IDEAS home Printed from https://ideas.repec.org/p/ags/nddaer/23425.html
   My bibliography  Save this paper

Additionality Of Credit Guarantees For U.S. Wheat Exports

Author

Listed:
  • Diersen, Matthew A.
  • Wilson, William W.
  • Dahl, Bruce L.
  • Satyanarayana, Vidyashankara

Abstract

The value of credit guarantee programs has recently been called into question. Credit guarantees are important marketing tools in the world wheat market, both to develop new markets and to compete in existing markets. This study examines the additionality of export credit guarantees. Empirical demand models were developed and estimated using pooled data among importing countries. Models were estimated for each of the principal exporting countries providing export credit guarantees: the United States, Canada and France. Additionality of credit guarantees were also contrasted to the Export Enhancement Program. Positive additionality was found for CCC guarantees, indicating that the GSM programs have resulted in additional exports that would not have occurred without the programs. Additionality was not constant across exporters. Additionality was estimated at 12.6 MMT for credit guarantees and 19 MMT for EEP. The U.S. results, when considering costs of the programs, indicate that the CCC subsidy (from guarantees), on a per dollar of subsidy basis, provides about four times more additionality than EEP. These results cast doubt on the price subsidy equivalence of guarantees. The subsidy implied in Canadian credit has a significant and negative effect on U.S. wheat exports. The magnitude of the coefficient is larger than the magnitude of the CCC guarantee subsidy. In the Canadian demand model, the effect of the CCC subsidy is insignificant. The results suggest that Canada's guarantee program does more to displace U.S. sales than it does to help Canadian sales. Further, as a whole CCC guarantees offset Canadian guarantees and outperform COFACE guarantees.

