AGRICULTURAL TRADE.   Term Paper ID:28280 Click to get this paper

Essay Subject: Discusses development of agricultural sector; issues; trade patterns; impact on International trade of GATT & AOA. World food problems.... More...

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Paper Abstract: Discusses development of agricultural sector; issues; trade patterns; impact on International trade of GATT & AOA. World food problems. Paper Introduction: Introduction With the increase in international trade , it is now possible, and in some cases necessary, for food grown in one country to be exported to another country. In some cases, this has given rise to specialization with particular countries focusing on raising particular goods. In other cases, countries have been unable to produce necessary foodstuffs and are highly dependent on imported food products. As international trade has become more commonplace in the agricultural sector, trade patterns have emerged. These patterns are subject to the influence of domestic as well as international politics, and factors entirely unrelated directly to crops can affect the trade of agricultural products. This research considers agricultural trade and trade patterns, including considering the situation of agricultural trade in Afric Text of the Paper: The entire text of the paper is shown below. However, the text is somewhat scrambled. We want to give you as much information as we possibly can about our papers and essays, but we cannot give them away for free. In the text below you will find that while disordered, many of the phrases are essentially intact. From this text you will be able to get a solid sense of the writing style, the concepts addressed, and the sources used in the research paper. Currently, SouthAfrica and Zimbabwe generate nearly all of the net exports in the region,while Malawi and Zambia are major importers (Weeks & Subasat, 1998, p. Conclusion International trade of any type is difficult to analyze because of themany variables which influence the success or failure of the trade.However, agricultural trade has additional problems in that goods aredirectly dependent on having arable land and suitable weather in order tobe produced, and these are factors which are often outside the control ofgovernments and industry. The AOA sets down the rules for policies which affectagricultural trade, and cover policies having an effect on market access,policies which affect domestic support, and policies regarding subsidizingexports. Adequacy of Supply According to McCalla and Josling, global consumption of agriculturalproducts is necessarily related to global production, and in recent years,global consumption has increased faster than population growth (McCalla &Josling, 1985, p. No Government Intervention Free markets, which completely lack government intervention, are amuch-publicized goal of many nations, but organizations such as the WorldTrade Organization (WTO) and International Monetary Fund (IMF) are evidencethat the goal has yet to be obtained. Tyers, R., & Anderson, K. Non-tariff barriers are converted into tariff equivalents inorder to be evaluated under AOA provisions, and the resulting tariffs andtheir equivalents must then be reduced under terms of the AOA. 294-313. McCalla, A. There is evidencethat regional trade might alleviate some of the food problems facing theworld today, but not until countries and regions begin to see themselves asable to fill shortages within their span of control. E. By the late twentieth century, however, theindustrialized nations accounted for more than 7 percent of exports andonly 4 percent of imports. 87). Cambridge, UK: Cambridge University Press. However, there is evidence tosuggest that at least in the eastern and southern regions of Africa, thelikelihood exists that nations could absorb each other's surpluses and filleach other's shortages. (1998, February). Development of Agricultural Sector Agriculture is one of the few economic sectors which even today isproduced by families for their own consumption in many developing nations.The rise of industrial agriculture is related directly to the tradepolicies of individual nations, but also to the infrastructure within thosenations. Current Import Levels Per capita income various greatly in the region in question, with thelowest per capita income being observed in Mozambique and the highest inMauritius. There are advantages anddisadvantages to both. Patterns of World Food Trade Over the course of the twentieth century, food prices moved on adownward trend. (1995). This can be particularlytrue of products which are grown only in limited areas. Nonetheless, governments and industry do take anactive role in the policies of agricultural trade, and although pricelevels fell (on the whole) throughout the twentieth century, distributionof food on a global level continues to be troubling. Centrally planned economies reward producers also, andcan provide incentives for producing crops which would be otherwiseunprofitable in the market. Agricultural Policy andWorld Markets. These include regional tradingblocs (such as the North American Free Trade Agreement--NAFTA--and theEuropean Union--EU). References Alexandratos, N. 3 ). 2 ). If nations produce the sametypes of items, or have the potential to produce the same types of items,trade is unlikely because there is nothing to trade--both countries alreadyare capable of producing the same goods as the other (Weeks & Subasat,1998, p. Price stability, assurance ofsupplies and political strategy are all seen as reasons to engage ingovernment intervention, and some governments fear that their businesseswill be at a disadvantage if government intervention is removed.Nonetheless, some governments have taken a largely laissez-faire approachto agricultural commerce. Weeks, J., & Subasat, T. The Potential foragricultural trade among eastern and southern Africa. 3 8). At the sametime, agricultural products are highly susceptible to weather, and in theshort-term, there can be considerable price inflation or suppressiondepending on weather conditions in key areas. In the mid-twentieth century, market economiesaccounted for 6 percent of the world's food imports and just over half ofthe world's exports. 82). In order for an industrial agricultural sector to develop,nations have to have an economic system which can reward producers fortheir investment. International Trade After AOA Although the Uruguay Round of GATT set forth provisions which affectall signatories to the GATT, additional policies have been implementedwhich supersede or supplement the AOA. New York: MacMillan. 25). Typically, African countriesare considered to be importers of foodstuffs and it is often assumed thatthey are producing below their optimum levels. 