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Permanent link (DOI): https://doi.org/10.7939/R3FT8DM26

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Export Markets for Canada's Foodgrains and Feedgrains Open Access

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Author or creator
Veeman, Terry S.
Veeman, Michele M.
Sudohl, Maxine
Dong, Xiao-Yuan
Additional contributors
Subject/Keyword
grain markets
international trade
Type of item
Report
Language
English
Place
Canada
Time
1980/1990
Description
The subject of this study is the economic characteristics of Canada's export markets for foodgrains and feedgrains. The focus is on economic analysis of barley export markets. Over time Canada has become the largest barley exporter, replacing France as the leading source of barley. On the import side, developing countries have become the fastest growing market segment for barley imports, replacing developed countries as the leading market output. Canada's export profile data reveal that developing and Eastern European countries became expansionary markets in the 1980s while developed countries have imported a decreasing share of Canada's barley exports. Constant market share analysis of the world barley and coarse grain markets reveal that those exporters with the highest export concentration in the rapidly expanding markets in richer developing countries registered positive export growth impacts due to this concentration. While corn is still the dominant feedgrain traded on world markets, barley became, by 1985, the fastest growing feedgrain export, resulting in positive export growth for those exporters, like Canada, for which barley is a prominent feedgrain. Despite appreciable reliance on less rapidly growing import markets for barley, Canada has been relatively competitive in world barley markets, at least up to the mid 1980s. In wheat, Canada's exports have tended to be more concentrated on less rapidly growing market segments and on less rapidly growing classes of wheat. Canada's competitive position in world wheat markets has varied over time and, toward the end of the 1980s, was worsened by the United States export enhancement program subsidies. The major determinants of cereal import demand in seventy-four developed countries (LDCs) were analyzed through the use of an econometric cross-sectional model. Key explanators of import demand in these increasingly important markets included the level of income and degree of urbanization, financial capacity proxies, and domestic grains supply variables. A contribution to the study of cereal markets involved the analysis of the impact of income distribution on less developed countries' cereal import demand in 1986 and 1987 for a more restricted sample of twenty-three nations. These developing countries exhibit a greater than proportional increase in cereal imports due to an increase in the income share of the poorest 40 percent of their populations. The inclusion of regional slope and intercept dummies in the cereal import demand model was an innovation that provided improved results. High levels of government debt appear to have inhibited cereal importation in nations in South America, but not in Asia and Africa. In all three continental regions, particularly in Africa, there is a positive relationship between food aid and cereal imports. The model predicts cereal imports for nations in Asia and South America more satisfactorily than for those in Africa. The results support the view that improvements in income distribution in developing nations would considerably stimulate cereal imports. In models where cereal imports were disaggregated into feedgrains and foodgrains, the estimated income elasticity of import demand for feedgrains is higher than that for foodgrains. In other words, feedgrain import demand is more sensitive to either upward or downward changes in income than is foodgrain import demand. This is one factor which helps to explain why feedgrain exports grew more rapidly in the 1970s and collapsed to a greater degree than wheat exports in the 1980s. World import demand for wheat appears to be relatively more \"recession proof\" than is the case for world barley imports. However, world barley markets show potential for greater future growth subject to improvements in the income levels of importing regions. Detailed time series studies of barley import demand in four Canadian export markets-- the (former) USSR, Japan, Columbia and China--were undertaken. The results revealed that Russia's characteristic pattern of import fluctuations is caused mainly by domestic barley and livestock production fluctuations. The price of barley imports also affects USSR barley import decisions, implying financial constraints are an important aspect of the Soviet market. In the Japanese market, barley import demand underwent a structural shift around 1972 when usage of barley changed from a foodgrain to feedgrain. Canadian barley changed from an inferior foodgrain to a normal feedgrain, as reflected in the income elasticity of demand. The Canadian dollar-Japanese yen exchange rate is an important determinant of Japan's barley import demand. Colombia's import demand for barley has been influenced by barley import price and foreign exchange reserves. As a developing country, Columbia faces financial constraints that influence import decisions. For China, another developing country, barley imports are affected by the price of barley imports and by the price of wheat imports which is, for China, a substitute for barley imports. Domestic barley and hog production also influence this nation's barley imports. Overall, our empirical analysis supports the contention that the fortunes of the developed and the developing nations are closely intertwined in the world food economy. The pace at which poor nations can develop, both through increasing income levels and improving income distribution, significantly influences their cereal imports and, concomitantly, cereal exports from rich nations such as Canada. A successful conclusion to the negotiations within the General Agreement on Tariffs and Trade and efforts to improve the economic situation of developing countries will benefit the Canadian grain producing and exporting sector.
Date created
1992
DOI
doi:10.7939/R3FT8DM26
License information
Creative Commons Attribution-Non-Commercial-No Derivatives 3.0 Unported
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