IFPRI Extensive and Intensive Margins of India’s Pulses Trade, Devesh Roy, IFPRI
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Transcript of IFPRI Extensive and Intensive Margins of India’s Pulses Trade, Devesh Roy, IFPRI
By
Akshay Bhatnagar, Raj Chandra and Devesh Roy
International Food Policy Research Institute
New Delhi-June 1, 2016
Background
Intensive and extensive margin of trade intensive margin (more imports of established pulses
from traditional partners) or through the extensive margin (new trade flows in new products and/or from new partners)?
Yellow pea is a perfect example of expansion on the extensive margin first later expansion on the intensive margin
Emergence of African partners that is still evolving another basis for extensive margin
Deepening of markets with Myanmar for example a case of intensive margin
Extensive and intensive margin and gains from trade Trade enables the exploitation of comparative
advantage
Producers can thus reduce costs, increase scale of production, improve productivity and increase producer surplus.
On the import side, welfare in enhanced through consumption of lower priced goods and through the availability of a larger variety of goods (OECD 2012).
Research questions addressed Dynamic behavior of India’s pulse imports
Has the source of growth been the intensive margin of trade or extensive margin
Has the relative roles of margins vary across pulses?
Did the period of 2008 food price crisis bring about change in the margins in trade?
In gravity model estimation which country fixed effects are associated with extensive margin and intensive margin respectively?
About Data Set Study is based on a highly disaggregated 8 digit
customs data – Novel part of the study
Several details disaggregated variety, landing ports, trading partners, entry timing
Data contains information on both volume and value of pulses export and import, destination as well as source country.
Pulses Aggregate Import
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Qu
an
tity
in
mil
lio
n t
on
s
Pulses Imports- Some Stylized
Facts India imports many pulses -mainly peas, chick peas, tur, black matpe and
lentils.
There has been significant variation in the share of different varieties in total imports.
Peas which had only 17.7% share in total imports in 2001 has increased to 50% in 2010.
Chick Peas with the highest share covering the one fourth of total import in 2001 (24.29%) has decreased to 3.73% in 2010.
Share of tur, black matpe and moong has also declined over the period of time but that of lentils and beans has increased by very small amount.
Chick Peas
0
0.05
0.1
0.15
0.2
0.25
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Qu
an
tity
in
Mil
lio
n T
on
s
Year
Quantity Imported from Different Countries
AU
CA
TR
TZ
Black Matpe Imports
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Qu
an
tity
Im
po
rt i
n M
illi
on
To
ns
Year
MM
MY
Pigeon Pea
0
0.01
0.02
0.03
0.04
0.05
0.06
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Qu
an
tity
in
Mil
lio
n T
on
s
Year
Quantity Imported from Different Countries
MM
MOZ
MW
TZ
Evolution of Trade across Variety
over Time
0.00
10.00
20.00
30.00
40.00
50.00
60.00
Pe
rce
nta
ge
Percentage share of different variety in total import
Peas
Pigeon Pea
Black Matpe
Chick Peas
Major Trading Partners for
different Varieties Peas Canada
Pigeon Pea Myanmar
Chick Pea Australia
Black Matpe Myanmar
Green Gram Myanmar
Lentils Canada
Evolution of Trading Partners Year 2001 Year 2005
Australia 3%
Canada 40%
Myanmar
36%
Tanzania 4%
United States
3% Others
14%
Australia 3%
Canada 21%
Iran 10%
Myanmar
41%
Singapore
5%
Others 20%
Evolution of Trading Partners year 2012
Australia 10%
Canada 28%
Myanmar 17%
Russia 13%
United States 3%
Tanzania 2%
France 3%
Ukarine 1%
Others 23%
Measurement of extensive and intensive margin
Behavior of margins over time
-7.00
-6.00
-5.00
-4.00
-3.00
-2.00
-1.00
0.00
1.00
2.00
3.00
4.00
January February March April May June July August September October November December
Change in Blackmatpe Import, Year 2002-03
Change in Import Changes at Extensive Margin Changes at Intensive Margin
Extensive and intensive margin during shocks
-40.00
-30.00
-20.00
-10.00
0.00
10.00
20.00
January February March April May June July August September October November December
Change in Blackmatpe import, Year 2007-08
