Hartley Furtan

Public and Private Returns from Joint Venture Research: An Example from Agriculture

Public research institutions are turning increasingly to the private sector for additional financial support. Such a trend, in the short run, lessens the need for public research expenditures, but may, in the long run, prove to be very costly to the economy as a whole. This is because private funding increases the chance that the direction of research will shift so that private benefits are enhanced. Such a shift is especially costly if public research funds are then not forthcoming that would have the potential of producing the maximum level of benefits to the economy as a whole. A case study of Canadian barley research is used to illustrate this problem.

Agricultural Policy: High Commodity and Input Prices

Because of high commodity prices, beginning in 2006, subsidies to farmers in the United States, the European Union, and Canada have been reduced significantly. However, significant losses have been experienced by the red meat sector, along with escalating food prices. Because of rising input costs, the “farm boom” may not be as great as first thought. Ethanol made from corn and country-of-origin labeling cloud the U.S. policy scene. Higher commodity prices have caused some countries to lower tariff and non-tariff barriers, resulting in freer commodity trade worldwide. Policymakers should attempt to make these trade-barrier cuts permanent and should rethink current policy legislation to deal with the possibility of a collapse of world commodity markets. Agricultural commodity prices have dropped significantly since early 2008.

CANADA-U.S. AGRICULTURAL TRADE

The U.S. 2002 Farm Bill provides sizeable direct and indirect subsidies to U.S. farmers, which has created increased competition in markets where the United States and Canada compete. Target prices were reintroduced and the overall level of U.S. Government support was increased. Canadian farmers will find it more difficult to compete in grains, oilseeds, and pulses. Government support in Canada for these crops is significantly below U.S. support. Canada and the United States have a significant two-way trade in agricultural products, including beef and pork. The outbreak of Mad Cow Disease in Canada in 2003 clearly illustrates the need for cooperation between the two countries.

International Trade with Price Supports and Environmental Constraints: The Canadian Hog Industry

The national resource endowments specific to individual countries have long been thought of as one of the sources of comparative advantage in trade. As production processes have had more serious ecological impacts, and as wealthier consumers have demanded improved environmental quality, the ability of a country’s ecological system to absorb pollutants has become more important as a source of comparative advantage. This phenomenon is especially important for agriculture and agricultural trade. For instance, groundwater nitrification has become a very important issue in dense livestock production areas of the European Union (E.U.) and North America. The environmental costs and abatement costs associated with livestock manure have become a significant economic factor in these regions.