Barry Krissoff

Emergence of U.S. Organic Agriculture—Can We Compete? Discussion

The theme of this session is the expansion and market competitiveness of organic agriculture. Because no single definition exists in economics or agriculture of the terms competitiveness and organics, let me start by offering some definitions. The National Organic Standards Board defines organic agriculture as an ecological production management system that promotes and enhances biodiversity, biological cycles, and soil biological activity. The focus of the definition is on ecologically compatible production systems, not on the product itself, or allowable (or nonallowable) specific inputs. In contrast, a discussion on markets and competitiveness focuses on the product itself. In an introductory economics textbook, competitiveness is defined as striving among a number of rivals in a contest aimed at purchasing or selling a particular product (Bronfenbrenner, Sichel, and Gardner). Firms producing organic products compete with one another for a share of the organics market, but the arena for the contest is much more cen-

CONSUMER EFFECTS OF HARMONIZING INTERNATIONAL STANDARDS FOR TRADE IN ORGANIC FOODS

Even if governments agree on equivalency of organic standards across countries, consumers may still believe domestically produced organic foods are superior to imports. We simulated a partial equilibrium model of trade in organic wheat between the United States and Germany to illustrate the welfare gains and losses associated with international harmonization of organic standards. Six cases were examined - no equivalency in standards (the status quo), equivalency of standards with complete and incomplete import acceptance, exporters certifying in importing country with complete and incomplete import acceptance, and exporters paying educational costs, with incomplete import acceptance. Results demonstrate that importing country consumers are better off if they are willing to accept imports as equivalent to domestically produced organic foods. Strategies to reduce resistance such as educational programs or foreign certification add costs to production that reduce quantity traded and impose welfare losses on exporting country producers and importing country consumers.

Agricultural Trade Liberalization in a Multi­ sector World Model

Impacts of agricultural and nonagricultural trade liberalization on agriculture are assessed in a multi-commodity, multi-country framework. By modeling simultaneously all goods sectors of the economy, we evaluate the importance of: (a) relative price changes between sectors, and (b) income and exchange-rate adjustments that follow trade liberalization in a world of floating rates. Specifically, we compare two cases using a static world policy simulation (SWOPSIM) model: agricultural multilateral liberalization and complete multilateral liberalization with floating exchange rates for all countries/regions. In both cases agricultural commodity prices tend to increase, an effect which is more pronounced when currency values adjust. The developing countries, in particular Argentina, Brazil and Mexico, have the most significant advances in agricultural and total production when exchange rates vary. Moreover, the gains from international trade are extended to all countries/regions explicitly specified in the model.

TRADE POLICY AND ENVIRONMENTAL QUALITY: THE CASE OF EXPORT SUBSIDIES

The United States and the European Union both employ export subsidies to stimulate wheat trade and to increase their competitiveness in world markets. The environmental consequences of these policies are being questioned. We simulate reducing or removing export subsidies for wheat from the United States and the EU using a multicountry partial equilibrium model, and we analyze the impact of export subsidy policy reform on nitrogen fertilizer and other chemical use. Our findings indicate that the U.S. EEP program cannot be blamed for environmental degradation in terms of nitrate leaching, while EU wheat subsides make only a small contribution to nitrate pollution.

Trade Agreements and Incentives for Environmental Quality: A Western Hemisphere Example

A simple conceptual model can illustrate the potential for trade and environment agreements to satisfy the objectives of lnorthernr countries concerned with environmental protection and lsouthernr countries pursuing export earnings. In a hypothetical empirical example, the United States offers preferential access to fruit juice imports from three Latin American countries in exchange for enhanced protection of farm workers potentially exposed to pesticides during fruit production. Results for this particular case suggest that the benefits of preferential access to the US market substantially outweigh the costs to Latin American countries of adopting pesticide safety regulations similar to those protecting US farm workers.

Preferential Trading Arrangements in Western Hemisphere Countries

Many countries of the Western Hemisphere in recent years have shown interest in participating in preferential trading arrangements (PTA) in anticipation of expanding exports. Results in this paper show that export expansion depends upon the type of agreement that is formed and who else is participating. Trade of two agricultural commodities are examined; wheat, and fruit and vegetable juices. Five PTAs are examined, each including the United States and one or more Western Hemisphere countries.