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U.S.-Canada Wheat Trade And Its Effects On U.S. Price And Income

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  • Koo, Won W.
  • Mattson, Jeremy W.

Abstract

The objectives of this study are to analyze the factors causing an increase in wheat imports from Canada and to estimate the effect of increased wheat imports on U.S. prices and farm income. An econometric model is developed and estimated to determine these factors and effects. Canadian exports to the United States are estimated as a function of U.S. price, the U.S. - Canada exchange rate, and other variables, while U.S. price is estimated as a function of imports from Canada, U.S. domestic supply and consumption, and exports. The two equations are estimated simultaneously. Results from this model are used to estimate the effect of imports from Canada on U.S. farm prices and income. Results indicate that imports from Canada have a significant negative effect on U.S. hard red spring and durum wheat prices and consequently decrease farm income for U.S. producers. However, while the effect is significant, it is still only a small portion of the total decrease in price in recent years. Some portion of the increased wheat imports is due to the elimination of import restrictions under the Canada - U.S. Free Trade Agreement, but other factors such as the exchange rate are also important.

Suggested Citation

  • Koo, Won W. & Mattson, Jeremy W., 2002. "U.S.-Canada Wheat Trade And Its Effects On U.S. Price And Income," Agribusiness & Applied Economics Report 23572, North Dakota State University, Department of Agribusiness and Applied Economics.
    • Handle: RePEc:ags:nddaae:23572
    DOI: 10.22004/ag.econ.23572
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    File URL: https://ageconsearch.umn.edu/record/23572/files/aer492.pdf
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    Cited by:

    1. Baek, Jungho & Mattson, Jeremy W. & Koo, Won W., 2009. "Analyzing Effects of the U.S. Duties on Canadian Hard Red Spring Wheat," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 10(2), pages 1-22.
    2. Baek, Jungho & Koo, Won W., 2006. "Price Dynamics in the North American Wheat Market," Agricultural and Resource Economics Review, Cambridge University Press, vol. 35(2), pages 265-275, October.

    More about this item

    Keywords

    International Relations/Trade;

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