Alex F. McCalla

A Duopoly Model of World Wheat Pricing

The interaction of domestic wheat policies in the international wheat market is analyzed through the constructs of imperfect competition theory. A cooperative duopoly model is presented as a conceptual framework for analyzing historic price behavior and for studying the implications of potential changes in domestic and international conditions. Canada and the United States are the duopolists, with Canada the price leader and the United States the usually silent partner. Australia, Argentina, France, and the smaller exporters constitute a fringe of price followers. The demand side is competitive in the sense that no major importer exerts market power except through the price limits of the IWA. The model suggests that relative price stability in the world wheat market from 1956 to 1965 has resulted mainly from the stabilizing actions of Canada and the United States.

Rural development - from vision to action

This rural sector strategy outlines the steps the Bank and its partners must take to spur rural development. Key elements of the strategy include (a) taking a broad rural focus, as opposed to a narrow agricultural sector focus, (b) involving the entire World Bank Group in promoting rural development, (c) working with partner countries and the broader international community to integrate rural development in overall country development strategies, and (d) addressing old issues in new ways. The five areas of concentration and future demand are rural strategy and policy formulation; agricultural systems intensification; management of natural resources and forestry; water allocation and management; and local and community development and rural infrastructure. The success of the rural sector strategy will be judged by three main outcomes: the reduction of rural poverty and improved management of natural resources; increased reliance on international markets for food security as well as profitable outlets for enhanced agricultural production; and a decreased number of rural underperformers and dropouts.

Dynamic Games and International Trade: An Application to the World Corn Market

Dynamic games are a conceptually useful way of analyzing imperfect markets where both buyers and sellers have potential market power. Previous analysis of imperfect markets was static and limited to either exporters or importers. A dynamic game allows the inclusion of both importers and exporters in a multiperiod framework allowing the derivation of reaction functions. A Nash noncooperative difference game is applied to the international corn market to explore the plausibility of numerical results. The results are reasonable and show that the game approach based on a more comprehensive econometric model has a promising future in policy analysis.

The Changing Context and Prospects for Agricultural and Rural Development in Africa

Over the past decade, economic and agricultural growth in sub-Saharan Africa (SSA) has resumed. The secular downward trend in agricultural prices ended in the early 1990s; growing incomes in Asia and Africa, combined with continued rapid population growth, are fueling food demand, which is expected to lead to a gradual upward trend in international real agricultural prices. For Africa the major agricultural growth opportunities will be in regional and domestic markets for food staples. To seize these opportunities, SSA will have to support economic growth via continued sound macroeconomic policies, further improvements in the investment climate, and investments in infrastructure and institutions. In the agricultural sector SSA will have to (1) remove the remaining agricultural taxation that still disadvantages African farmers relative to all other farmers in the world, (2) improve its services for small farmers, (3) significantly increase its investment in agricultural technology generation and dissemination at national and subregional levels, (4) empower local governments, communities, and farmer organizations for their own development via further administrative and fiscal decentralization and community-driven development, and (5) strengthen the already existing regional agricultural institutions for agricultural trade, biosafety, phytosanitary regulations, seed production, regulation and trade, and technology generation.

Prospects for food security in the 21st Century: with special emphasis on Africa

Food security for the world in 2025 is possible and probable if the right set of things are done, starting now. But the task will not be easy. It is both a technology and a political/economic challenge. The challenge for sub-Saharan Africa is even greater. While other regions improved per capita food availability over the last 30 years, Africas availability declined. But food security is about more than supply. It is also about access which means income generating employment is critical. Meeting future requirements in Africa and the world will require sustainable intensification of complex production systems, appropriate national and international policies and continued investments in agricultural research. Without these conditions and increased employment intensive growth, prospects for the future are less bright.