77). Some reliefis given to developing countries with regard to these provisions in orderto help them gain or maintain a foothold in the agricultural sector(Alexandratos, 1995, p. World Agriculture Toward 2 1 . Government Intervention Developing countries which are new to international trade, or whichhave industries which are new to international trade, may adopt governmentintervention as a way to protect those industries and build up markets.There can be severe problems with this approach, as agriculture and otherindustries may lack the competitive impetus to develop efficient productionmethods, but it remains a common practice. Weeks and Subasat maintain that the potential for trade in this regionhas been underestimated historically, and that the potential foragricultural trade is, in fact, strong among various nations. Categories of International Agriculture Issues There are three broad categories which can be identified in the areaof international agriculture: development of the agricultural sector, foodconsumption, and trade and resource transfers (McCalla & Josling, 1985, p.13). Contrary topopular belief, the region as a whole is not an overwhelming importer ofgrain except during periods of drought. In the latter half of the twentieth century, however, pricefluctuations became more significant, resulting changing patterns of worldfood prices, production and trade. Growing Dependence of Centrally Planned Economies on Food Imports from Industrial Market Economies During the latter half of the twentieth century, centrally plannedeconomies moved their resources away from agricultural production and intoother activities which were deemed more appropriate. (1985). In other cases,countries have been unable to produce necessary foodstuffs and are highlydependent on imported food products. International Trade Policy Countries can elect to have either free trade (no governmentintervention) or managed trade (with government intervention) in theirdealings on the international market. Policy Adjustments Policy adjustments are likely to take place as the developing nationsof the world continue their trend toward becoming net agriculturalimporters (meaning that they will import more foodstuffs than they export). Introduction With the increase in international trade , it is now possible, and insome cases necessary, for food grown in one country to be exported toanother country. 298). In some cases, thisresulted in manufacturing sectors being expanded and the results beingexported on the world market; the resulting revenues were used to importgoods, including agricultural products, from industrial market economies.In other situations, the centrally planned economies simply could notcompete with the efficiencies of the industrial markets in the area ofagricultural products, and in a market where profit margins can be verylow, that lack of efficiency was enough to turn the centrally plannedeconomies into food importers. This suggests that hunger should be decliningaround the world, but another factor, poverty, needs to be included in theevaluation. However, if there are sufficient differences amongcountries, then trade can exist (although differences are not the onlyprerequisite for international trade. Personal Income Sufficient for Purchase While poverty and income distribution are influenced by far more thanjust agricultural policy, the concentration of population in agriculturemay indicate whether rural families can produce adequate food for their ownneeds or whether they will purchase food products with wage income. There are also varying degrees of urbanization among thenations in question, with countries such as South Africa and Zambia beinghighly urban while Burundi and Rwanda are highly rural. Global agricultural production was in thehands of the industrialized nations which had comparative advantage in theform of efficient production methods and strong capital support. Food Policy, 23, pp.78-88. New York:John Wiley & Sons, pp. During periods of droughtand famine, this concept is reinforced. In some cases, this has given rise to specialization withparticular countries focusing on raising particular goods. Food Consumption The category of food consumption includes both the issue of having asupply of food adequate to meet the needs of the population, and having thepersonal income necessary to purchase the agricultural goods. Specific Regional Example (Eastern and Southern Africa) One of the key aspects of international trade is whether trade in aspecific product area is below its potential. Disarray in World Food Markets: AQuantitative Assessment. (1992). This trend is already well in place, and governments around the world canbe expected to adjust their policies as a result and in response to thistrend (Alexandratos, 1995, p. In general, particularly withthe Uruguay round of the General Agreement on Tariffs and Trade (GATT),there is movement toward less government intervention. There were some exceptions to that as fluctuations haveoccurred around the trend, but increases in agricultural technology arelargely credited with forcing the long-term level of agricultural pricesdown. Evenin those nations with largely affluent consumers, policies may have to beundertaken to assist persons with the means to avoid hunger andmalnutrition (McCalla & Josling, 1985, p. Likelihood that Shortages/Surpluses can be Filled/Absorbed When considering whether the region can fill its own shortages orabsorb its own surpluses, it is critical to determine whether there issufficient difference in the production capabilities and potential of thevarious countries to support regional trade. 23). This discussion focuses on free markets ratherthan centrally planned economies. Increase in Food Price Fluctuation (Short-Run) The price fluctuations which have developed around the downward trendhave evolved in part because of declining real market prices in somemarkets (such as the United States) during times when other markets (suchas those in Western Europe and Japan) took care to shore up prices throughsubsidies and other supports (Tyers & Anderson, 1992, p. Governments in free markets canencourage production of certain products over others through the use ofsubsidies or other incentives, which can artificially inflate prices, butwhich can help an economy (temporarily) stimulate growth of theagricultural sector (McCalla & Josling, 1985, p. Agreement on Agriculture (AOA) The Agreement on Agriculture (AOA) is a result of the Uruguay Round ofthe GATT talks. Food Prices Declining Relative to Nonfood Products One of the factors contributing to this price fluctuation is theincreasing dominance of industrial market economies as major exporters ofagricultural products. 294). As international trade has becomemore commonplace in the agricultural sector, trade patterns have emerged.These patterns are subject to the influence of domestic as well asinternational politics, and factors entirely unrelated directly to cropscan affect the trade of agricultural products. The risk of regional trading blocs is that they willdivert trade to their own memberships at the expense of outsiders.Typically, tariffs and other restrictions are relaxed within trading blocsfor member nations, but are enforced for non-member states (Alexandratos,1995, p. This research considersagricultural trade and trade patterns, including considering the situationof agricultural trade in Africa. The other major finding of theauthors is that it is critical that the region be considered as a wholerather than as its component parts, and some barriers to trade, includinghigh tariff levels, would have to be reduced for regional grain trade to beeffective (Weeks & Subasat, 1998, p. F., & Josling, T. If this paper is not what you are looking for, you can search again: Search for: or Click here to request an essay written just for you.