IDEAS home Printed from https://ideas.repec.org/a/wly/agribz/v24y2008i4p557-574.html
   My bibliography  Save this article

The impact of EU export subsidy reductions on U.S. dairy exports

Author

Listed:
  • Andrew Muhammad

    (Department of Agricultural Economics, Mississippi State University, P.O. Box 5187, Mississippi State, MS 39762)

  • Richard L. Kilmer

    (Food and Resource Economics Department, University of Florida, P.O. Box 110240, Gainesville, FL 32611-0240)

Abstract

In this article, we consider the impact of European Union (EU) export subsidy reductions on the U.S. dairy trade. We assume reductions of 36% similar to the 1995 World Trade Organization agreement. The price substitutability between U.S. and EU dairy products is estimated using a Rotterdam-type production model. Past analyses have suggested that EU export subsidy reductions will increase U.S. dairy exports because the removal of EU subsidies will raise EU export dairy prices, rendering U.S. dairy products more competitive on world markets. This is partially true for nonfat dry milk, where our projections indicate an increase of 4.6% in U.S. exports. U.S. cheese, butter, and whey exports, on the other hand, rise by only 0.2, 0.1, and 0.2%, respectively. The main reason for the relatively modest gains is that the U.S. and EU dairy products are independent, not substitutes, for one another in a majority of the countries studied. [JEL classifications: Q17, Q18, F53] © 2008 Wiley Periodicals, Inc.

Suggested Citation

  • Andrew Muhammad & Richard L. Kilmer, 2008. "The impact of EU export subsidy reductions on U.S. dairy exports," Agribusiness, John Wiley & Sons, Ltd., vol. 24(4), pages 557-574.
    • Handle: RePEc:wly:agribz:v:24:y:2008:i:4:p:557-574
    DOI: 10.1002/agr.20179
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1002/agr.20179
    File Function: Link to full text; subscription required
    Download Restriction: no
    File URL: https://libkey.io/10.1002/agr.20179?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. Beach, Charles M & MacKinnon, James G, 1979. "Maximum Likelihood Estimation of Singular Equation Systems with Autoregressive Disturbances," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 20(2), pages 459-464, June.
    2. Alexandre Gohin & Patrice Gautier, 2005. "The Phasing out of EU Agricultural Export Subsidies: Impacts of Two Management Schemes," Economie Internationale, CEPII research center, issue 101, pages 5-27.
    3. Alexandre Gohin & Patrice Gautier, 2005. "The phasing out of EU agricultural export subsidies : impacts of TWO management schemes," Post-Print hal-01931543, HAL.
    4. Davis, George C. & Jensen, Kimberly L., 1994. "Two-Stage Utility Maximization And Import Demand Systems Revisited: Limitations And An Alternative," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 19(2), pages 1-16, December.
    5. repec:ags:joaaec:v:36:y:2004:i:3:p:549-558 is not listed on IDEAS
    6. Murphy, Elizabeth & Norwood, Bailey & Wohlgenant, Michael, 2004. "Do Economic Restrictions Improve Forecasts?," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 36(3), pages 549-558, December.
    7. Terry L. Kastens & Gary W. Brester, 1996. "Model Selection and Forecasting Ability of Theory-Constrained Food Demand Systems," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(2), pages 301-312.
    8. Meng Zhou & Andrew M. Novakovic, 1996. "Exporting to China: Possibilities and challenges for US dairy industry," Agribusiness, John Wiley & Sons, Ltd., vol. 12(1), pages 1-13.
    9. Washington, Andrew A. & Kilmer, Richard L., 2002. "The Production Theory Approach To Import Demand Analysis: A Comparison Of The Rotterdam Model And The Differential Production Approach," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 34(3), pages 1-3, December.
    10. Bruce A. Blonigen & Wesley W. Wilson, 1999. "Explaining Armington: What Determines Substitutability Between Home and Foreign Goods?," Canadian Journal of Economics, Canadian Economics Association, vol. 32(1), pages 1-21, February.
    11. Lopez, Rigoberto A. & Pagoulatos, Emilio & Gonzalez, Maria A., 2006. "Home bias and U.S. imports of processed food products," The North American Journal of Economics and Finance, Elsevier, vol. 17(3), pages 363-373, December.
    12. Washington, Andrew A. & Kilmer, Richard L., 2002. "The Derived Demand For Imported Cheese In Hong Kong," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 5(1), pages 1-12.
    13. Berndt, Ernst R & Savin, N Eugene, 1975. "Estimation and Hypothesis Testing in Singular Equation Systems with Autoregressive Disturbances," Econometrica, Econometric Society, vol. 43(5-6), pages 937-957, Sept.-Nov.
    Full references (including those not matched with items on IDEAS)