Structural Transformation and African Agriculture

The purpose of the Africa Emerging Markets Forum is to discuss the continent’s economic and social challenges and to share ideas for better results on the ground. This article focuses on the performance and potential contribution of agricultural development, first looking at the current constraints and then setting out some suggestions for the way forward. Over the past 50 years, the normal structural decline in the share of agriculture in the economy and accompanying convergence of incomes in the agricultural and non-agricultural sectors, has not yet happened in sub-Saharan Africa. The economy, in terms of sector shares in total output, has been practically frozen, as has the structure of production within agriculture itself, its technology, and its mode of growth primarily via area expansion. As a consequence, African agriculture remains extremely under-capitalized, and the number of poor and hungry has increased in both the rural and urban areas. Encouraging signs for a new beginning for agriculture discussed in this article include the resumption of economic growth, the reduction in agricultural dis-protection, the end of the secular downward trend in agricultural prices, growing domestic and regional demand for food, improvements in the institutional environment for rural development, and a growing commitment of African Governments to agricultural development. While there is much talk about another structural transformation in Africa toward large scale commercial farming, there appear to be diseconomies of scale in farming, while the success rate of large scale farming has been very limited in Africa. The family farm model therefore remains an appropriate model for most of African agricultural development. To seize opportunities underlying the above-mentioned encouraging signs, sub-Saharan Africa will need to support economic growth by (a) continued sound macroeconomic policies, (b) removing of the remain-ing agricultural taxation that still disadvantages African farmers relative to all other farmers in the world, (c) improving services for small farmers, (d) significantly increasing investment in agricultural technology and its dissemination, (e) empowering local governments, communities, and farmer organizations for their own development, and (f) strengthening the already existing regional agricultural institutions. An overall conclusion emanating from this article is for individual countries to adapt and customize the above broad goals into country-specific action plans to enhance the performance and contribution of the agriculture sector, in line with the CAADP (Comprehensive Africa Agriculture Development Programme) compacts on which they are already working.

A strategic framework for improving food security in Arab countries

In 2007 and the first half of 2008, a sharp rise in agricultural commodity and food prices triggered grave concerns about food security, malnutrition and increased poverty. While the threat of a prolonged food-price shock receded in the second half of 2008, many factors underlying the price volatility are likely to persist, and will require careful management if future food-price shocks are to be avoided. This paper suggests three strategies that, together, could reduce vulnerability to price shocks: (1) strengthen safety nets, improve access to family planning services, and promote education; (2) enhance domestic food production and improve rural livelihoods through increased investment in research and development to increase productivity; and (3) reduce exposure to market volatility through more efficient supply chains and better use of financial instruments to hedge risk. The challenge of food security will require a global response, involving governments, international and regional funding and lending institutions, United Nations agencies, non-governmental organizations, civil society, and the private sector.

State Trading in Grain

This chapter explores the role state trading plays in the international grain trade. Principal attention is paid to trade in temperate zone grains, namely wheat and coarse grains.1 The only significantly traded grain excluded is rice.2 The volume of grain trade has grown steadily over the post-war years. During the same period the proportion of trade in which state traders are involved as exporters, importers or both has increased. For example, in the four-year period 1973–7, more than 95 per cent of world wheat trade involved a state trader as an exporter, importer or both. Thus it is useful to examine in more detail the role that state traders play.

Grain Marketing Systems: The Case of the United States versus Canada

This paper compares the U.S. and Canadian grain-marketing systems, emphasizing wheat. The historical evolution of each system is first presented; then each systems performance is evaluated using such criteria as producer prices and export market shares. The particular marketing system by itself is not the only determinant of performance differences of the two systems; government policies also play a role. Furthermore, the two marketing systems do not operate independently of each other. Often the Canadian Wheat Board uses the private system in the United States to carry out the delivery of grain once sales have been made; also, at times, the Board has made direct sales to U.S. grain firms.

The Uruguay round and agricultural policies in developing countries and economies in transition

Abstract This paper reviews changes in the global trade policy environment as a result of the Uruguay Round Agreement on Agriculture, and their potential impact on developing countries and economies in transition. The Agreement is, except in a few cases, not likely to present these countries with major policy adjustment problems. In Latin America, unilateral reforms have proceeded further than required by the Agreement. In Africa, countries that have experienced structural adjustment are liberalizing faster than the Agreement requires. In Asia the situation is mixed, but in general agricultural trade liberalization appears to be moving more slowly, especially when compared to Latin America; progress in reducing quantitative restrictions has been show. In Eastern Europe and the CIS, the progression and completeness of liberalization varies widely, though GATT notions of tariffication and tariff bindings have strengthened the position of reformers in those countries that are members of the WTO. While the short term impact of the Agreement may be modest, the bringing of agriculture under the rules of GATT should help prevent reintroducing non-tariff restrictions in the future. However, given that much of the food imports, particularly in parts of Asia, are still conducted by parastatals, if state trading in GATT-legal it is hard to anticipate how strong discipline on trade distorting support could be brought about.