World Exports Concentrated among the
Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.
World and U.S Wheat Markets
Dr. Vincent H. Smith
Department of Agricultural Economics and Economics
Montana State University
Follow the Grain: March 25, 2009
World Wheat Market Structure
Production is spread over many countries
World Exports Concentrated among the “Big Five” (Argentina, Australia, Canada, European Union, United States) plus India.
World imports are spread among many countries.
Wheat Market Basics
World production generally drives average world prices, although corn prices have also been important in recent years
World production was large in 2009 because of strong per acre yields and very high prices in early 2009.
World Production was low in 1996 (about 521 million tons) and prices were at 20 year highs. A somewhat, but not completely, different story in 2010.
US Wheat Demand has recently shrunk, partly because millers are adopting technologies to increase flour yield per ton of wheat in response to high prices
-Subsidies linked to current production or prices
-Subsidies tied to historical production that may affect some current production decisions
-Subsidies viewed as not affecting current production (decoupled payments, etc)
The Brazilian Cotton Case Findings:
-U.S. direct payments were not decoupled
-Countercylcical payments were orange box and payments and therefore GATT illegal
-The step 2 program for cotton was a GATT illegal export subsidy
-Modest increases in the loan rate for cotton had caused “price depression.”
Economists would agree about the step 2 program but are skeptical about the WTO panel conclusions with respect to direct payments.
New WTO cases are being brought. Several major US subsidy programs now violate US WTO obligations