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  • Business risk management programs under review
    Can. J. Agric. Econ. (IF 0.950) Pub Date : 2020-01-10
    Peter Slade

    The Canadian federal, provincial, and territorial governments recently enacted a new 5‐year agricultural policy framework, the Canadian Agricultural Partnership. While the framework contained few changes to existing policies, the governments also committed to a full review of Canadian business risk management (BRM) programs. In this article, I provide an overview of the existing suite of BRM programs and summarize the BRM program review. I conclude by making recommendations for future policy frameworks.

  • A local maximum likelihood model of crop yield distributions
    Can. J. Agric. Econ. (IF 0.950) Pub Date : 2019-12-30
    Ximing Wu; Yu Yvette Zhang

    In this note, we propose a local maximum likelihood estimator for spatially‐dependent distributions. Our estimator adopts the Poisson regression approach for density ratio models and incorporates spatial smoothing via local regression. We also present a method of smoothing parameter selection. We illustrate this easy‐to‐implement estimator with an application to the estimation of corn yield distributions of Iowa counties. The usefulness of the approach is further demonstrated via an application to the estimation of crop insurance premium.

  • Agriculture in the United States, Mexico, Canada Agreement: Agreeing to keep things pretty much the same
    Can. J. Agric. Econ. (IF 0.950) Pub Date : 2019-11-20
    William A. Kerr

    North American Free Trade Agreement (NAFTA) was referred to by U.S. President Trump as one of the worst trade deals ever made. Given this billing, one might have expected the result of its renegotiation to be a major change to the trading relationship between the United States and Canada. The new United States, Mexico, Canada Agreement (USMCA), however, retains a great deal of its predecessor. This is particularly true for agricultural trade. Canadian market access into the United States remains virtually unchanged. No major domestic regulatory changes were agreed to by Canada. While there were concessions made on market access for U.S. products into Canada's heavily protected sectors where the supply management policy applies, they do not appear to threaten the system. While the value of the compensation has not yet been announced, compensation for losses that will be suffered by farmers producing under supply management is agreed in principle. The USMCA is an agreement to keep things pretty much the same.

  • Organic farming for local markets in Kenya: Contribution of conversion and certification to environmental benefits
    Can. J. Agric. Econ. (IF 0.950) Pub Date : 2019-11-04
    Chloé Tankam; Eric W. Djimeu

    Organic farming is a way to address environmental issues. In Kenya, organic production for domestic markets based on local certification represents a solution to both economic and environmental issues. We propose to address this latter issue. Indeed, no quantitative studies have been dedicated to these systems’ impacts on the environment. However, their theoretical benefits can be weakened, first by their functioning based on internal control and indirect external control, and second by the risk of self‐selection since farmers using low levels of synthetic inputs have less effort to make in order to enter in conversion process. Thanks to unique farm‐level survey data along with the propensity score matching method, we assess the producer‐level effects of organic certification for fruits and vegetables on agro‐ecological practices. We show that conversion and certification are associated with organic farming techniques and positive perceptions of different statements about environmental values. However, we do not notice any additional effects of certification compared to conversion alone. Although economic issues are important, we focus on environmental issues that appear as important for smallholders. In a context with no public regulation, conversion‐only farmers and locally certified farmers could be a lever for a more sustainable agriculture.

  • Assessing effects of federal crop insurance supply on acreage and yield of specialty crops
    Can. J. Agric. Econ. (IF 0.950) Pub Date : 2019-10-31
    Jian Shi; JunJie Wu; Beau Olen

    Crop insurance may affect harvested acreage and yield by influencing producers’ behavior such as land allocation and input use. Although specialty crops are a major source of farm income, especially on the U.S. west coast, they have not received as much attention as field crops in previous empirical studies. This paper assesses the effect of moral hazard and adverse selection associated with the federal crop insurance program (FCIP) on the acreage and yield of major specialty crops in California. An econometric method that expands the switching regression model is developed to assess the effect. Results suggest that federal crop insurance can change specialty crop growers’ production responses to climate and soil conditions. The moral hazard effect tends to increase the acreage and yield of the specialty crops, whereas the adverse selection effect tends to have the opposite effect. The overall effect of the FCIP on acreage and yield of specialty crops is found to be moderate.

