Assessing the Implications of EU Enlargement for CEEC Agri-food Trade Specialisation

The goal of the paper is to analyse agri-food trade specialisation in seven Central and Eastern European Countries (CEECs) with their trade groupings over the period 2000-2005, prior to and after their accession to the EU. For these CEECs, we found high agri-food trade specialisation in a relatively small number of commodities. The most competitive commodities in trade with all trade groupings other than the EU-15 were marked by a fairly high level of processing. Over the analysed period the CEE countries did not maintain positions of the most competitive commodities, but at the same time they improved positions of a number of previously uncompetitive commodities. The competitiveness of CEEC agrifood trade commodities declined over the period analysed.agri-food trade, specialisation, Lafay index, Markov matrices, new EU Member States, International Relations/Trade,

Agri-food Trade Specialisation Pattern in the New EU Member States

The paper analyses development of agri-food trade specialisation pattern in eight EU Member States of the 2004 and 2007 enlargements (NMS) during the period 2000 – 2005. Over the period analysed, the NMS were not able to hold trade positions in the most competitive commodities, but on the other hand, positions of a number of previously uncompetitive commodities improved. We show convergence of dynamism of agri-food trade specialisation across NMS in trade with the partners/groupings investigated.agri-food trade, specialisation, EU Member States of 2004 and 2007 enlargements, International Relations/Trade,

BIOFUELS AND LEAKAGES IN THE FUEL MARKET

Leakage in the fuel market differs, depending on whether ethanol production is determined by a tax credit or consumption mandate. Two components of market leakage are distinguished: domestic and international. Leakage with both a tax credit and a consumption mandate depends on market elasticities and consumption/production shares, with the former having a bigger impact. Leakage is also more sensitive to changes in market supply and demand elasticities in the country not introducing biofuels. Although positive with a tax credit, market leakage can be negative with a consumption mandate, meaning that one gallon of ethanol can replace more than a gallon of gasoline. We also show that being a small country biofuels producer does not necessarily mean that leakage for this country is 100 percent. Our numerical estimates show that one gallon of ethanol replaces approximately 0.2-0.3 gallons of gasoline in the U.S.Agricultural and Food Policy, Crop Production/Industries, Environmental Economics and Policy, International Relations/Trade, Resource /Energy Economics and Policy,

Trade Creation and Diversion in the Enlarged EU Market: Evidence for Agricultural Trade in Slovakia

In the paper the authors analyze the changes in agricultural trade patterns in Slovakia influenced by the gradual trade liberalization that occurred prior to European Union enlargement in 2004. The results show a significant trade-diversion effect of the enlargement on Slovak agricultural trade. A one-percentage-point reduction in the agricultural tariff rate of Slovakia increases agricultural imports from EU15 and Central and East European countries (CEEC) by around 3 percent. Given that the average reduction in tariff rates was 10.4 percent, the authors can conclude that approximately 31.4 percent of the increase in agricultural imports from the EU15 and CEEC was due to elimination of tariffs as Slovakia (and the other CEECs) joined the EU.agricultural trade; EU enlargement; Slovakia; trade liberalization

International Interlinkages of Biofuel Prices: The Role of Biofuel Policies

Based on their theoretical predictions, Kliauga, de Gorter, and Just (2008) and de Gorter, Drabik, and Just (2010) argue that the United States and the European Union establish the world ethanol and biodiesel prices, respectively. We test these theories using cointegration analysis and the Vector Error Correction (VEC) model. Weekly price series are analyzed for the major global biofuel producers (European Union, United States, and Brazil) for the period 2002 – 2010. Polices in the United States and Brazil appear to play an equal role in determining ethanol prices in other countries, thus only partially confirming the theoretical predictions. For biodiesel, our results demonstrate that the EU mandate impacts the world biodiesel price and thus they confirm the European Union’s price leadership established in theory.biofuels, biofuel polices, price leadership, VEC, International Relations/Trade, Resource /Energy Economics and Policy, C32, Q16, Q17, Q47,

THE ECONOMICS OF FARM ORGANIZATION IN CEEC AND FSU

In Western Europe, USA and other developed countries agriculture is dominated by small family farms. In Central and Eastern European Countries (CEEC) and Former Soviet Union (FSU) dual structure of farms exists. There are large corporate farms (CF) and small family farms (FF) in CEEC and FSU. Our paper shows that both CF and FF specialize in commodities in which they have comparative advantage. CF specialize in capital intensive products and in products with low labor monitoring. FF specialize in products with higher labor monitoring requirements. The implication of this paper is that farm structure determines in which products the country will be competitive on international markets. This is especially important for transition countries where high transaction costs hinder the change of farm organization. For this reason in transition countries suffering from high transaction cost the choice of product structure is more important than the choice of farm organization.farm structure, production specialization, transaction costs, CEEC, FSU, Farm Management,

