Determinants of World Demand for U.S. Corn Seeds: The Role of Trade Costs

Abstract

The United States is a large net exporter of corn seeds. Seed trade, including that of corn, has been expanding, but its determinants are not well understood. This paper econometrically investigates the determinants of world demand for U.S. corn seeds with a detailed analysis of trade costs impeding export flows to various markets, including costs associated with distance, tariffs, and sanitary and phytosanitary (SPS) regulations. The analysis relies on a gravity-like model based on an explicit specification of derived demand for seed by foreign corn producers, estimated based on data from 48 countries and for the years 1989 to 2004. An SPS count variable is incorporated as a shifter in the unit cost of seeds faced by foreign users. A sample selection framework is used to account for the determination of which trade flows are positive. All trade costs matter and have had a negative impact on U.S. corn seed exports. Tariffs matter most, followed by distance and SPS measures.

Tariffs and non-tariff frictions in the world wine trade

“…Jayasinghe et al, 2010), we modelled trade resistance induced by trade regulations including tariffs and non-tariff barriers by assuming a multiplicative form:…”

“…On the contrary, Henry de Fraham and Vancauteren (2006) stated that the harmonization of regulations in the food industry have largely increased intra-EU trade. Last but not least, Jayasinghe et al (2010) analyzed trade frictions in world demand for US corn seeds, and concluded that "tariffs matter most, followed by distance and SPS measures". Needless to say, the relative importance of tariffs and non-tariff barriers is still not clear cut, and their impacts on trade are necessarily case specific.…”

Maximum residue limits and agrifood exports of China: choosing the best estimation technique

“…Their findings revealed a significantly persistent trade resistance in the EU market for the Central and Eastern European Countries (CEECs) agrifood products regardless of the EU integration and the trade liberalization processes. Similarly, Jayasinghe et al (2010) also use the Heckman's selection model to cope with zeros in the trade data and concluded that, like other trade costs, the SPS regulations impede exports. Vigani et al (2012) showed that the variation in the GMO standards impeded the trade flows.…”

Front Matter

“…The third case study written with Sampath Jayasinghe and GianCarlo Moschini (Jayasinghe, Beghin and Moschini, 2010) looks at the impact of seed quality standards and requirements on exports of US corn seeds. Seed trade is important but has been overlooked by applied economists.…”