  • An empirical assessment of food security on First Nations in Canada
    Can. J. Agric. Econ. (IF 0.950) Pub Date : 2019-09-24
    B. James Deaton; Alexander Scholz; Bethany Lipka

    Using data generated from surveys conducted on First Nations throughout Canada, we use regression analysis to examine factors influencing food insecurity. To our knowledge, this is the first time a regression‐based analysis has been conducted to examine food insecurity on First Nations in Canada. As expected, income is inversely related to the likelihood that one reports their household as experiencing food insecurity. In addition, individuals in extremely remote areas are more likely to report their household as experiencing food insecurity. Although traditional food consumption is prevalent, we do not find evidence that it is associated with reductions in the prevalence of self‐reported household food insecurity. We find that gender and mental health are associated with perceived household food insecurity. Although this study is novel, for reasons and limitations detailed in the paper, it should be viewed as an initial effort to establish potential relationships that underscore one of the most important issues facing Canada: the high prevalence of food insecurity in First Nations communities.

  • State trading deregulation and prairie durum wheat production
    Can. J. Agric. Econ. (IF 0.950) Pub Date : 2019-09-06
    Colin A. Carter; Shon M. Ferguson

    We estimate the impact of the 2012 removal of the Canadian Wheat Board's (CWB) single‐desk on the spatial pattern of durum wheat acres in Western Canada. We analyze changes in durum seeded acres with a panel regression and Census Agricultural Region data from 2004 to 2016. Our results indicate that removal of the CWB single‐desk had a significant impact on total durum production in Western Canada. In addition, we find that the spatial distribution of durum wheat acres shifted away from marginal durum‐growing areas and toward drier areas, an increase in specialization that arguably improved the efficiency of resource allocation.

  • The law and economics of Canada's WTO litigation contesting U.S. country‐of‐origin labeling (COOL)
    Can. J. Agric. Econ. (IF 0.950) Pub Date : 2019-12-12
    Daniel A. Sumner; Ton Zuijdwijk

    We explain the interplay of law and economics in the successful WTO challenge by Canada of U.S. mandatory country‐of‐origin labeling (COOL) measures for beef and pork, which hinged on origin of livestock used in U.S. meat production. Canada mounted a successful legal and economic strategy to convince WTO adjudicating bodies that the United States had violated specific WTO provisions. Canada's economic evidence shows that through costs of segregation the COOL measure harmed the competitive position of Canadian cattle and hogs in the U.S. market. Economic evidence was built into the strategy and cited by the WTO Panels in support of their legal findings that the COOL measure violated U.S. obligations under WTO agreements. Canada was awarded rights to more than one billion Canadian dollars in retaliation and the United States responded by eliminating the offending COOL measure. The COOL case demonstrates how economic and econometric evidence can be used in complex dispute settlement proceedings dealing with technical trade barriers. Economics is especially valuable in the initial stage of framing the effects at issue, in the intermediate stages of documenting empirical causation and in the final stage of litigation, which was to calculate and defend the amount of retaliation.

  • Revisiting U.S. country of origin labeling trade damage estimates how does an equilibrium displacement model perform under different scenarios
    Can. J. Agric. Econ. (IF 0.950) Pub Date : 2019-12-29
    William F. Hahn; Sharon S. Sydow; Warren P. Preston

    Mexico and Canada successfully challenged the U.S. mandatory country of origin labeling (COOL) requirements for beef and pork as inconsistent with World Trade Organization (WTO) rules, which ultimately led to arbitration over the level of trade lost due to the COOL measure. During this phase of the dispute, Mexico, Canada, and the United States provided the Arbitration Panel with estimates of the trade losses caused by COOL that were produced using different quantitative methods. The U.S. estimates were based on an equilibrium displacement model (EDM). This article presents a version of the EDM used by the U.S. Government to calculate trade losses due to COOL. The Panel developed its own analysis combining econometric analysis and an EDM that used only supply‐side information to calculate changes in Canadian and Mexican livestock trade. The U.S. EDM includes both the supply and demand sides of the market. We use the U.S. EDM and the Panel's assumptions to re‐estimate the value of lost trade due to COOL. The inclusion of demand‐side effects and domestic COOL costs produces lower estimated trade damages than those produced using the Panel's analysis, validating the EDM as a useful quantitative tool for this type of trade policy analysis.

  • Nontariff measures and product differentiation: Hormone‐treated beef trade from the United States and Canada to the European Union
    Can. J. Agric. Econ. (IF 0.950) Pub Date : 2019-07-22
    Byung Min Soon; Wyatt Thompson

    We investigate how a combination of the sanitary and phytosanitary (SPS) measure and product differentiation affects beef trade and the consequences for the United States (US)–European Union (EU) hormone‐treated beef trade dispute. We develop a partial equilibrium model to represent the global beef markets and product differentiation between non‐hormone‐treated beef, hormone‐treated beef, and other beef. The results show that removing the SPS measure increases EU hormone‐treated beef imports from the US and Canada and decrease beef consumption. In addition, EU hormone‐treated beef consumption and imports can be related to a few key indicators of product differentiation. The framework we develop can estimate EU hormone‐treated beef consumption and imports based on a minimum of parameters relating to product differentiation, thereby providing useful applied economic analysis of a key trade measure.

