Lost in Translation: (In)Coherence Between Agricultural and Development Policy Eugenio Díaz-Bonilla Agricultural Trade Policy in the U.S. Can reform advance domestic policy objectives and sustainable development? ICTSD. April 13, 212. Washington DC
Overview! 1. Different U.S. agricultural and nonagricultural policies and different policies in other countries too! 2. Different developing countries! Agricultural structure, products, poverty/food security, trade, and implications for growth! 3. Different visions of development and definitions of impact! Role of agriculture in development?! Perspective from consumers or producers! Indicators of impact?! 4. Conclusions
1. Different Policies and Products! Expand domestic supply (subsidies, services, infrastructure ). Effect on other activities! Reducing domestic supply (conservation )! Limiting external access to domestic demand (tariffs, quotas, SPS )! Expanding access to external markets (export subsidies, credits, trade promotion )! Reduction of volatility in prices/quantities (stocks, hedging )! Food aid (more micro issues; different components)! Other macroeconomic and trade policies! Policy reaction from other countries (in simulations, results come from ALL policies).
.35 Percentage of World Agricultural Production.3.25.2.15.1.5 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 21 23 25 27 29 China European Union + (Total) India asia minus China india Japan United States of America Africa + (Total) LAC
1 Net Agricultural Trade (billion US$) 5-5 - 1-15 Asia Africa Europe LAC USA+Canada
6 Net Food Trade (billion US$) 4 2-2 - 4-6 - 8-1 - 12 Asia Africa Europe LAC USA+Canada
US Share of World Exports (%) EU Total EU External Only Corn 5 58 Soybeans 46 47 Soybean Oils 9 1 Oilseeds 34 38 Oilseeds cakes 11 13 Wheat 22 27 Rice 12 13 Textile Fibers 26 27 Meat and Meat Preparations 1 18
6 PSE in United States Value in US$ and Percentage 3 5 25 4 2 3 15 2 1 1 5 y1986 y1987 y1988 y1989 y199 y1991 y1992 y1993 y1994 y1995 y1996 y1997 y1998 y1999 y2 y21 y22 y23 y24 y25 y26 y27 y28 y29 y21 PSE USD PSE %
2. Different countries Latin Sub- Middle East South East Asia All Least America & Saharan & North Asia & Pacific Developing developed Caribbean Africa Africa Countries countries Agriculture, value added (% of GDP) Rural population (% of total population) Agriculture value added per worker (constant 1995 US$) Agricultural exports (% merchandise trade) Land use, arable land (hectares per person) Agricultural machinery, tractors per 1 hectares of arable land Roads, km per squared km of total area 7.9 17.9 13.9 28.3 15.4 13.2 36.7 26.5 68.4 43.6 73.2 67.7 6.6 76.4 2915.5 349.2 2163.6 376.2 418.4 589.8 239 28.3 23.9 4.7 17.9 11.7 15.3 35.3.27.26.21.16.11.21.2 118.2 18 117.8 8.9 67.9 12 8.141.52.62.551.139.123.44
Average size (unweighted) Average size (weighted) Gini Index Africa a/ 2.92 1.2.53 Asia 2.2 1.62.57 Developing b/ LAC 87.9 63.25.82 w/argentina c/ LAC w/o 32.53 27.66.82 Argentina USA 186.95 na.64 EU d/ 27.27 17.91.59 Japan/Korea 1.12 1.15.47 Canada 349.7 na.74
3. Different visions and impacts! Role of Agriculture in development! Perspective from consumers or producers?! Impact indicators! Welfare: additional consumption with the simulated policies; combination of additional production and changes in terms of trade.! Total GDP presents a general value of production.! Agricultural and agroindustrial value added! Net agricultural trade (exports minus imports) and total agricultural exports.! Agricultural consumption and the ratio of agricultural imports to total exports: related to food security at the national level
1,4 1,2 1, 8 6 4 2 Proved Gas Reserves Recoverable Shale Gas
16 Gas Natural (US$/mmbtu) 14 12 1 8 6 4 2 1977 1978 1979 198 1981 1982 1983 1984 1985 1986 1987 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 Gas LNG (US$/mmbtu) Gas Europa (US$/mmbtu) Gas EEUU (US$/mmbtu)
14 US Real Exchange Rate (Federal Reserve; Major Currencies) 13 12 11 1 9 8 7 6 Jan- 73 Aug- 74 Mar- 76 Oct- 77 May- 79 Nov- 8 Jun- 82 Jan- 84 Aug- 85 Mar- 87 Oct- 88 May- 9 Nov- 91 Jun- 93 Jan- 95 Aug- 96 Mar- 98 Oct- 99 May- 1 Nov- 2 Jun- 4 Jan- 6 Aug- 7 Mar- 9 Oct- 1
4. Conclusions! Different views of threats and opportunities! Basic Principles:! US does not have a food security or an energy security problem; it has a serious medium-term fiscal problem! Think in general equilibrium terms! Policies:! If you want to help the family farm, you support the family farm, not crops. Focus on direct uncoupled income support! Keep on investing on technology, particularly landsaving, water-saving, energy-saving. Make it a public good! Untie food aid! Consider products of special interest for developing countries (cotton, sugar)
Thanks
1.5% Current Account Balance as % of World's GDP 1.%.5%.% 198 1981 1982 1983 1984 1985 1986 1987 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 -.5% - 1.% - 1.5% - 2.% China + Japan + Newly Industrialized Asian Economies European Union United States Middle East and North Africa (Analytical)
.35 Percentage of World Agricultural Production.3.25.2.15.1.5 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 21 23 25 27 29 China United States of America European Union + (Total) Africa + (Total) Asia w/o China and India India LAC
.3 U.S. Share of Different Products.25.2.15.1.5 Cereals,Total + (Total) Food (PIN) + (Total) Crops (PIN) + (Total) Livestock (PIN) + (Total)
1 Net Agricultural Trade (billion US$) 5-5 - 1-15 Asia Africa Europe LAC USA+Canada
6 Net Food Trade (billion US$) 4 2-2 - 4-6 - 8-1 - 12 Asia Africa Europe LAC USA+Canada
1 5-5 - 1-15 - 2-25 - 3-35 Europe + (Total) Europe w/o EU European Union + (Total)
2 Asia: Net Food Trade (billion US$) - 2-4 - 6-8 - 1 Asia + (Total) Asia w/o China, India, Japan China India Japan
7% Sum of Absolute Value of Current Account Imbalances (%GDP) 6% 5% 4% 3% 2% 1% % 198 1981 1982 1983 1984 1985 1986 1987 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 213 214 215 216 Sum of Absolute Value of Current Account Imbalances (%GDP)
1.2E+13 GDP LIM Oountries (US$ 2) 1E+13 8E+12 6E+12 4E+12 2E+12 1961 1963 1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 21 23 25 27 29
Longer-Term Projections?
3 2.5 2 1.5 1.5 192 1924 1928 1932 Indices de Acciones y Casas en los EEUU desde 192 (Enero 1995=1) 1936 194 1944 1948 1952 1956 196 1964 1968 1972 1976 198 1984 1988 1992 1996 2 24 28 Dow Jones (real) S&P 5 (real) Indice de Casas Case-Shiller (real)
Debt/Income 35 3 25 2 15 1 5 Mar-87 Mar-88 Mar-89 Mar-9 Mar-91 Mar-92 Mar-93 Mar-94 Mar-95 Mar-96 Mar-97 Mar-98 Mar-99 Mar- Mar-1 Government Financial institutions Households Nonfinancial corporations Mar-2 Mar-3 Mar-4 Mar-5 Mar-6 Mar-7 Mar-8