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Panama canal: How critical to U.S. grain exports?

Author

Listed:
  • Stephen W. Fuller

    (Department of Agricultural Economics, Texas A&M University, 2124 TAMU, College Station, TX 77843-2124)

  • Luis Fellin

    (Department of Agricultural Economics, Texas A&M University, 2124 TAMU, College Station, TX 77843-2124)

  • Ken Eriksen

    (U.S. Department of Agriculture, Agricultural Marketing Service, Transportation and Marketing Program, 1400 Independence Avenue, SW, Washington, DC 20250)

Abstract

The administration and operation of the Panama Canal was transferred to the Republic of Panama on December 31, 1999. Shipping and agricultural interests indicate new Canal management may increase tolls in an effort to maximize revenues, and some fear mismanagement may eventually result in Canal closure. Analysis show increasing tolls would reduce exports via U.S. Gulf ports, increase exports via U.S. Pacific Northwest ports, reduce quantities transiting the Canal, and increase maritime movements to East Asia via Africa's Cape of Good Hope. The U.S. role in Asia's corn and soybean markets would decline; however, total U.S. exports would be reduced no more than 2%. Results suggest a revenue-maximizing Canal operator could substantially increase revenues by adjusting tolls up by $2|ton on corn-laden vessels and $1|ton on soybean-laden vessels. This would lower U.S. corn and soybean revenues by about $160 million. If the Canal were to be closed, it is projected that revenues of U.S. corn and soybean producers would decline $303 million per year. [EconLit citations: L910, L920] © 2000 John Wiley & Sons, Inc.

Suggested Citation

  • Stephen W. Fuller & Luis Fellin & Ken Eriksen, 2000. "Panama canal: How critical to U.S. grain exports?," Agribusiness, John Wiley & Sons, Ltd., vol. 16(4), pages 435-455.
    • Handle: RePEc:wly:agribz:v:16:y:2000:i:4:p:435-455
    DOI: 10.1002/1520-6297(200023)16:4<435::AID-AGR4>3.0.CO;2-I
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    References listed on IDEAS

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    1. Shun-Yi Shei & Robert L. Thompson, 1977. "The Impact of Trade Restrictions on Price Stability in the World Wheat Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 59(4), pages 628-638.
    2. Fellin, Luis & Fuller, Stephen, 1997. "Effect of Proposed Waterway User Tax on U.S. Grain Flow Patterns and Producers," Journal of the Transportation Research Forum, Transportation Research Forum, vol. 36(2).
    3. James K. Binkley & Bruce Harrer, 1981. "Major Determinants of Ocean Freight Rates for Grains: An Econometric Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 63(1), pages 47-57.
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    Cited by:

    1. Lazard, Patrice M. & Kennedy, P. Lynn, 2020. "Trouble at Old River: The Impact of a Mississippi River Avulsion on U.S. Soybean Exports," Journal of Food Distribution Research, Food Distribution Research Society, vol. 51(3), November.
    2. Moon, Sang & Koo, Won W., 2006. "Effects of the Panama Canal on U.S. Competitiveness on the World Soybean Market," 2006 Annual meeting, July 23-26, Long Beach, CA 21418, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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