  • A counterfactual experiment about the eradication of cattle diseases on beef trade
    Can. J. Agric. Econ. (IF 0.950) Pub Date : 2019-10-31
    Wendkouni Jean‐Baptiste Zongo; Bruno Larue

    In response to disease outbreak alerts in exporting countries, importing countries usually impose trade bans that vary in terms of product coverage and in terms of duration. We rely on a unique balanced panel dataset that covers four‐digit disaggregated beef products over the 1996–2013 period, to estimate the effect of a hypothetical removal of animal diseases outbreaks on trade flows. More specifically, we investigate how bovine spongiform encephalopathy (BSE) and the foot and mouth diseases (FMDs) affect beef trade flows. We use a sectoral structural gravity approach to measure direct, conditional, and full effects, allowing inward and outward multilateral resistance indices, expenditures, and factory‐gate prices to adjust to the eradication of animal diseases. The indirect channels through which BSE and FMD impact trade are important. Our counterfactual experiment suggests that Canada would secure substantial gains from BSE and FMD eradication.

  • Do state‐owned enterprises benefit more from China's cereal grain tariff‐rate quota regime?
    Can. J. Agric. Econ. (IF 0.950) Pub Date : 2019-12-09
    Chaoping Xie; Jason H. Grant; Kathryn A. Boys

    In 2016, the United States launched a formal dispute with the World Trade Organization (WTO) concerning China's wheat, corn, and rice tariff‐rate quota (TRQs) administration. A formal panel was requested in August 2017, with several major grain exporters, including Canada, joining as third‐party members. This study employs two unique micro‐level datasets to investigate the role of state‐owned and non‐state‐owned enterprises’ (SOE and non‐SOE, respectively) in China's agricultural imports. Results suggest that SOEs are noticeably more active in importing quota‐bound commodities compared to quota‐free imported commodities. Moreover, the larger role of SOEs in China's cereal grain imports is negatively correlated with China's food security targets, as measured by estimated prior year stocks‐to‐use ratios. Conversely, above average food security targets in China's cereal grain market leads to an important extensive margin adjustment of non‐SOE import participation. Finally, we find very little compelling evidence that China's September reallocation of unused TRQ has any economic or statistically significant impact on non‐SOE entry into importing or the intensity with which their imports occur.

  • The price of sanctions: An empirical analysis of German export losses due to the Russian agricultural ban
    Can. J. Agric. Econ. (IF 0.950) Pub Date : 2019-04-01
    Svetlana Fedoseeva; Roland Herrmann

    The aim of this paper is to contribute to the vivid political discussion on the consequences of the Russian agricultural import ban on the German export market by quantifying export losses that German agri‐food exporters encountered on the Russian market due to the agricultural import ban of 2014. A gravity‐type approach is used to measure the sanction effect in a panel of German agri‐food exports covering the period from January 1999 to June 2018. The ban effect is disentangled from a sequence of different geopolitically‐ and economically driven episodes. Once macroeconomic developments of the Russian economy as well as individual stages of decreasing trade cooperation in the preban period are accounted for, the import ban reduced German agri‐food exports significantly but was not the major cause. Therefore, a simple elimination of the ban will not be enough to restore trade to the presanctions level.

  • Agriculture trade restrictiveness in Canada: How important are the cross effects?
    Can. J. Agric. Econ. (IF 0.950) Pub Date : 2019-09-17
    Yves Surry; James Rude

    A trade restrictiveness index (TRI) aggregates an entire protection structure into a single uniform measure that is consistent with trade theory and reflects the extent of policy interventions on trade or welfare. Although there are several variants of a TRI, all approaches aggregate protective measures using weights that depend on import demand and export supply elasticities; some studies ignore cross‐price effects while others account for them. This study measures the degree of bias introduced by ignoring cross effects. It provides a practical approach to account for demand‐ and supply‐side cross‐price effects in a multi‐commodity TRI setting. This approach is illustrated with a case study of distortions in the Canadian crop and livestock sector. Domestic demand and supply cross effects are approximated using a “constant differences of elasticities of substitution” functional form. On average, over the period 1996–2016, we find that cross‐price effects do make a difference, and that including them makes the TRI 27% higher than an approach which ignores them. Furthermore, both TRI approaches produce indices that are higher and more variable than the OECD's percentage Producer Support Estimate (PSE) that measures policy transfers as a share of gross farm receipts. The fundamental differences between a TRI and PSE% is driven by market price support for milk.

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