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Measuring the impact of agricultural production shocks on international trade flows

Author

Listed:
  • Shon M Ferguson
  • Johan Gars

Abstract

The purpose of this study is to measure the sensitivity of traded quantities and trade unit values to agricultural production shocks. We develop a general equilibrium model of trade in which production shocks in exporting countries affect both traded quantities and trade unit values. The model includes per-unit trade costs and develops a methodology to quantify their size exploiting the trade unit value data. Using bilateral trade flow data for a large sample of countries and agricultural commodities, we find that the intensive margin of trade is relatively inelastic to production shocks, with a 1 per cent increase in production leading to a 0.5 per cent increase in exports. We also find that per-unit trade costs are large, comprising 15–20 per cent of import unit values on average. Overall, our results suggest that there is room for improving trade as a mechanism for coping with food production volatility.

Suggested Citation

  • Shon M Ferguson & Johan Gars, 2020. "Measuring the impact of agricultural production shocks on international trade flows," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 47(3), pages 1094-1132.
    • Handle: RePEc:oup:erevae:v:47:y:2020:i:3:p:1094-1132.
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    File URL: http://hdl.handle.net/10.1093/erae/jbz013
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    Cited by:

    1. Raluca Georgiana Robu & Alina Petronela Alexoaei & Valentin Cojanu & Dumitru Miron, 2024. "The cereal network: a baseline approach to current configurations of trade communities," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 12(1), pages 1-20, December.
    2. Chen, Zhangliang & Dall'Erba, Sandy, "undated". "Drought, Domestic Trade And Agricultural Profit: Theory And Evidence," 2018 Annual Meeting, August 5-7, Washington, D.C. 274397, Agricultural and Applied Economics Association.
    3. repec:ags:aaea22:344040 is not listed on IDEAS
    4. Sandy Dall'Erba & Zhangliang Chen & Noé J. Nava, 2021. "U.S. Interstate Trade Will Mitigate the Negative Impact of Climate Change on Crop Profit," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(5), pages 1720-1741, October.
    5. Muhammad Ramzan & Hong Li, 2025. "An analytical framework to link factors affecting agricultural trade intensity in the world: pathways to sustainable agricultural development 2030 agenda," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 27(1), pages 1223-1272, January.
    6. Noé J. Nava & William Ridley & Sandy Dall'erba, 2023. "A model of the U.S. food system: What are the determinants of the state vulnerabilities to production shocks and supply chain disruptions?," Agricultural Economics, International Association of Agricultural Economists, vol. 54(1), pages 95-109, January.
    7. Chemerys, Vasyl & Dushka, Vitalii & Dorosh, Mariana & Maksym, Volodymyr, . "Export potential of the livestock breeding industry of Ukraine," Agricultural and Resource Economics: International Scientific E-Journal, Agricultural and Resource Economics: International Scientific E-Journal, vol. 6(3).
    8. Zheng, Yixing & Grant, Jason & Legrand, Nicolas, 2024. "Direct and Indirect Impact of Weather Shock on Global Agricultural Trade," 2024 Annual Meeting, July 28-30, New Orleans, LA 343988, Agricultural and Applied Economics Association.

    More about this item

    Keywords

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    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F18 - International Economics - - Trade - - - Trade and Environment
    • Q11 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Aggregate Supply and Demand Analysis; Prices
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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