Journal of Agricultural and Resource Economics
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Cardamom is a high-value spice primarily produced in Guatemala and India. This study empirically quantifies the impact of Saudi Arabia’s import restriction on Indian cardamom using a spatial equilibrium model, incorporating imperfect competition and product differentiation between India and Guatemala in the world cardamom market. The study finds that the price of Indian cardamom in Saudi Arabia increases by 41% and causes an overall world net welfare loss of $20.5 million for Indian cardamom in the global market. However, Guatemala benefits from this policy by reallocating its cardamom trade to Saudi Arabia.
We develop a theoretical model to analyze the impacts of deporting undocumented workers and implement it empirically for US vegetable production, which employs low-skilled domestic, guest, and undocumented workers, along with high-skilled workers, materials, and capital. The results show that removing 1,000 undocumented workers leads to a negligible increase in low-skilled domestic employment (59 workers) and an annual wage increase of $57 per worker, indicating very limited but positive labor-market adjustment. In contrast, reduced labor availability lowers vegetable output by $35.07 million and reduces returns to complementary inputs. Moreover, removing half of the undocumented workforce reduces vegetable output by $2.55 billion.
Undocumented workers are an important part of the workforce
in many sectors of the U.S. economy, particularly in the agrifood
sector. The Trump administration is deporting undocumented workers.This study quantifies the impacts of a mass deportation policy on the U.S. economy and on key sectors using a multi-regional general equilibrium model that includes an undocumented workforce and the movement of migrants across countries. Deportation of 30% of the undocumented workforce will reduce economic activities in all industries (more so in agriculture, food processing, leisure, and construction) and lower the U.S. GDP by $128.56 billion. Furthermore, labor shortfall due to deportation will increase cost of production and raise food prices.
This study explores the impacts of deportation of the undocumented workers on various segments of the poultry supply chain using a model comprising domestic workers and undocumented workers. The results show that the deportation of 20% of undocumented workers in the poultry supply chain increases the wage rates by 7.82% which raises the cost of production and chicken product prices. Lack of labor availability due to this deportation policy causes production to decline in every segment of the poultry supply chain. Poultry producers’ welfare declines by $63.85 million. Price inflation for chicken products occurs, ranging from 1.41% for feet to 2.94% for ready-to-eat products. Domestic consumption of chicken products falls, ranging from 0.73% for whole chickens to 2.11% for ready-to-eat products. US consumers’ surplus declines by $1.94 billion.
Agricultural trade has been steadily increasing since the 1960s. Consequently, agricultural trade has become an important field in agricultural economics since the 1970s. This special issue article presents an overview of key trade theories, empirical trade models, the current status of multilateral trade negotiations, major disputes, and key forces that can shape future commodity trade. Agriculture was brought into global trade negotiations under the Uruguay Round; however, the Doha Round negotiations are beset with disagreements among WTO member countries. Further, with Trump’s unilateral tariff policies, global trade negotiations are under siege, disrupting trade and potentially slowing economic growth worldwide.
We examine the interdependence of high-yielding (HY) variety adoption and farm and farmer characteristics to achieve almost self-sufficiency in rice production in Bangladesh. We use data collected by the International Rice Research Institute (IRRI), Bangladesh, to estimate yield differentials, return differentials, and risk. We find that HY rice varieties contributed 61.34%, plot-specific attributes contributed 3.08%, and farmer-specific characteristics contributed 35.58% toward rice productivity. Additionally, adopting HY varieties resulted in a base return increase of about 154.03%. Plot-specific attributes had larger effects on the return model than on the differential yield model, while farmer-specific characteristics adversely impacted HY return gains.
This study analyzes the effects of the proposed Mexican import ban of GM corn on Mexican, US, and global corn markets. This import ban would have caused considerable trade reallocations. Mexico would have had to import from France, Colombia, and Indonesia to fill the void left by lost imports from the United States. In turn, the United States would have had to divert its lost export sales in Mexico to Japan, Colombia, South Korea, and itself. Because of these trade reallocations, Mexico would have imported from more expensive sources. The United States would have exported to distant countries. Welfare would have decreased in many countries, with Mexico incurring large losses.
We develop a perennial crop vintage-investment decision model that incorporates the dynamics of growers’ endogenous removal and planting decisions with uncertainty regarding the future release date of a new variety. We apply the model to coconut cultivation to examine the effects of a new cultivar’s higher yield, lower input requirements, and lower discard rates on the removal and planting decisions for various vintages of existing trees and different announced release dates of new cultivars. Results show that if the new variety is highly (moderately) profitable, growers will alter their planting and removal decisions to plant the new variety sooner (later).
We assess the economic and political factors that underpinned the scope and magnitude of tariffs and US subsidies during the US–China trade dispute. We develop a political-economy model of tariff retaliation and compensatory subsidization and econometrically quantify the determinants of trade and subsidy policies during the trade dispute. Our empirical findings confirm that political (electoral geography of targeted commodities) and economic (optimal tariff relationships, attributes of export supply and import demand, and trade balances) factors were key determinants of US policies. China’s tariff retaliation was consistent with higher protectionism for larger sectors with extensive state ownership.
