Trade Implications of the Food Security Act of 1985

One of the central themes of the Food Security Act of 1985 (FSA85) is to make the United States more competitive in exporting agricultural commodities. The means to achieve this objective include lower loan rates, marketing loan provisions, and export credits and subsidies. The comprehensive analysis of the FSA85 (Womack et. al.) has taken these programs into account in making estimates of U.S. prices, exports and other performance variables. The purpose of this paper is to focus attention on the foreign import demand and competitor supplies that underlie the U.S. export estimates and to evaluate the responsiveness of trade patterns to the changes in U.S. policies

The World Soybean Trade Model: Specification, Estimation, and Validation

The soybean trade model is one of the three models in the trade modeling system developed, updated, and maintained by the Center for Agricultural and Rural Development (CARD). The other two commodity trade models are for wheat and the feed-grains complex. The three trade models are linked through cross-price linkages in the supply and demand components of these models, yet each model can be solved independently. In general, however, all three trade models are solved iteratively to obtain a simultaneous solution. Equilibrium price, quantities of supply and demand, and net trade are determined by equating excess demands and supplies across regions and explicitly linking prices in each region to a world reference price

An U.S. Export Disposal Policy for Wheat and Corn Stocks: A Quantitative Analysis for 1977/78 to 1984/85

Over the past decade the operation of the commodity loan programs and since 1977 the farmer-owned reserve (FOR) programs, has resulted in the accumulation of large quantities of grain stocks both in the hands of the government and in the hands of farmers, sealed under the reserve program. Government and farmer-owned reserve (FOR) stocks for wheat exceeded a billion bushels several times in recent years and for corn reached two and a half billion bushels in 1982/83. The build-up of these stocks in 1982/83 led to the implementation of the massive acreage reduction under the Payment-in-Kind (PIK) program. Government-owned (CCC) and FOR stocks were used in this program as payment to farmers for idling cropland

The World Wheat Trade Model: Specification, Estimation, and Validation

The wheat trade model is one of the three models in the trade modeling system developed, updated, and maintained by the Center for Agricultural and Rural Development (CARD). The other two commodity trade models are for feed grains and the soybeans complex. The three trade models are linked through cross-price linkages in the supply and demand components of these models, yet each model can be solved on a stand-alone basis. In general, however, all three trade models are solved iteratively to obtain a simultaneous solution. Equilibrium prices, quantities of supply and demand and net trade are determined by equating excess demands and supplies across regions and explicitly linking prices in each region to a world reference price

The World Feed-Grains Trade Model: Specification, Estimation, and Validation

The feed-grains trade model is one of the three models in the world trade modeling system developed, updated, and maintained by the Center for Agricultural and Rural Development (CARD). The other two commodity trade models are for wheat and the soybeans complex. The three world models are related through cross-price linkages in the supply and demand components of these models, yet each model can be solved independently. In general, however, all three trade models are solved iteratively to obtain a simultaneous solution. Equilibrium prices, quantities of supply and demand, and net trade are determined by equating excess demands and supplies across regions and explicitly linking prices in each region to a world reference price

The U.S. Export Response to Prices and the Impacts of Trade Liberalization: A Regional Trade Model Analysis

Commodity modeling is like many other endeavors in science and in life—we continue to strive for completeness and perfection but may never be satisfied with the current level of our accomplishments. This is a productive attitude, because it always generates incentives for continued effort and progress. An alternative attitude adopted by some of our professional colleagues is agnostic: we do not know the underlying structure of commodity markets and perhaps cannot know it so we might as well give up and fit a reduced-form or a time series model

FAPRI Trade Model for the Soybean Sector: Specification, Estimation, and Validation

The international components and the overall structure of this model are based on recent work by Huyser (1983). The U.S. Structure and components of the model are based on recent work by Ash (1984) and earlier work by Baumes and Meyers (1980) and Meyers and Hacklander (1979). The roots of all these models trace back to the seminal work on the soybean industry by Houck, Ryan, and Subotnik (1972). A review of related modeling work in the soybean sector can be found in Huyser and Ash

Implications of a Production Entitlement Guarantee (PEG) Program for World Commodity Markets, 1992-2000

A Production Entitlement Guarantee (PEG) program would replace existing agricultural policies with a program that would allow governments to subsidize only a fixed proportion of each farmer\u27s historical production. World supply and demand conditions would determine the price farmers receive for any production in excess of the guaranteed PEG quality because all import barriers and export subsidies would be eliminated. A dynamic multicountry, multicommodity model is used to evaluate the impact of replacing current agricultural policies in the United States, the European Community, Japan, and Canada with a PEG program. For all countries and commodities, the guaranteed PEG quantity is set equal to 80 percent of each farmer\u27s average production between 1985 and 1989. Government payments are made to farmers on their PEG production as partial compensation for revenue losses. Except for programs with environmental aims, all other programs that subsidize or protect domestic agriculture would be eliminated

Tariffication of European Community Corn Imports

In July 1989, U.S. negotiators presented a tariffication proposal at the General Agreement on Tariffs and Trade (GATT) meeting in Geneva. According to that proposal, all agricultural nontariff barriers (NTBs) such as quotas and variable import levies would be converted to equivalent ad valorem tariffs. The following formula, known as the price gap method, was proposed for converting the NTBs to tariffs: TE= [(PD – PW)/PW] · 100, where TE is the tariff equivalent, PD is domestic price and PW is world price. If an agreement on tariffication is reached, the next step will be to develop a schedule for a phased reduction of tariffs. The purpose of tariffication and phased reduction is to eliminate market access barriers and thus provide treatment of imports no less favorable than that accorded to domestic commodities and products