy Reform

With the recent (2002) elimination of the longstanding "marketing quota" system that supported domestic peanut prices at well above world levels, the U.S. peanut sector is in the initial stages of adjusting to a more uncertain, market-oriented environment. At the aggregate level, some early indications are that the adjustment process for U.S. peanut farmers has been difficult, resulting in deep losses of revenue and a rapid exit from peanut production by some producers. In 2003, the value of U.S. peanut production was down 30 percent and prices fell by nearly 25 percent compared with 2001. U.S. peanut planted acreage is at its lowest since 1915, and planted acreage has declined sharply in several important peanut producing States-55 percent in Virginia and nearly 40 percent in Texas since 2001. Peanut production is concentrated geographically, with a relatively small subset of counties in just 7 States accounting for the bulk of output. As a result, changes to the peanut program have potentially important economic implications not just for the individual farm households that produce peanuts, but perhaps for some rural communities as well. At the same time, it appears that adjustment difficulties for many current (and historical) producers may be mitigated by a number of factors, including: (1) an already diversified farm enterprise structure, with peanut (harvested) acreage accounting for an average of only 20 percent of peanut farmers' overall cropland, and a substantial share-72 percent of total household income already coming from off farm sources; (2) lower production costs for some producers stemming from policy-induced reductions in factor or input costs (e.g. land rental rates, seed prices); and (3) government revenue support and asset-loss compensation for current and historical peanut producers. It appears that one of the main difficulties faced by U.S. peanut producers following the elimination of the marketing quota system has been the loss of price stability, and a lack of price transparency and price discovery mechanisms under the new peanut program. Sources of price information and risk management tools -such as futures markets - are not available to peanut producers. Marketing alternatives may also be limited by a concentrated market structure at the buyer/processor level. Beyond detailing the more aggregate-level indicators of market adjustment, examining the adjustment experience and strategies of peanut producers at the household/farm enterprise level represents an opportunity to identify policy and market factors that facilitated or hindered adjustment, and to inform producers and policy-makers contemplating reform in other commodity programs. In particular, other U.S. commodities that are geographically concentrated or have a similar program history of production/import controls (tobacco, sugar, dairy) could draw lessons from the experience of peanut producers. Variations by region, demographic and household financial characteristics, and other factors such as institutional setting "market structure, trading/price discovery institutions, macroeconomic context or market orientation of the economy" are relevant to the analysis of policy reform both in the United States and other countries.peanuts, policy, adjustment, marketing quotas, Agricultural and Food Policy, Crop Production/Industries,

Post-Buyout Structural Change in the Peanut and Tobacco Sectors

When longstanding marketing quota systems were eliminated (“bought out”) in 2002 for peanuts and 2004 for tobacco, producers lost quota-related price supports and other quota system protections, and were exposed more directly to a market-oriented system. The nature of the peanut and tobacco marketing quota programs, the structure and magnitude of the buyouts, and market dynamics influenced the ensuing structural changes that occurred at the farm, regional, and aggregate market levels. Analysis of USDA’s Agricultural Resource Management Surveys (ARMS) on peanut and tobacco producers over a multi-year timeframe provides insights on, and a basis for comparing and contrasting the buyout impacts along multiple dimensions. Notable developments include a consolidation in the number and increased scale of farms, regional shifts in production regions, and increased use of contracting to manage price risk.peanuts, tobacco, policy, marketing quotas, buyouts, Agricultural and Food Policy,

The Post-Buyout Experience: Peanut and Tobacco Sectors Adapt to Policy Reform

Marketing quota and price support programs for peanuts and tobacco were a longstanding feature of U.S. farm policy, from the 1930s until the Government enacted quota buyouts, in 2002 for peanuts and 2004 for tobacco. Quota owners were compensated with temporary payments, but elimination of the quota programs exposed producers more to market risks and brought about structural changes at farm, regional, and marketwide levels. Since the buyouts, many peanut and tobacco farms have exited production. The farms that remain are mostly larger and have adopted new risk management strategies, such as contracting. Freed of the planting restrictions in the quota programs, production of peanuts, and to a lesser extent of tobacco, has been relocated to regions better suited to their growth. While total acreage and prices for peanuts and tobacco have remained below pre-buyout levels, the lower prices—along with increased production efficiency— have supported renewed growth in demand, particularly in export markets.Policy reform, farm policy, buyouts, marketing quotas, peanuts, tobacco, adjustment, structural change, Agricultural and Food Policy, Industrial Organization, Institutional and Behavioral Economics, Marketing,

Global Growth, Macroeconomic Change, and U.S. Agricultural Trade

After a decade of uneven export growth and rapidly growing imports, U.S. agriculture has begun to reassert its position in global trade markets. Rising exports and signs of moderating demand for imports mark a departure from previous trends. This report places past trends and emerging developments in perspective by spotlighting the role of two specific factors that help steer U.S. agricultural trade patterns: global growth and shifts in foreign economic activity that affect U.S. exports, and macroeconomic factors underlying the growth of U.S. imports. Consistent with actual changes in the level and destination of U.S. exports, model simulations corroborate the contention that renewed export growth can be sustained by expanding incomes and growing food import demand in emerging economies. In contrast, the rapid growth of U.S. agricultural imports appears less related to domestic income growth than to changing consumer preferences and other, perhaps less sustainable, macroeconomic conditions that fostered the growth of U.S. current account deficits.agricultural trade, trade balance, income growth, economic development, population, macroeconomics, exchange rates, current account, growth projections., Agricultural and Food Policy, Agricultural Finance, International Development, International Relations/Trade,

Mycotoxin Regulations: Implications for International Agricultural Trade

Food Consumption/Nutrition/Food Safety, International Relations/Trade,