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Agricultural and Macroeconomic Impact of Rising Imported Grain Prices on Taiwan

Author

Listed:
  • Lin, Hsing-Chun
  • Lee, Duu-Hwa
  • Hsu, Sheng-Ming
  • Chou, Li-Chen
  • Chang, Ching-Cheng
  • Hsu, Shih-Shun

Abstract

During the recent hike of oil price, we saw the OPEC oil price reached USD $130 per barrel by the end of July 2008. Developed countries dramatically increased the bio-fuel production to reduce the reliance on the oil import. With the recent shortage of crop harvests, the demands for corn, sugarcane, and rape spiked. The rising international shipping costs also drove the commodity prices higher. The grain prices are the greatest concerns of Taiwanese residents. For example, the prices of wheat in 2007; and the corn and soybean in 2008 reached their highest in the last decade. The hiking prices seriously impacted the Taiwanese farming industry as well as its consumer prices as both of them are highly dependent of the imported foods and crops. Using Input-Output Model and Computable General Equilibrium Model, this study estimates the impacts of imported grain prices on Taiwanese Macroeconomics and consumer price index. Assuming the food prices are fully transferable, the Input-Output Model shows the import prices of corn, soybean and wheat increased 30%, 1% and 40% under scenario one (the growth rate of 2004-2007 as the base year); 75％、60％、35％ under scenario two (the growth rate of 2004-2008 as the base year); 85％、75％、65％ under scenario price three (the growth rate of 2004-2017 as the base year). The impacts of corn price on consumer prices and weighted average domestic prices are higher than those of soybean and wheat prices. Computable General Equilibrium Model shows the same results that the impact of corn’s prices is higher than those of soybean and wheat, but the ratio is smaller than the result using the Input-Output analysis. That’s due to the adjustment of demand-supply side, therefore potion of the impacts absorbed by producer in weighted average consumer price index.

Suggested Citation

  • Lin, Hsing-Chun & Lee, Duu-Hwa & Hsu, Sheng-Ming & Chou, Li-Chen & Chang, Ching-Cheng & Hsu, Shih-Shun, 2010. "Agricultural and Macroeconomic Impact of Rising Imported Grain Prices on Taiwan," Conference papers 332027, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    • Handle: RePEc:ags:pugtwp:332027
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    References listed on IDEAS

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