E. Wesley F. Peterson

Rice in Asia: Is It Becoming an Inferior Good?

Empirical results using time-series and cross-sectional data indicate that rice in Asia is becoming an inferior good. Income elasticities declined and in some cases became negative between 1961 and 1985 in most of the fourteen Asian countries studied. Accordingly, domestic demand for rice in these countries is not likely to grow as rapidly as it has in the past. As a consequence, there is a potential for excess supplies of rice to develop in Asia, putting downward pressure on rice prices. While governments in Asian countries may need to adjust their rice policies in the future, world rice suppliers may need to develop new markets for rice.

An econometric analysis of rice consumption in the People's Republic of China

Rice is the most important staple food in the Peoples Republic of China (PRC). In many Asian countries rice appears to have become an inferior good, with income increases leading to declines in per capita consumption as other food products are substituted for rice. In this study, human rice consumption is analyzed with a model that allows income elasticities to vary with income levels. An additional equation accounting for rice disappearance as seed, livestock feed, industrial uses and exports is also estimated. The results of the analysis indicate that rice has become an inferior good in China and per capita consumption is likely to decline in the future. Population growth and the growing use of rice for other purposes means that total rice disappearance will continue to increase although at a rate that is slower than has historically been the case. The predicted changes in rice consumption will create pressures to adjust production and trade patterns for rice as well as other agricultural products.

Fractional Cointegration and the False Rejection of the Law of One Price in International Commodity Markets

This study examines the Law of One Price (LOP) in international commodity markets using fractional cointegration analysis. For proper evaluation of the LOP, fractional cointegration analysis seems to be appropriate because of its flexibility in capturing a wider range of mean reversion behavior than standard cointegration analysis. Out of nine pairs of price series examined, fractional cointegration supports the existence of the LOP in eight cases, as compared to three cases using standard cointegration procedures. Overall, these results suggest that there is a long-run tendency for the LOP to hold for commodity prices.

ESTIMATION OF DEMAND FOR WHEAT BY CLASSES FOR THE UNITED STATES AND THE EUROPEAN UNION

This study estimates demand for wheat differentiated by classes using a dynamic AIDS model for the United States and the European Union (EU). The results suggest that imported wheat is more price responsive than domestic wheat in the U.S. market but not in the EU market. This may suggest that the Canadian policy that reduces prices of Canadian wheat in the U.S. market or U.S. export subsidies that raise prices of U.S, wheat could be expected to give rise to substantial substitution of Canadian for U.S. wheat. It is also found that in the EU, complementary relationships exist between spring and other wheat groups, This complementary relationship between the lower and higher quality wheat in the EU is not surprising because EU millers blend cheaper wheat such as EU common wheat and U.S. other wheat with high protein (spring) to obtain the preferred characteristics.

Impacts of official development assistance on agricultural growth, savings and agricultural imports

This paper explores the links between development assistance, agricultural output growth and imports in 56 developing economies over the period 1974–1990. The empirical model treats agricultural growth and imports, savings and aid as endogenous. The analysis also accounts for differences in macroeconomic policies. The results show that aid had a positive impact on agricultural growth. A robust relationship exits between aid and agricultural imports consistent with the argument that aid helps industrialized countries through market expansion and strengthened trade ties.

An Analysis of Possible U.S. Sugar Import Policy Revisions

The U.S. sugar import policy, while supporting domestic producers, has had indirect effects on other markets. This study extends previous analyses to look at effects of sugar policy changes from a total agricultural sector perspective. The effects of sugar policy reform are studied with and without changes in farm program provisions for other crops. The results show welfare losses due to the sugar program. It is also shown that reduction of farm programs without altering the sugar quota tilts the terms of trade toward sugar producers giving them a competitive advantage and it is implied that both sets of policies need to be revised simultaneously to avoid distortions between commodities.

The Design of Supranational Organizations for the Provision of International Public Goods: Global Environmental Protection

An international environmental organization would need to be loosely structured initially with a focus on a narrow range of environmental issues. It also would need to emphasize consensus and limit the scope of its interventions to avoid defections by important participants. The benefits of such an organization include the potential for achieving more nearly optimal levels of environmental protection, cost savings from reduction of duplication and managerial economies of scale, and the strengthening of environmental interests in negotiations on the coordination of the environmental regime with other international regimes such as those focusing on trade or development.

The impact of environmental regulations on world grain trade

International trade and global environmental protection have become the objects of intense debate. One aspect of this debate concerns the effects of environmental regulations on international competitiveness. In this article, the impact of environmental regulations on grain trade patterns is examined using Heckscher-Ohlin-Vanek (HOV) equations in which net trade is explained by relative factor endowments. The HOV equations are extended to include proxies for environmental regulations which are tested for significance. The results indicate that grain trade patterns are well explained by national factor endowments. Environmental regulations appear to have little impact on comparative advantage in grains.

A time-series analysis of the effects of government policies on the U.S. beef cattle industry

Government intervention in agricultural markets is extensive in most industrialized countries. In the United States, complex policies have been elaborated in an effort to change or regulate producer and consumer prices, farm incomes, and a host of other aspects of the food and fiber system. Within this complex array of policies, the U.S. beef cattle industry appears to be relatively free of government influence. A single policy, an import quota, has been used to stabilize prices and protect producer incomes (Henry. 1988). The effects of this policy have been analyzed by Freebaim and Rausser (1975). Arzac and Wilkinson (1979). Rausser and Hochman (1979). Chambers et al. ( 1981). and Martin and Heady (1984). In general, these studies show that eliminating the quota (or setting it at a higher level) would lead to decreases in beef prices ranging from 2 to 6 percent. Although the import quota is the only policy specitically targeted at the beef industry, policies designed to influence economic conditions in other sectors may indirectly affect beef. In fact, it is possible that the effects of feed grain and dairy policies are as great or greater than the direct effects of the import quota (Arzac and Wilkinson. 1979, and Ospina and Shumway. 1980). For example, Ospina and Shumway (1980) found that beef supplies are more responsive to changes in corn prices than to changes in their own price. Interest in the indirect effects of dairy policies on the beef industry was stimulated by the 1986 dairy termination program (DTP) (Marsh. 1988). This program had the potential to generate substantial increases in the supply of beef as a result of its provisions for the slaughter of large numbers of dairy cows. Marsh found that the DTP did lead to a fall in beef prices of about 5 percent.

Assessing agricultural education: Agricultural economics at a crossroads

Colleges of agriculture are being forced to adapt to a changing world. The forces behind these changes affect all departments within the college. In this paper, the place of agricultural economics within the college and within the university is identified, the current situation facing the discipline is outlined, and strategies for responding to the forces of change are discussed. Three alternatives are available: continuation, termination, and metamorphosis. Different departments are likely to pursue different strategies. Some may disappear altogether or may be absorbed into the parent discipline, economics, or into the business school. Other departments may transform themselves into specialized sub-disciplines, such as natural resources or agribusiness departments. Still others may continue with little or no change. Whatever course is followed, strategic planning will surely be necessary.