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Does the U.S. Midwest Have a Cost Advantage Over China in Producing Corn, Soybeans, and Hogs?

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  • Cheng Fang
  • Jacinto F. Fabiosa

Abstract

China's accession to the World Trade Organization, a significant event for U.S. agricultural trade, has been viewed as benefitting U.S. farmers, especially midwestern farmers. This research compares the productivity and cost of production (COP) of China and the United States in producing corn, soybeans, and hogs. The results show that the U.S. Midwest (defined in this study as the Heartland region as classified by the U.S. Department of Agriculture's Economic Research Service) has a substantial advantage in land and labor productivities in producing corn and soybeans, especially compared to China's South and West producing regions. However, China's Northeast region, a major corn- and soybean-producing area, has a very competitive COP over the U.S. Midwest. In hog production, the U.S. Midwest has a cost advantage over China in feed cost and labor productivity (there is little difference in fine feed usage), but this advantage is more than offset by the lower cost of feeder pigs and low capital replacement cost in China. Land policy in both the United States and China is a key determinant of COP. In addition, labor productivity and related policies in China are driving forces for China's competitive position.

Suggested Citation

  • Cheng Fang & Jacinto F. Fabiosa, 2002. "Does the U.S. Midwest Have a Cost Advantage Over China in Producing Corn, Soybeans, and Hogs?," Midwest Agribusiness Trade Research and Information Center (MATRIC) Publications (archive only) 02-mrp4, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    • Handle: RePEc:ias:mpaper:02-mrp4
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    References listed on IDEAS

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    1. Sharples, Jerry A., 1990. "Cost Of Production And Productivity In Analyzing Trade And Competitiveness," 1990 Annual meeting, August 5-8, Vancouver, Canada 271060, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Hervé Le Stum & Denis Camaret, 1990. "European Community Experience in Costs of Producing Wheat," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(5), pages 1298-1303.
    3. World Bank, 2000. "World Development Indicators 2000," World Bank Publications - Books, The World Bank Group, number 13828.
    4. Le Stum, Herve & Camaret, Denis, 1990. "European Community Experience In Costs Of Producing Wheat," 1990 Annual meeting, August 5-8, Vancouver, Canada 271066, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Jerry A. Sharples, 1990. "Cost of Production and Productivity in Analyzing Trade and Competitiveness," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(5), pages 1278-1282.
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    Cited by:

    1. Yen, Steven T. & Fang, Cheng & Su, Shew-Jiuan, 2004. "Household food demand in urban China: a censored system approach," Journal of Comparative Economics, Elsevier, vol. 32(3), pages 564-585, September.
    2. Lyford, Conrad P. & Welch, J. Mark, 2004. "Measuring Competition For Textiles: Does The U.S. Make The Grade?," 2004 Annual Meeting, February 14-18, 2004, Tulsa, Oklahoma 34616, Southern Agricultural Economics Association.

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