Suggested Citation

  • Diersen, Matthew A. & Wilson, William W. & Dahl, Bruce L. & Satyanarayana, Vidyashankara, 1997. "Additionality Of Credit Guarantees For U.S. Wheat Exports," Agricultural Economics Reports 23425, North Dakota State University, Department of Agribusiness and Applied Economics.
    • Handle: RePEc:ags:nddaer:23425
    DOI: 10.22004/ag.econ.23425
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/23425/files/aer377.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.23425?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. McClain, Emily A. & Dusch, Erin, 1994. "Brazil: Determinants of Wheat Import Demand," Staff Reports 278743, United States Department of Agriculture, Economic Research Service.
    2. Bailey, Kenneth W., 1989. "Why Did U.S. Wheat Exports Expand?," Agricultural Information Bulletins 309491, United States Department of Agriculture, Economic Research Service.
    3. Haley, Stephen L., 1989. "Evaluation Of Export Enhancement, Dollar Depreciation, And Loan Rate Reduction For Wheat," Staff Reports 278157, United States Department of Agriculture, Economic Research Service.
    4. Dahl, Bruce L. & Wilson, William W. & Gustafson, Cole R., 1995. "Valuing Option Provisions for Export Credit Guarantees," Agricultural Economics Reports 23269, North Dakota State University, Department of Agribusiness and Applied Economics.
    5. Lent, Rebecca & Dusch, Erin, 1994. "Tunisia: Determinants of Wheat Import Demand," Staff Reports 278737, United States Department of Agriculture, Economic Research Service.
    6. Skully, David W, 1992. "Price Discrimination and State Trading: The Case of U.S. Wheat," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 19(3), pages 313-329.
    7. Ackerman, Karen Z., 1993. "Morocco: Determinants of Wheat Import Demand," Staff Reports 278701, United States Department of Agriculture, Economic Research Service.
    8. Missiaen, Margaret & Smith, Mark, 1993. "Ghana and Togo: Determinants of Wheat Import Demand," Staff Reports 278702, United States Department of Agriculture, Economic Research Service.
    9. Sheffield, Sharon S., 1993. "Russian Federation: Determinants of Wheat Import Demand," Staff Reports 278728, United States Department of Agriculture, Economic Research Service.
    10. Won W. Koo & David Karemera, 1991. "Determinants of World Wheat Trade Flows and Policy Analysis," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 39(3), pages 439-455, November.
    11. Anania, Giovanni & Bohman, Mary & Carter, Colin A., 1991. "U.S. Export Subsidies in Wheat: Strategic Trade Policy or An Expensive Beggar-My-Neighbor tactic?," Working Papers 51148, International Agricultural Trade Research Consortium.
    12. Seung-Ryong Yang & William W. Wilson, 1996. "Credit Allocation Decisions of Wheat Exporting Countries," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 44(1), pages 53-65, March.
    13. Stephen L. Haley, 1990. "Measuring the effectiveness of the export enhancement program for poultry," Agribusiness, John Wiley & Sons, Ltd., vol. 6(2), pages 97-108.
    14. Haley, Stephen L., 1990. "Measuring the Effectiveness of the Export Enhancement Program for Poultry," Staff Reports 278276, United States Department of Agriculture, Economic Research Service.
    15. Johnson, D. Demcey, 1995. "Export Credit Guarantees: A Welfare and Strategic Analysis," AE Series 231489, North Dakota State University, Department of Agribusiness and Applied Economics.
    16. Hyberg, Bengt & Smith, Mark & Skully, David & Davison, Cecil, 1995. "Export credit guarantees: The commodity credit corporation and US agricultural export policy," Food Policy, Elsevier, vol. 20(1), pages 27-39, February.
    17. Dahl, Bruce L. & Johnson, D. Demcey & Wilson, William W. & Gustafson, Cole R., 1995. "Credit Guarantee Programs in International Grain Markets: Background and Issues," Agricultural Economics Reports 23331, North Dakota State University, Department of Agribusiness and Applied Economics.
    18. Giovanni Anania & Mary Bohman & Colin A. Carter, 1992. "United States Export Subsidies in Wheat: Strategic Trade Policy or Expensive Beggar-Thy-Neighbor Tactic?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(3), pages 534-545.
    19. Levin, Carol E. & Lin, Chin-Zen, 1993. "Philippines: Determinants of Wheat Import Demand," Staff Reports 278694, United States Department of Agriculture, Economic Research Service.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Rienstra-Munnicha, Paul & Mulik, Kranti & Koo, Won W., 2006. "Empirically Analyzing The Impact Of U.S. Export Credit Programs On U.S. Agricultural Trade," Agribusiness & Applied Economics Report 23644, North Dakota State University, Department of Agribusiness and Applied Economics.
    2. Young, Linda M. & Abbott, Philip C. & Leetmaa, Susan E., 2001. "Export Competition: Issues And Options In The Agricultural Negotiations," Commissioned Papers 14624, International Agricultural Trade Research Consortium.
    3. repec:ags:aare02:125165 is not listed on IDEAS
    4. Satyanarayana, Vidyashankara & Johnson, D. Demcey, 1998. "Credit Guarantee Programs And U.S. Market Share In Selected Wheat Import Markets," Agricultural Economics Reports 23284, North Dakota State University, Department of Agribusiness and Applied Economics.