Carbon Leakage with Forestation Policies

This paper analyzes carbon leakage due to reduced emissions from deforestation (RED). We find that leakage with RED is good because the policy induces afforestation that contributes to a further carbon sequestration. By ignoring the domestic component of carbon leakage, the literature can either overestimate or underestimate leakage, depending on the magnitudes of the numerator and the denominator of the leakage formulas. Unlike the literature, we include the land and agricultural markets in the analysis of carbon leakage with forestation policies. In this model, carbon leakage depends on: (1) supply and demand elasticities of timber production and consumption, respectively in the country introducing a RED policy (Home country) and in the rest of the world; (2) Home country’s production and consumption share in the world timber production and consumption, respectively; (3) prices of land and crop products in the Home country and the rest of the world; (4) initial allocation of land between forestry and agriculture; (5) share of total forest area set aside under RED; and (6) relative carbon sequestration potential of the forest planted on an afforested land and of the forest withdrawn from timber harvest. These potentials depend heavily on the forest species as well as on timing of the policy, and on the discount rate and time path of increasing carbon prices.carbon leakage, forestry, reduced emissions from deforestation, afforestation, Agricultural and Food Policy, Environmental Economics and Policy, Land Economics/Use, Q23, Q24, Q54,

The Market And Environmental Effects Of Alternative Biofuel Policies

This dissertation analyzes market and environmental effects of alternative U.S. and Brazilian biofuel policies. Although we focus on corn- and sugarcane-ethanol, the advanced analytical framework can easily be extended to other biofuels and biofuel feedstocks, such as biodiesel and soybean. The dissertation consists of three chapters. The first chapter develops an analytical framework to assess the market effects of a set of biofuel policies (including subsidies to feedstocks). U.S. corn-ethanol policies are used as an example to study the effects of biofuel policies on corn prices. We determine the 'no policy' ethanol price, analyze the implications for the 'no policy' corn price and resulting 'water' in the ethanol price premium due to the policy, and generalize the surprising interaction effects between mandates and tax credits to include ethanol and corn production subsidies. The effect of an ethanol price premium depends on the value of the ethanol co-product, the value of production subsidies, and how the world ethanol price is determined. U.S. corn-ethanol policies are shown to be a major reason for recent rises in corn prices. The ethanol policy-induced increase in corn prices is estimated to be 33 - 46.5 percent in the period 2008 - 2011. The second chapter seeks to answer the question of what caused the significant increase in ethanol, sugar, and sugarcane prices in Brazil in the period 2010/11 to 2011/12. We develop a general economic model of the Brazilian fuel-ethanol-sugar complex. Unlike biofuel mandates and tax exemptions elsewhere, Brazil's fuel-ethanol-sugar markets and fuel policies are unique in that each policy, in this setting, theoretically has an ambiguous impact on the market price of ethanol and hence on sugarcane and sugar prices. Our empirical analysis shows that there are two policies that seemingly help the ethanol industry but do otherwise in reality: a low gasoline tax and a high anhydrous tax exemption result in lower ethanol prices. On the other hand, as expected, higher mandates, gasoline prices, and tax exemptions for hydrous ethanol lead to higher ethanol and sugar prices. Eliminating Brazilian ethanol tax exemptions and mandates reduces ethanol prices by 21 percent in 2010-11, which is very similar to the estimated effects of U.S. ethanol policies in the same time period. However, the marginal changes in Brazilian policies on ethanol prices between 2010-11 and 2011-12 are small both individually and collectively. The observed market changes can only be explained by outward shifts in fuel transportation and sugar export demand curves, and reduced sugarcane supply due to bad weather. In the third chapter, we investigate whether U.S. corn ethanol saves greenhouse gas emissions relative to the gasoline it is assumed to replace one-to-one (on an energy equivalent basis). This chapter shows that ethanol policies generate far greater carbon leakage in the fuel market than in the agricultural market, where leakage occurs in the form of land use change. Carbon leakage in the fuel market due to a tax credit is always greater than that of a mandate, while the combination of a mandate and subsidy generates greater leakage than a mandate alone. We show that corn-ethanol does not meet the U.S. EPA's sustainability threshold, regardless of the biofuel policy and whether one includes emissions from land use change. This result makes the controversy over how to measure land use change inconsequential

Modeling Carbon Leakages with Forestation Policies

This paper analyzes carbon leakage due to reduced emissions from deforestation (RED). We find that leakage with RED is good because the policy induces afforestation that contributes to a further carbon sequestration. By ignoring the domestic component of carbon leakage, the literature can either overestimate or underestimate leakage, depending on the magnitudes of the numerator and the denominator of the leakage formulas. Unlike the literature, we include the land and agricultural markets in the analysis of carbon leakage with forestation policies. In this model, carbon leakage depends on: (1) supply and demand elasticities of timber production and consumption, respectively in the country introducing a RED policy (Home country) and in the rest of the world; (2) Home country's production and consumption share in the world timber production and consumption, respectively; (3) prices of land and crop products in the Home country and the rest of the world; (4) initial allocation of land between forestry and agriculture; (5) share of total forest area set aside under RED; and (6) relative carbon sequestration potential of the forest planted on an afforested land and of the forest withdrawn from timber harvest. These potentials depend heavily on the forest species as well as on timing of the policy, and on the discount rate and time path of increasing carbon prices.carbon leakage, forestry, reduced emissions from deforestation, afforestation, Resource /Energy Economics and Policy, Q23, Q24, Q54,

On the EU–U.S. Biodiesel ‘Splash & Dash' Controversy: Causes, Consequences and Policy Recommendations

Replaced with revised version of paper on 10/26/10.splash & dash, biodiesel, blender’s tax credit, tax exemption, trade, European Union, Unites States, Agricultural and Food Policy, International Relations/Trade, F13, Q17, Q27, Q42,