Change in Import Changes at Extensive Margin Changes at Intensive Margin
-5.00
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
45.00
Change in Blackmatpe Import, Year 2008-09
Chane in Import Changes at Extensive Margin Changes at Intensive margin
-20.00
-15.00
-10.00
-5.00
0.00
5.00
10.00
15.00
Changes in Blackmatpe Import, Year 20011-12
Extensive margin during shocks changes - case of chick peas with more diverse set of producers
-4.00
-3.00
-2.00
-1.00
0.00
1.00
2.00
3.00
4.00
January February March April May June July August September October November December
Change in Chickpea Import, Year 2007-2008
Change in Import Changes at Extensive Margin Changs at Intensive Margin
-2.00
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
Change in Chickpea Import, Year 2008-2009
Changes in Import Changes at Extensive margin Changes at Intensive Margin
Margins in pigeon pea
-14.00
-12.00
-10.00
-8.00
-6.00
-4.00
-2.00
0.00
2.00
4.00
6.00
8.00
January February March April May June July August September October November December
Change in Pigeonpea Import, Year 2002-2003
Change in Import Changes at Extensive Margin Changes at Intensive Margin
Is Lentils different? Lentils is the most highly traded pulse in the world
-0.50
0.00
0.50
1.00
1.50
Change in Lentils Import, Year 2002-2003
Change in import Changes at Extensive Margin Changes at Intensive Margin
-10.00
-8.00
-6.00
-4.00
-2.00
0.00
2.00
January February March April May June July August September October November December
Change in Lentils Import, Year 2007-2008
Change in Import Changes at Extensive Margin Changes at Intensive Margin
Margins in Lentils trade
-5.00
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
40.00
Change in Lentils Import, Year 2008-2009
Change in Import Changes at Extensive Margin Changes at Intensive Margin
-5.00
0.00
5.00
10.00
15.00
20.00
25.00
30.00
35.00
Change in Lentils Import, Year 2011-2012
Change in import Changes at Extensive Margin Changes at Intensive Margin
Yellow pea- the start up of EM across varieties
-1E+01
-5E+00
0E+00
5E+00
1E+01
2E+01
January February March April May June July August September October November December
Change in Yellowpea Import, Year 2002-2003
Change in Import Changes at Extensive Margin Changes at Intensive Margin
Has the intensive margin been driven by increase in prices?
-1500
-1000
-500
0
500
1000
1500
2000
2500
3000
January February March April May June July August September October November December
Change in Black Matpe Unit Value, Year 2008-2009
Change in unit Value Changes at Extensive Margin Changes at Intensive Margin
Intensive margin in terms of unit values
-3000
-2500
-2000
-1500
-1000
-500
0
500
1000
January February March April May June July August September October November December
Change in Black Matpe Unit Value, year 2011-2012
Chane in Unit Value Changes at Extensive Margin Changes at Intensive Margin
Simple gravity model estimates of extensive and intensive margins Estimation of equation whether there is trade or not
for extensive margin
Level of trade for intensive margin
Gravity model estimates for pigeon pea Our interest –country fixed effects
They account for multilateral resistance but also indicate likelihood of country joining in or dropping out
Level equation captures the contribution of the country higher or lower relative to the benchmark
Results Global production share a strong determinant of both
extensive and intensive margins
Canada, China, Kenya, Malaysia, Mozambique, Myanmar, Tanzania have contributed positively to the extensive margin with a significant likelihood of trading
Ethiopia, Ukraine, Thailand, Nigeria,Mexico significant negative likelihood of joining in
Results for intensive margin China, Ethiopia, Mozambique, Thailand, Ethiopia,
Tanzania contributed significantly to the expansion along the intensive margin
Conclusions and policy implications Margins are important for trade policy Bigger expansion in trade has happened from intensive
margin Significant increase in prices contributing to intensive
margin Yellow pea presents the case where low elasticity of
substitution leads to greater extensive margin There are pulses where extensive margin is picking up or
has been significant Reliance on trade less fraught with risks there
Based on the interplay of margins the trade policy stance has to be at more granular level