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Impact of trade policy to stabilize domestic prices on international food price volatility  Kym Anderson and Signe Nelgen (drawing on collaborations also with Will Martin) University of Adelaide [email_address] IFPRI Board of Trustees Policy Seminar,  Washington DC, 5 December 2011
Policy message ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Why domestic market insulation? ,[object Object],[object Object],[object Object],[object Object]
Effects of market insulation policies on international prices  ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Qua n tity of  international  trade Price ES 1 ES 0 ED 0 Q 0 Q 1 E 1 E 0 P 1 P 0
Quantity  of  international  trade Price ES 2 ES 1 ES 0 ED 0 Q 0 Q 1 Q 2 E 1 E 2 E 0 P 1 P x P 0 P 2
Quantity  of  international  trade Price ES 1 ES 0 ED 0 ED’ Q 0 Q’ Q 1 E’ E 1 E 0 M N P’ P 1 P 0
Quantity  of  international  trade Price ES 2 ES 1 ES 0 ED 0 ED ’ Q 0 Q’ Q 1 Q 2 E 3 E’ E 1 E 2 E 0 M N P 3 P’ P 1 P x P 0 P 2
Net effect of both groups’ responses ,[object Object],[object Object],[object Object],[object Object],[object Object]
Evidence of changing trade restrictions  ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Evidence of changing trade restrictions  ,[object Object],[object Object],[object Object],[object Object]
Evidence of domestic mkt. insulation ,[object Object],[object Object]
Short-run price transmission elasticity ests. Globally, 1970-2010 Rice 0.41 Wheat 0.57 Maize 0.67
Rice NRA, global wted. av. 1970-2010
How much have partial insulation policies contributed to int’l price spikes?  ,[object Object],[object Object],[object Object]
Trade tax contribution to int’l price spike  ,[object Object],[object Object],[object Object],[object Object],[object Object]
Int’l price rises  (cumulative, nominal, %) 1972-74 2005-08 Rice 300 127 Wheat 158 100 Maize 135 126 Soybean 98 90 Sugar 309 29
Proportional contribution of trade tax changes to int’l price spikes 1972-74 2005-08 Rice 0.27 0.31 Wheat 0.23 0.13 Maize 0.18 0.18 Soybean 0.01 0.45 Sugar 0.18 0.56
Decomposing policy contributions, 2005-08  TOTAL PROPORT’L CONTRIB’N High-income countries Developing  countries Importing countries Exporting countries Rice 0.31 0.01 0.30 0.13 0.18 Wheat 0.13 0.06 0.07 0.06 0.07 Maize 0.18 0.08 0.10 0.07 0.11 Soybean 0.45 0.17 0.28 0.21 0.24 Sugar 0.56 0.11 0.45 0.30 0.26
How much would int’l prices have risen in 2005-08 without altered trade restrictions (%)? International  price rise Domestic price rises including  contribution of changed trade restrictions net of contribution of changed trade restrictions All countries Developing countries High-income countries Rice 127 78 65 64 66 Wheat 100 84 98 60 113 Maize 126 112 106 78 129
Policy implications ,[object Object],[object Object],[object Object],[object Object]
Thanks! ,[object Object],[object Object],[object Object]

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Impact of Trade Policy to Stabilize Domestic Prices on International Food Price Volatility

  • 1. Impact of trade policy to stabilize domestic prices on international food price volatility Kym Anderson and Signe Nelgen (drawing on collaborations also with Will Martin) University of Adelaide [email_address] IFPRI Board of Trustees Policy Seminar, Washington DC, 5 December 2011
  • 2.
  • 3.
  • 4.
  • 5. Qua n tity of international trade Price ES 1 ES 0 ED 0 Q 0 Q 1 E 1 E 0 P 1 P 0
  • 6. Quantity of international trade Price ES 2 ES 1 ES 0 ED 0 Q 0 Q 1 Q 2 E 1 E 2 E 0 P 1 P x P 0 P 2
  • 7. Quantity of international trade Price ES 1 ES 0 ED 0 ED’ Q 0 Q’ Q 1 E’ E 1 E 0 M N P’ P 1 P 0
  • 8. Quantity of international trade Price ES 2 ES 1 ES 0 ED 0 ED ’ Q 0 Q’ Q 1 Q 2 E 3 E’ E 1 E 2 E 0 M N P 3 P’ P 1 P x P 0 P 2
  • 9.
  • 10.
  • 11.
  • 12.
  • 13. Short-run price transmission elasticity ests. Globally, 1970-2010 Rice 0.41 Wheat 0.57 Maize 0.67
  • 14. Rice NRA, global wted. av. 1970-2010
  • 15.
  • 16.
  • 17. Int’l price rises (cumulative, nominal, %) 1972-74 2005-08 Rice 300 127 Wheat 158 100 Maize 135 126 Soybean 98 90 Sugar 309 29
  • 18. Proportional contribution of trade tax changes to int’l price spikes 1972-74 2005-08 Rice 0.27 0.31 Wheat 0.23 0.13 Maize 0.18 0.18 Soybean 0.01 0.45 Sugar 0.18 0.56
  • 19. Decomposing policy contributions, 2005-08 TOTAL PROPORT’L CONTRIB’N High-income countries Developing countries Importing countries Exporting countries Rice 0.31 0.01 0.30 0.13 0.18 Wheat 0.13 0.06 0.07 0.06 0.07 Maize 0.18 0.08 0.10 0.07 0.11 Soybean 0.45 0.17 0.28 0.21 0.24 Sugar 0.56 0.11 0.45 0.30 0.26
  • 20. How much would int’l prices have risen in 2005-08 without altered trade restrictions (%)? International price rise Domestic price rises including contribution of changed trade restrictions net of contribution of changed trade restrictions All countries Developing countries High-income countries Rice 127 78 65 64 66 Wheat 100 84 98 60 113 Maize 126 112 106 78 129
  • 21.
  • 22.