1. 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

2. U.S. Agricultural Interventions (Base Year 2001) ProductrTOrTMSrTXSrTF-land Grains80-40-66 Oilseeds290-140-12 Cotton280-20-27 OthCrops40-70-21 Livestock10-10-12 Dairy02-2980 Sugar05-5000 OthFood01-400

3. Gains From Unilateral US Liberalization Allocative efficiency accounts for most gains

4. Changes in US Exports from Unilateral Trade Liberalization

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

6. Effects of Scenarios on World Commodity Prices All US DohaAmberA+GAmberA+G Grains-0.2+1.3+2.4+1.5+2.1 Oilsee+1.9+9.2+9.0+5.3+4.8 Cotton+1.6+6.7+6.6+5.4+5.2 O Crop-0.1+0.8+0.1+1.1+1.0 Lvstk+0.1+1.4+2.5+1.4+1.3 Dairy+3.7+3.9+4.5+2.7 Sugar+0.3 +0.7+0.2 O Food-0.1-0.5-0.3+0.5+0.6

7. Farm Household Income Changes

8. 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.