Lecture 2 – Global Trends in Agriculture
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Transcript of Lecture 2 – Global Trends in Agriculture
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Lecture 2 – Global Trends in Agriculture
EconS350Fall Semester, 2010
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Domestic policy
• “The Farm Bill” is the most important piece of policy for US agriculture
• Defines objectives for the US food economy domestically.
• Most recent version is the “Food, Conservation, and Energy Act of 2008”.
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Brief history of US agriculture policy
• Agricultural Adjustment Act (AAA), 1933– Provided price and income support programs
• Food and Agriculture Act of 1965– Tried to reduce price supports
• 1985 Food Security Act & 1990 Food, Agriculture, Conservation, and Trade Act– Encouraged marketing of commodities rather than relying on selling to government.
• 1996 Federal Agriculture Improvement and Reform Act– “Decoupled payments”: government payments are not tied to a farmer’s current
production decisions.
• Supply controls and price supports lead to “inefficiencies”. – Produce more than what is demanded, etc.
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2008 Farm Bill
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Farm bill payments
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Conservation payments in the Farm Bill
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US agriculture and foreign markets
• 1910-1914: “Golden age” for US agriculture
• 1920’s saw drop in prices that led to the Smoot-Hawley tariffs.
• Volume of US ag exports fell by 20% from 1920s to 1930s.
• Exports increased only in the 1970s.
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US agriculture and foreign markets
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US agriculture and foreign markets
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Global production of major crops
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
0
50
100
150
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0
20
40
60
80
100
SoybeansRest of World
China
Argentina
Brazil
USA
Area
Mill
ion
Ton
s
Mill
ion
Hec
tare
s
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Global production of major crops
1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
0
100
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0
20
40
60
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Maize
Rest of World
Argentina
India
Mexico
Brazil
China
USA
Area
Mill
ion
Ton
s
Mill
ion
Hec
tare
s
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Global production of major crops
1961
1964
1967
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
2006
0
100
200
300
400
500
600
700
800
900
0
50
100
150
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250
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Wheat
Rest of World
Germany
Canada
France
USA
India
USSR (former)
China
Area
Mill
ion
Ton
s
Mill
ion
Hec
tare
s
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World trade policy• Doha Round
– Follows the Uruguay Round (1982) and the GATT (General Agreement on Tariffs and Trade, 1949).
– Multilateral trade negotiation under the World Trade Organization– Started in 2001 and still going
• Conflict between rich and poor countries– Developed or richer: US, EU, Japan– Developing or poorer: Brazil, China, Russia, India
• Points of conflict– Improve market access by cutting tariffs– Reduce export subsidies– Reduce trade distorting domestic support– Consider non-trade concerns such as food security, environmental protection, rural
development, poverty alleviation.
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World trade policy
• Agriculture is THE FOCAL POINT of conflict in multilateral trade negotiations.
• Knowledge of these “macro” level factors is a critical part of being an effective farm manager.