    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. Muhammad, Andrew & Ngeleza, Guyslain K., 2009. "European Union preferential trade agreements with developing countries and their impact on Colombian and Kenyan carnation exports to the United Kingdom:," IFPRI discussion papers 862, International Food Policy Research Institute (IFPRI).
    2. Andrew Muhammad, 2009. "Would African Countries Benefit from the Termination of Kenya’s Economic Partnership Agreement (EPA) with the EU? An Analysis of EU Demand for Imported Roses," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(1), pages 220-238, February.
    3. Muhammad, Andrew & Jones, Keithly G. & Hahn, William F., 2007. "The Impact of Domestic and Import Prices on U.S. Lamb Imports: A Production System Approach," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 36(2), pages 1-11, October.
    4. Washington, Andrew A. & Kilmer, Richard L., 2002. "The Derived Demand For Imported Cheese In Hong Kong," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 5(1), pages 1-12.
    5. Kilmer, Richard L. & Washington, Andrew A., 2000. "The Derived Demand For Imported Cheese In Hong Kong Differentiated By Source Country Of Production," 2000 Annual meeting, July 30-August 2, Tampa, FL 21724, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Muhammad, Andrew & Ngeleza, Guyslain K., 2009. "The role of the Generalised System of Preferences (GSP) in determining carnation demand in the United Kingdom: implications for Colombian and Kenyan exports," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 48(3), pages 1-16, September.
    7. Wang, Xiaojin & Reed, Michael, 2014. "Estimation of U.S. Demand for Imported Shrimp by Country: A Two-stage Differential Production Approach," 2014 Annual Meeting, February 1-4, 2014, Dallas, Texas 162459, Southern Agricultural Economics Association.
    8. Countryman Amanda M & Muhammad Andrew, 2017. "The Effects of T-TIP Market Access Reform on EU Beef Import Demand," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 15(1), pages 1-10, January.
    9. Washington, Andrew A. & Kilmer, Richard L., 2001. "The Derived Demand For Imported Cheese Into Japan By Country," 2001: International Trade in Livestock Products Symposium, January 2001, Auckland, New Zealand 14551, International Agricultural Trade Research Consortium.
    10. Sun, Changyou, 2015. "An investigation of China's import demand for wood pulp and wastepaper," Forest Policy and Economics, Elsevier, vol. 61(C), pages 113-121.
    11. GAIGNE, Carl & LAROCHE DUPRAZ, Cathie & MATTHEWS, Alan, 2015. "Thirty years of European research on international trade in food and agricultural products," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement (RAEStud), Institut National de la Recherche Agronomique (INRA), vol. 96(1), March.
    12. Toshinobu Matsuda, 2006. "A trigonometric flexible consumer demand system," Canadian Journal of Economics, Canadian Economics Association, vol. 39(1), pages 145-162, February.
    13. repec:ags:ijag24:346834 is not listed on IDEAS
    14. James L. Seale & Mary A. Marchant & Alberto Basso, 2003. "Imports versus Domestic Production: A Demand System Analysis of the U.S. Red Wine Market," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 25(1), pages 187-202.
    15. Muhammad, Andrew, 2008. "The Role of the Imports for Re-Exports Program in Determining Canadian Demand for Imported Cheese: Implications for U.S. Exports," 2008 Annual Meeting, February 2-6, 2008, Dallas, Texas 8214, Southern Agricultural Economics Association.
    16. Chen, Bowen & Villoria, Nelson & Xia, Tian, 2017. "Import Protections in China’s Grain Markets: An Empirical Assessment," 2017: Globalization Adrift, December 3-5, 2017, Washington, D.C. 266817, International Agricultural Trade Research Consortium.
    17. Sun, Changyou, 2014. "Recent growth in China's roundwood import and its global implications," Forest Policy and Economics, Elsevier, vol. 39(C), pages 43-53.
    18. Okrent, Abigail M. & Alston, Julian M., 2011. "Demand for Food in the United States: A Review of Literature, Evaluation of Previous Estimates, and Presentation of New Estimates of Demand," Monographs, University of California, Davis, Giannini Foundation, number 251908, December.
    19. Andrew Muhammad & S. Aaron Smith & Tun‐Hsiang Edward Yu, 2021. "COVID‐19 and cotton import demand in China," Agribusiness, John Wiley & Sons, Ltd., vol. 37(1), pages 3-24, January.
    20. Gordon Fisher & Michael McAleer & Diana Whistler, 1981. "Interest Rates and Durability in the Linear Expenditure Family," Canadian Journal of Economics, Canadian Economics Association, vol. 14(2), pages 331-341, May.
    21. Tonsor, Glynn T. & Marsh, Thomas L., 2005. "Comparing Heterogeneous Consumption in US and Japanese Meat and Fish Demand," 2005 Annual meeting, July 24-27, Providence, RI 19567, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

    More about this item

    JEL classification:

    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations

    Statistics

    Access and download statistics

    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:wly:agribz:v:24:y:2008:i:4:p:557-574. 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: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1520-6297 .

    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.