Rutten, Martine M. and Chant, Lindsay J. and Meijerink, Gerdien W. (2011): Sit down at the ball game: how trade barriers make the world less food secure.
Download (233kB) | Preview
This paper analyses the impacts of trade policy responses to rising world food prices by carrying out a series of stylised experiments in the wheat market using a world trade model, GTAP. The sequence of events that is modelled comprises a negative wheat supply shock and subsequent implementation of an export tax by a major net exporter and a reduction in import tariffs by a small importer. The effects of trade policy responses are contrasted with those of full liberalisation of the wheat market. At the core are the (opposite) effects on producers and consumers, as well as the terms-of-trade and trade tax revenue effects. Food security is shown to depend crucially on changes in prices but also in incomes that are associated with changes in factor returns. The results reveal that major net exporters are generally better off when implementing export taxes for food security purposes. Large exporting countries export price instability causing world food prices to rise further. Net importing countries lose out and have limited leeway to reduce tariffs or subsidise imports. Liberalising wheat trade mitigates rising prices and contributes to food security, but to the detriment of production in Africa and Asia, making them more dependent on and vulnerable to changes in the world market. Concerted action at the WTO forum is required, notably clarifying and sharpening the rules regarding export measures.
|Item Type:||MPRA Paper|
|Original Title:||Sit down at the ball game: how trade barriers make the world less food secure|
|Keywords:||food security; world food crisis; international grain trade; trade measures; trade liberalisation; CGE modelling|
|Subjects:||C - Mathematical and Quantitative Methods > C6 - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling > C68 - Computable General Equilibrium Models
F - International Economics > F1 - Trade > F10 - General
Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q1 - Agriculture > Q18 - Agricultural Policy; Food Policy
|Depositing User:||M.M. Rutten|
|Date Deposited:||24. Apr 2011 05:05|
|Last Modified:||15. Feb 2013 21:16|
Abbott, P.C., Hurt, C., Tyner, W.E., 2008. What's driving food prices?, Issue Report, Farm Foundation, Oak Brook, Illinois.
Anderson, K., 2009. Reducing trade distortions could ease food price volatility. Vox Research-based policy analysis and commentary from leading economists. Available at: http://www.voxeu.org/index.php?q=node/4200 [Accessed March, 21, 2011].
Bouët, A., Laborde Debucquet, D., 2010. The economics of export taxation in a context of food crisis: A theoretical and CGE-approach contribution. IFRPI Discussion Paper 00994, International Food Policy Research Institute (IFPRI), Washington, DC.
DEFRA, 2010. Annex 3: Export restrictions on food over 2007/08: An analysis of their impact and evaluation of policy options, in: The 2007/08 agricultural price spikes: causes and policy implications. Department for Environment, Food and Rural Affairs (DEFRA), London.
Demeke, M., Pangrazio, G., Maetz, M., 2009. Country responses to the food security crisis: Nature and preliminary implications of the policies pursued. Food and Agriculture Organization (FAO) of the United Nations, Rome.
Dollive, K., 2008. The impact of export restraints on rising grain prices. Office of Economics Working Paper no. 2008-08-A, U.S. International Trade Commission, Washington, DC.
Headey, D., 2010. Rethinking the global food crisis: The role of trade shocks, Food Policy 36: 136-146.
Hertel, T.W. (ed), 1997. Global Trade Analysis: Modelling and Applications. Cambridge University Press, Cambridge.
Hertel, T.W., Preckel, P.V., Reimer, J.J., 2001. Trade policy, staple food price variability, and the vulnerability of low-income households. Prepared for presentation at the Fourth Annual Conference on Global Economic Analysis, June 27-29, 2001, Purdue University, Purdue.
Karapinar, B., Häberli, C. (eds), 2010. Food crises and the WTO: World Trade Forum. Cambridge University Press, Cambridge, UK.
Keeney, R., Hertel, T.W. (2005). GTAP-AGR: A framework for assessing the implications of multilateral changes in agricultural policies. GTAP Technical Paper No. 24.
Kim, J., 2010. Recent trends in export restrictions. OECD Trade Policy Working Papers No. 101, OECD Publishing, Organisation for Economic Co-operation and Development (OECD), Paris.
Krugman, P.R., Obstfeld, M. (eds), 1994. International economics: theory and policy, Third Edition, HarperCollins College Publishers, New York.
Martin, W., Anderson, K., 2010. Trade distortions and food price surges. Paper for the World Bank-UC Berkeley Conference on Agriculture for Development – Revisited, October 1-2, 2010, Berkeley.
Mitra, S., Josling, T., 2009. Agricultural export restrictions: Welfare implications and trade disciplines, IPC position paper, Agricultural and Rural Development Policy Series, International Food & Agricultural Trade Policy Council, Washington, DC.
OECD-FAO, 2010. OECD-FAO Agricultural Outlook 2010-2019. Organisation for Economic Co-operation and Development (OECD) and the Food and Agriculture Organization (FAO) of the United Nations, Geneva and Rome.
OECD-FAO, 2008. OECD-FAO Agricultural Outlook 2008-2017. Organisation for Economic Co-operation and Development (OECD) and the Food and Agriculture Organization (FAO) of the United Nations, Geneva and Rome.
Piesse, J., Thirtle, C., 2009. Three bubbles and a panic: An explanatory review of recent food commodity price events. Food Policy, 34, 119-129.
Pyakuryal, B., Roy, D., Thapa, Y.B., 2010. Trade liberalization and food security in Nepal. Food Policy 35, 20-31.
Södersten, B., Reed G., 2010. International economics, Third Edition, Macmillan Press LTD, Basingstoke.
Tanaka, T., Hosoe, N. Does agricultural trade liberalization increase risks of supply-side uncertainty?: Effects of productivity shocks and export restrictions on welfare and food supply in Japan. Food Policy (2011), doi:10.1016/j.foodpol.2011.01.002.
Tanzania Ministry of Finance and Economic Affairs, 2008. Macroeconomic policy framework for the plan/budget 2008/09-2010/11, Government of Tanzania, Dar es Salaam.
Valdés, A., 2010. Price volatility and border measures. Background paper for the seminar Agricultural Price Volatility: Prospects, Challenges and Possible Solutions, organised by the International Food & Agriculture Trade Policy Council, the University of Barcelona and the International Centre for Trade and Sustainable Development, May 26-27, 2010, Barcelona.
World Bank, 2011. Food price watch. Poverty Reduction and Equity Group, Poverty Reduction and Economic Management (PREM) Network, World Bank, Washington, DC.