Are Farm Subsidies Worth the Doha Failure Bob Thompson and Anita Regmi High Income Country Distortions in Agricultural Markets Three basic forms –Import.

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Presentation transcript:

Are Farm Subsidies Worth the Doha Failure Bob Thompson and Anita Regmi High Income Country Distortions in Agricultural Markets Three basic forms –Import tariffs & export subsidies Modeled in GTAP-AGR as wedge between world price and domestic price –Support linked to the volume of production of specific commodities (“amber box” support) Modeled in GTAP-AGR as augmentation of product price –Support not linked to production of specific commodities (“green box” support or “decoupled” income transfers) Modeled in GTAP-AGR as land input subsidy

U.S. Agricultural Interventions (Base Year 2001) ProductrTOrTMSrTXSrTF-land Grains Oilseeds Cotton OthCrops Livestock Dairy Sugar OthFood01-400

Gains From Unilateral US Liberalization Allocative efficiency accounts for most gains

Changes in US Exports from Unilateral Trade Liberalization

Change in U.S. and World Price Ratio [pms(i,r,s) - ams(i,r,s) - pim(i,s)]

Effects of Scenarios on World Commodity Prices All US DohaAmberA+GAmberA+G Grains Oilsee Cotton O Crop Lvstk Dairy Sugar O Food

Farm Household Income Changes

Impact of Alternative Scenarios on US Farm Land Prices Scenarios –Doha- 6% –All High Income Countries Eliminate Amber-19% Eliminate All Distortions-46% –U.S. Only Eliminate Amber-13% Eliminate All Distortions-44% What would a buyout cost? Under full unilateral ag liberalization, annual returns to land in U.S. fall by $18.6 billion. At a 10% discount rate, to buy out U.S. farm land owners’ capital losses would cost $186 billion or about the total budget cost of U.S. farm programs over 9 years.