Yield Variability and Agricultural Trade

Abstract

We examine how changes in yield variability affect the welfare of cereal grain and oilseed buyers and producers around the world. We simulate trade patterns and welfare for 21 countries with a Ricardian trade model that incorporates bilateral trade costs and crop yield distributions. The model shows that world trade volumes would need to increase substantially if crop yield variability were to rise. Net welfare effects, however, are moderate so long as countries do not resort to policies that inhibit trade, such as export restrictions or measures to promote self-sufficiency in crops. Low-income countries suffer the most from increases in yield variability, due to higher bilateral trade costs and lower-than-average productivity.

Dynamic Transmissions and Volatility Spillovers between Global Price and U.S. Producer Price in Agricultural Markets

“…For example, the poor harvests in Australia and Ukraine in 2007 may have worsened the 2008 food crisis, and Russia's poor harvest in 2010 unsettled the global wheat market (Tanaka et al 2012;Welton 2011). To make matters worse, future climate change will be aggravated by the migration of crop production to other areas (Reimer and Li 2009). However, past studies have utterly underestimated the importance of analyzing the interconnection between producer prices of countries producing large amounts of exports and global prices in the agricultural sector, particularly in the light of the fact that an ample number of published articles have found price spillover effects from international to local food-importing markets.…”

Welfare‐at‐Risk and Extreme Dependency of Regional Wheat Yields: Implications of a Stochastic CGE Model

“…This situation is particularly important in light of the impacts of climate change, which are likely to aggravate production volatility (Dasgupta et al ., ; IPCC, ). Migration of production to areas which suffer higher yield variability might also lead to a surge in volatility (Reimer and Li, ). Increasing frequency and intensity of extreme events would also result in productivity shocks (IPCC, ).…”

Agriculture and Trade Opportunities for Tanzania: Past Volatility and Future Climate Change

“…Also, the scope of many of these studies is constrained by data limitations that prohibited analysis of individual African countries. Reimer and Li (2009) disaggregates many countries and examines of cereal and oilseeds trade, to conclude that world trade volumes will need to increase if yield variability increases. However, this analysis is unable to examine the complex impacts of factor incomes and prices on household welfare, as has been shown in studies of international price shocks following trade liberalization (e.g.…”