FREC 410
International Ag. Trade & Marketing
Overview of
International Agricultural Trade
Dr. Titus Awokuse
207 Townsend Hall
Tel: 302-831-1323; Fax: 302-831-6243
kuse@udel.edu
http://www.udel.edu/FREC/Awokuse/FREC410_webpage.htm
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Recent Statistics on Ag. Trade flows
„
„
U.S Trade Issues
Value of world ag exports has increased over 10-fold
in the last 30 years
growth from increase __________
growth also from higher prices
could have been larger if not for _________ in non-tariff
barriers
But Ag sector is still small relative to the industrial sector
In developed nations
„
~ 7% of total import and export values
„
U.S. is the leading ag exporter in the world:
~ 20% of all _________________
„
France is 2nd, followed by the Netherlands, and
Germany …
„
Leading Ag importers are same as leading
exporters
… shows the diversity of ag production &
specialization
Product differentiation Î____________________
In developing / less developed nations
„
ag imports are: ~ 20% of total import values
„
ag imports are: ~ 11% of total export values
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US Major Ag Exports
Major importers from US
„
„
Netherlands, France, Germany, UK
Grains (food and feed)
Italy, Spain
Red meat
Wheat
Asia:
„
Soybeans
Europe:
Cotton
Japan, S. Korea, Taiwan, Hong Kong, China
Poultry meat
North America:
Fresh fruits
Mexico, Canada
Processed fruits and veggies
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US Major Ag Imports & Origins
Overview of Issues
US imports from:
What is int’l economics?
Canada/ mexico/Indonesia/ Brazil/Colombia/ Italy/Netherlands/
France/ Thailand/ EU-15
„
„
It’s application of fundamental methods of
analysis in general econ to econ transactions
across political borders
„
Uses econ theory at micro (individual and
firm) & macro levels
„
Major issue: rule for economic interaction
b/w sovereign nations: domestic laws;
relative domestic prices
US major ag imports
Raw coffee
Wine and beer
Fresh fruits
Red meat
Processed fruits & Veggies
Fresh veg
Snack foods
Live animals
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Why do nations trade?
Important Questions
(basis of this course)
„
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Mutual welfare benefits for all parties
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Absolute advantage
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Why do nations trade?
Adam Smith; Mills
Comparative advantage
„
What determines the Direction of
David Ricardo
Trade Flows?
Differences in resource _______________
„
Eli Hecksher & Bertil Ohlin
„
What is the Role of Governments?
Imperfect Competition & differentiated products
„
Paul Krugman
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What determines the
Direction of Trade Flows?
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Labor productivity – David Ricardo
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Climate:
explains why Brazil and Kenya export coffee
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Natural resource endowment:
Nigeria & Iraq export oil
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Technology:
Japan & US export auto and aircrafts
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What is the Role of Governments?
„
National govts and international institutions play
a major role in _____________
„
Through the making of trade policies and agreements that limits
or encourage trade
Free Trade vs. Protectionism
If there are gains from trade, why do we have protective govt.
policies?
„
„
GATT (and later WTO) was created after WWII
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Example: Debates in US for and against _____________________
Some inefficient domestic industries can’t compete with imports
Trade liberalization and reduction of _____________________
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Developed Countries Issues
Issues in International Trade
„
The world will be viewed from two perspectives:
„
Developed (Industrial) nations
Less Developed Countries (LDCs)
Exporters (Supply):
Access to foreign mkts:
________________ price policies abroad
Orderly disposal of surpluses:
Food aid programs
General Price stability
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Developing Countries Issues
Developed Countries Issues
„
„
Importers (Demand):
Supply assurance of _______________
and raw materials
Exporters (Supply):
Secure and stable mkts for exports
Price stability for exports and imports
Role of multinational corporations:
Import Price stability
Location of processing abroad:
tariff protection for processors
Unfair competition with __________________
producers:
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economic control of trade
Sugar in the US
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Developing Countries Issues
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SUMMARY
Importers (Demand):
Supply assurance of temperate-zone
foodstuffs and animal feeds
Import Price stability
Students should be able to:
„
Critic protectionism and advocate benefits of free
trade
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Understand analytical framework for measuring the
effects of “protective” policies that affect trade
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Why?
Framework helps predict effects of trade future policies
Such knowledge could be used to define criteria for deciding
when govt intervention is good for economy
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