Global Agricultural Policy and Trade Model Consortium

1. Global Agricultural Policy and Trade Model Consortium David Abler Penn State University

2. Plan of Talk • Describe the ERS/Penn State trade modeling project • A precursor to the proposed consortium • Discuss the proposed global agricultural policy and trade model consortium

3. ERS/Penn State Trade Project • Joint effort between ERS and Penn State to develop a new partial equilibrium trade model • Project began in October 1998 • Four-region prototype model in 2000 • 12-region beta version of model in 2002

4. ERS/Penn State Trade Model • Applied partial equilibrium model • Multiple commodities (currently 35) • Multiple regions (currently 12) • Nonspatial, gross trade model • Annual model • Comparative static or dynamic (partial adjustment)

5. Commodities (35 total) • 13 crops • Rice, wheat, corn, other coarse grains, soybeans, sunflower seed, rapeseed, peanuts, cotton (both as a fiber and an oilseed), other oilseeds, tropical oils, sugar • 12 oilseed products • Oil and meal from soybeans, sunflowers, rapeseed, cottonseed, peanuts, other oilseeds • 4 livestock products • Beef and veal, pork, poultry, raw milk • 6 processed dairy products • Fluid milk, butter, cheese, nonfat dry milk, whole dry milk, other dairy products

6. Regions (12 total)

7. Policy Coverage • Core set of policies for all countries • Specific and ad valorem import and export taxes and subsidies • Tariff rate quotas (TRQs) • Producer and consumer subsidies • Additional policies appropriate to US, Canada, EU, Japan, and South Korea • Rich policy detail for EU

8. Strengths of the Model • Commodity detail • Grains, oilseeds, and livestock interactions • Policy detail and good representation of many policy instruments • Consistency of parameter values with economic theory

9. The Model Has Been Used to … • Project the impacts of trade liberalization • All products as well as specific product categories (dairy, coarse grains) • Analyze the impacts of agricultural policies in Japan • Evaluate the impacts of EU agricultural policy reforms • More information and references online at http://trade.aers.psu.edu/

10. The Proposed Consortium • A consortium of users of a general purpose partial equilibrium model of global agricultural markets and policy • Working title: Global Agricultural Policy and Trade Model Consortium • Use the ERS/Penn State model as a starting point • Consortium members would develop, apply, and document the model • Membership free and open to all

11. NRI Proposal • 3-year proposal to USDA’s National Research Initiative (NRI) grants program • Principal investigators: David Abler and David Blandford (Penn State University) • Would provide funding for: • Consortium meetings in 2005 and 2006, and public symposium in 2007 • Mini-grants to consortium members for model development, application, and documentation • Development of user-friendly “front end” and “back end” to model • Executive board to provide strategic guidance to the consortium

12. Why a Consortium? • Costs of agricultural trade model-building are very high and increasing • A trade model is a public good, so long as the model and source code are publicly accessible • Significant economies of scale in number of users of a trade model • Economies of scope (up to a point) in issues addressed by a trade model • Network externalities among model users

13. Examples of Successful Consortia • Global Trade Analysis Project (GTAP) • Agricultural Market Access Database (AMAD) project • Linux – formal and informal consortia

14. Next Steps • Seek out potential participants in the consortium, if funded • Continue development of ERS/Penn State model given current resources • Search for additional funding • NRI approximately $500K for 3 years