Imperfect Substitutes, Deferred Producer Payment System, and State Trading Enterprises: An Empirical Test of Leadership in the Global Malting Barley Markets (original) (raw)
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American Journal of Agricultural Economics, 2006
The lack of transparency in the pricing and operational activities of state trading enterprises (STEs) has caused WTO members to express concern that certain countries' STEs might circumvent Uruguay Round commitments on export subsidies, domestic support, or market access. The purpose of this study is to examine the market structure of the differentiated world malting barley market in which two STEs (the Canadian Wheat Board and Australian Barley Board) maintain jointly a very large share of the export market. In particular, this study focuses on the exclusive procuring and pricing policies used by both STEs to test if these intra-country mechanisms can generate leadership and shift rent from other exporting countries. A conceptual and empirical framework is also provided to test if STEs set their initial payments at optimal levels. Four key results are forthcoming from this research. First, we found strong support that the global malting barley market operates in a quantity setting oligopolistic structure. Second, both STEs and other exporting countries were in Cournot competition, and thus held the potential to exercise rentshifting behavior using their initial payment structures. Third, while some distortionary impacts from the STE prepayment systems were possible, we did not find evidence that it was a tool either STE employed. Empirical results from the precommitment stage show that both STEs did not set their initial payments low enough to maximize their profits. Fourth, It appears that the strong anecdotal and statistical evidence of product differentiation dampened significantly the desire/ability of malting barley STEs to pursue a rentshifting objective.
The Welfare Effects of State Trading Enterprises: the Case of US-Canada Malting Barley Trade
Although advances in WTO led efforts toward free trade agreements have reduced explicit policy induced distortions in globally traded commodities, the potential for policy shifts toward implicit distortions certainly remains quite viable. For example, State Trading Enterprises (STEs) maintain internationally legal and internal strategies that several countries use to obtain an advantageous position in world markets. As early as 1947, the General Agreement on Tariffs and Trade (GATT) acknowledged State Trading Enterprises (STEs) as legitimate participants in international trade. The World Trade Organization (WTO) defines STEs as "government and nongovernmental enterprises, including marketing boards, which have been granted exclusive or special rights or privileges, including statutory or constitutional powers, in the exercise of which they influence through purchases or sales the level or direction of imports or exports.(citation)" In 1995/96, there were about 100 STEs reported to WTO by 32 countries. State trading is more prevalent in agriculture than in any other industries. STEs operate in a broad range of agricultural commodities and mostly traded in grains and dairy products. Normally, STEs have single desk marketing functions and engage in price pooling. With these privileges, which are unavailable to commercial firms, STEs may exert influence on world grain market. The Canadian Wheat Board (CWB) is a singledesk state trading agency responsible for the marketing of all wheat and barley sold for human domestic consumption and for export. The U.S. is the biggest importer of Canadian six-row malting barley and its imports of malting barley from Canada have
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State Trading Enterprises in a Differentiated Environment: The Case of Global Malting Barley Markets
2003
The lack of transparency in the pricing and operational activities of state trading enterprises (STEs) has caused members of the World Trade Organization to express concern that certain countries' STEs might circumvent Uruguay Round commitments on export subsidies, domestic support, or market access. The purpose of this study is to examine the market structure of the differentiated world malting barley
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Many U.S. agricultural commodity industries are currently considering if and how they might implement a mandatory national generic promotion program. As U.S. industries consider how to finance these programs, one of the key decisions they face is the choice to include or exempt imported products from promotional assessment fees. Free-riders, unwilling riders, exclusion costs, economies of scale, market share, seasonality of production, storage constraints, and the role of government are reviewed within the context of this choice. The paper concludes that perceptions of fairness and ownership of decision processes, commonly held objectives, and effective communication links are key factors affecting decisions about the structures of generic commodity promotion programs.
The Value of the Initial Payment of the Canadian Wheat Board as a Signaling Device
American Journal of Agricultural Economics, 2010
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