While comparative advantage factors expand agricultural trade, trade and domestic policies and gravity factors can either promote or hinder commodity trade. We use a theoretical multicountry trade model to analyze how various factors impact agricultural trade. Following previous literature, we model cross-country productivity differences using a probabilistic distribution. We then empirically implement the theoretical model to quantify the effects of various determinants of agricultural trade. Production-inhibiting policies and tariffs hinder bilateral trade, while domestic institutional quality, support programs, and land endowments expand bilateral trade.
This study adopts a novel approach to assessing addiction to cigarettes, small and large cigars, e-cigarettes, smokeless tobacco, and loose smoking tobacco by decomposing tobacco demand into supernumerary and precommitted quantities. Supernumerary tobacco consumption represents a demand component that varies with prices and smoker income, while precommitted consumption is immune to changes in economic circumstances and thus may be reflective of addiction. By empirically estimating the supernumerary and precommitted demand components, we shed light on the severity of tobacco addiction and smoker price and income responsiveness in the United States, which may prove vital in refining various tobacco control policies.
Using a theoretical and empirical spatial equilibrium model, we examine the effect of the Chinese 25% tariff on the world sorghum market under various market structures. The effects of the tariff are less pronounced under bilateral monopoly than under perfect competition. Specifically, the reallocations of trade caused by the tariff are lessened as the United States uses its market power to mitigate adverse effects. This reduces the tariff’s impacts on prices, production, consumption, and welfare for most countries. However, the calibration revealed that the United States and China do not exert significant market power on the world sorghum market and that international sorghum trade is more accurately represented by perfect competition.
We use a broiler supply-chain model to examine the impacts of COVID-19-induced labor shortages and income reduction throughout the sector. Results show that the labor shock has negative effects on production throughout the supply chain, causing meat shortages and the average retail price to rise by 11:11%. The income shock lowers both quantities and prices in the supply chain. The combined production effects of both shocks are generally more pronounced, as they reinforce each other. However, retail prices move in opposite directions, with labor shock increasing prices and income shock reducing prices, leading to a 5:44% net increase in the average retail price.
We develop a four-sector (labor-intensive agriculture, capital-intensive agriculture, service & construction, and manufacturing) general-equilibrium model of North American countries to analyze the effects of tighter U.S. immigration policies. Results show that these policies erode the comparative advantage of U.S. labor-intensive agriculture, causing U.S. production and exports to fall and other countries to expand their exports to the United States. In Mexico, low-skilled labor demand in labor-intensive agriculture increases as production rises. The effectiveness of U.S. tighter immigration policies depends on the substitutability between U.S. domestic and undocumented workers. Immigration policies exacerbate the wedge between Mexican low-skilled wage rate and the undocumented wage rate, intensifying the underlying cause for unauthorized entry.
We investigate the impacts of Comprehensive Economic and Trade Agreement (CETA) liberalizations of trade and investment barriers on processed food markets. Using a four-region monopolistic competition model with heterogeneous food-processing firms that incorporates domestically operating, exporting, and multinational enterprise (MNE) firms, we quantify the effects of tariff elimination, fixed trade cost reduction, and foreign direct investment (FDI) cost reduction under CETA on prices, domestic sales, bilateral trade flows, affiliate sales, productivity, number of firms, and aggregate output. Our results highlight that trade liberalization promotes bilateral exports but reduces foreign affiliate sales, and, in contrast, lower FDI costs expand MNE affiliate sales but curtail bilateral exports.
China targeted U.S. soybeans, among other commodities, for its recent retaliatory tariff chiefly because of the sheer volume of its imports from the United States. We develop a theoretical and empirical spatial equilibrium trade model to analyze the effects of the 25% Chinese soybean tariff on the United States, China, and nine other major soybean trading regions. Both the United States and China incur welfare losses as a result of the tariff, but Brazil experiences a large net gain. The United States mitigates some of its losses by reallocating trade to other importers, but at a cost to smaller exporters such as Canada.
We develop a model with farm-level heterogeneity in productivity and endogenous entry and exit decisions to analyze the effect of price supports and direct payments on the U.S. corn market. The analytical results show that, contrary to the existing literature, removal of direct payments augments productivity while removal of price supports does not impact productivity, and direct payments can lead to larger production distortions than price supports under certain conditions. The simulation results corroborate the theoretical findings in that if both policies are equal in magnitude, then direct payments result in larger price, output, and welfare distortions than price supports.
Orange juice processors in Florida face stiff competition from São Paulo processors. The United States imposes a specific import tariff to protect domestic processors. São Paulo processors also export to the European Union, which imposes an ad valorem tariff on orange juice. Under oligopolistic competition with endogenous firm entry and exit, this paper analyzes how the changes in tariff policy and productivity impact the market structure in Florida and São Paulo; prices; quantities; and welfare in the United States, Brazil, and the European Union. Free trade and an increase in São Paulo productivity benefit U.S. and EU consumers and São Paulo processors. In contrast, U.S. tariff reduction adversely impacts Florida processors.
We develop a strategic trade model to analyze the oligopolistic competition between Florida and São Paulo processors in the U.S. orange juice market and São Paulo processors in the European orange juice market. We obtain analytical results of the effects of changes in trade liberalization. A structural econometric model is derived from the theoretical model, and the new empirical industrial organization literature is used to estimate the market power of Florida and São Paulo producers. We simulate the effects of U.S. and European tariff reductions on prices, quantities, and trade volume
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