    5. Thompson, Wyatt, 2007. "Inconsistent Objectives of Agricultural Export Credit Disciplines," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 8(1), pages 1-13.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Satyanarayana, Vidyashankara & Johnson, D. Demcey, 1998. "Credit Guarantee Programs And U.S. Market Share In Selected Wheat Import Markets," Agricultural Economics Reports 23284, North Dakota State University, Department of Agribusiness and Applied Economics.
    2. Young, Linda M. & Abbott, Philip C. & Leetmaa, Susan E., 2001. "Export Competition: Issues And Options In The Agricultural Negotiations," Commissioned Papers 14624, International Agricultural Trade Research Consortium.
    3. Diersen, Matthew A. & Wilson, William W. & Dahl, Bruce L. & Satyanarayana, Vidyashankara, 1997. "Additionality Of Credit Guarantees For U.S. Wheat Exports; Summary," Agricultural Economics Reports 23240, North Dakota State University, Department of Agribusiness and Applied Economics.
    4. Pinelopi Koujianou Goldberg & Michael M. Knetter, 1997. "Causes and Consequences of the Export Enhancement Program for Wheat," NBER Chapters, in: The Effects of US Trade Protection and Promotion Policies, pages 273-296, National Bureau of Economic Research, Inc.
    5. Rienstra-Munnicha, Paul & Mulik, Kranti & Koo, Won W., 2006. "Empirically Analyzing The Impact Of U.S. Export Credit Programs On U.S. Agricultural Trade," Agribusiness & Applied Economics Report 23644, North Dakota State University, Department of Agribusiness and Applied Economics.
    6. Wilson, William W. & Johnson, D. Demcey & Dahl, Bruce L., 1999. "Transparency And Export Subsidies In International Wheat Competition," Agricultural Economics Reports 23208, North Dakota State University, Department of Agribusiness and Applied Economics.
    7. Hyberg, Bengt & Smith, Mark & Skully, David & Davison, Cecil, 1995. "Export credit guarantees: The commodity credit corporation and US agricultural export policy," Food Policy, Elsevier, vol. 20(1), pages 27-39, February.
    8. Thompson, Wyatt, 2007. "Inconsistent Objectives of Agricultural Export Credit Disciplines," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 8(1), pages 1-13.
    9. repec:ags:aare02:125165 is not listed on IDEAS
    10. Rude, James, 2000. "Reform of Agricultural Export Credit Programs," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 1(2), pages 1-13.
    11. Patterson, Paul M. & Abbott, Philip C. & Stiegert, Kyle W., 1996. "The Export Enhancement Program'S Influence On Firm-Level Competition In International Markets," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 21(1), pages 1-12, July.
    12. Reimer, Jeffrey J. & Stiegert, Kyle W., 2006. "Evidence on Imperfect Competition and Strategic Trade Theory," Staff Paper Series 498, University of Wisconsin, Agricultural and Applied Economics.
    13. Dahl, Bruce L. & Wilson, William W. & Gustafson, Cole R., 1999. "Option Values For Provisions In Export Credit Guarantees," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(2), pages 1-19, December.
    14. Peterson, Jeffrey M. & Minten, Bart & de Gorter, Harry, 1999. "Economic Costs Of The U.S. Wheat Export Enhancement Program: Manna From Heaven Or From Taxpayers?," Working Papers 14578, International Agricultural Trade Research Consortium.
    15. Roningen, Vernon & Dixit, Praveen & Sullivan, John & Hart, Tracey, 1991. "Overview of the Static World Policy Simulation (SWOPSIM) Modeling Framework," Staff Reports 278390, United States Department of Agriculture, Economic Research Service.
    16. Roningen, Vernon & Dixit, Praveen & Sullivan, John & Hart, Tracy, 1991. "Overview of the Static World Policy Simulation (SWOPSIM) Modeling Framework," Staff Reports 278513, United States Department of Agriculture, Economic Research Service.
    17. Reimer Jeffrey J & Stiegert Kyle, 2006. "Imperfect Competition and Strategic Trade Theory: Evidence for International Food and Agricultural Markets," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 4(1), pages 1-27, September.
    18. Mahalingam, Nalini & Schrader, Lee F., 1993. "Export Marketing Strategies: An Analysis of Firm Activity in Eggs, Cereals, and Apple Juice," Occasional Papers 233155, Regional Research Project NC-194: Organization and Performance of World Food Systems.
    19. Wilson, William W. & Yang, Seung-Ryong, 1994. "Impacts of Wheat Export Strategies on Market Shares," Agricultural Economics Reports 23387, North Dakota State University, Department of Agribusiness and Applied Economics.
    20. Golz, Theresa K. & Golz, Joel T. & Helgeson, Delmer L. & Petry, Timothy A., 1990. "Preliminary Economic Feasibility of Broiler Production in North Dakota," Agricultural Economics Reports 23238, North Dakota State University, Department of Agribusiness and Applied Economics.
    21. Dahl, Bruce L. & Wilson, William W. & Gustafson, Cole R., 1995. "Valuing Option Provisions for Export Credit Guarantees," Agricultural Economics Reports 23269, North Dakota State University, Department of Agribusiness and Applied Economics.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:nddaer:23425. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/dandsus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.