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A quantitative analysis of trade policy responses to higher world agricultural commodity prices

  • "Edward" Yu, Tun-Hsiang
  • Tokgoz, Simla
  • Wailes, Eric
  • Chavez, Eddie

The worldwide spike in prices of agricultural commodities in 2007-2008 elevated food security and social stability issues to the forefront, especially in many food-deficit countries. In order to mitigate the global food commodity price pressure on domestic markets, several major exporting and importing countries, mostly developing economies, adopted trade policy changes such as export bans (or raising export restrictions) or reducing import tariffs during the same period. This paper estimates the potential impacts of these policies on the world prices and trade of major agricultural commodities using a set of multi-country, multi-commodity, and partial-equilibrium models. Our findings suggest that over all, the trade policy responses in various countries increased the prices of all agricultural commodities, although the impact on the total net trade varies by commodity. The simulation results show that the overall impact of trade policy distortions on the world rice price is most significant at 24%, followed by wheat (14%) and barley (9%). In general, the poorer food-deficit countries/regions, which have limited power to manipulate their trade policies, experienced higher price increases compared to those major trading countries that adopted policy interventions. Also, the developing countries that are net importers which did not implement trade policy interventions experienced significant welfare losses resulting from interventions implemented by other major trading countries.

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Article provided by Elsevier in its journal Food Policy.

Volume (Year): 36 (2011)
Issue (Month): 5 (October)
Pages: 545-561

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Handle: RePEc:eee:jfpoli:v:36:y:2011:i:5:p:545-561
Contact details of provider: Web page: http://www.elsevier.com/locate/foodpol

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  1. von Braun, Joachim, 2008. "Rising food prices: What should be done? [In Chinese]," Policy briefs 1 CH, International Food Policy Research Institute (IFPRI).
  2. Coady,David & Dorosh,Paul & Minten,Bart, 2008. "Evaluating alternative policy responses to higher world food prices: The case of increasing rice prices in Madagascar," IFPRI discussion papers 780, International Food Policy Research Institute (IFPRI).
  3. Cummings, Ralph Jr. & Rashid, Shahidur & Gulati, Ashok, 2006. "Grain price stabilization experiences in Asia: What have we learned?," Food Policy, Elsevier, vol. 31(4), pages 302-312, August.
  4. Joachim von Braun, 2008. "Rising Food Prices: What Should Be Done?," EuroChoices, The Agricultural Economics Society, vol. 7(SpecialIs), pages 30-35, 08.
  5. Craig Sugden, 2009. "Responding to High Commodity Prices," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 23(1), pages 79-105, 05.
  6. von Braun, Joachim & Ahmed, Akhter & Asenso-Okyere, Kwadwo & Fan, Shenggen & Gulati, Ashok & Hoddinott, John & Pandya-Lorch, Rajul & Rosegrant, Mark W. & Ruel, Marie & Torero, Maximo & van Rheenen, Te, 2008. "High food prices: The what, who, and how of proposed policy actions," Policy briefs 1A, International Food Policy Research Institute (IFPRI).
  7. Joachim Braun, 2009. "Addressing the food crisis: governance, market functioning, and investment in public goods," The Science, Sociology and Economics of Food Production and Access to Food, Springer, vol. 1(1), pages 9-15, February.
  8. Bouet, Antoine & Laborde Debucquet, David, 2010. "Economics of export taxation in a context of food crisis," IFPRI discussion papers 994, International Food Policy Research Institute (IFPRI).
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