This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. ASSA Annual Meeting
  3. 2024
  4. Program
  5. Agricultural Trade and GVC
« Back to Results

Agricultural Trade and GVC

Paper Session

Sunday, Jan. 7, 2024 1:00 PM - 3:00 PM (CST)

Grand Hyatt, Republic B
Hosted By: American Economic Association
  • Chairs:
    Heitor Sandes Pellegrina, University of Notre Dame
  • Devaki Ghose, World Bank

Deforestation: A Global and Dynamic Perspective

Heitor Sandes Pellegrina
,
University of Notre Dame
Sebastian Sotelo
,
University of Michigan
Elliot Khang
,
University of Michigan
Farid Farrokhi
,
Purdue University

Abstract

We study deforestation in a dynamic world trade system. Using a data set on global deforestation, we document that between 1990-2020: (i) forest area has decreased by 7.1 percent at the global level, with large heterogeneity across countries, (ii) deforestation has been markedly associated with expansions of agricultural land use, and (iii) forest carbon intensity differs substantially across the world. We build a model in which structural change and comparative advantage determine the extent, location, and timing of deforestation. We show analytically that, if agriculture is complementary to the rest of the economy, multilateral agricultural liberalization tends to reduce
deforestation, even if such shocks increase deforestation when experienced only by an individual economy. In our calibrated model, a permanent 30 percent reduction in global agricultural trade costs leads to a 0.80 percent steady-state increase in global forest area relative to the business as usual scenario an effect that takes decades to unfold. Countries that have a comparative advantage in agriculture deforest more to supply agricultural products to the rest of the world. For example, Brazil and Canada lose 0.2 and 0.4 percent in forest area, while China gains 2.7 percent.

Fertilizer Import Ban, Agricultural Exports, and Welfare: Evidence from Sri-Lanka

Devaki Ghose
,
World Bank
Ana Fernandes
,
World Bank
Eduardo Fraga
,
World Bank

Abstract

We study the effects that a sudden disruption in the availability of chemical fertilizer due to an import ban had on agricultural production, exports, and welfare across different regions of Sri Lanka. Using new firm-level monthly trade data, detailed agricultural ground production data combined with remotely sensed yield data, and state-of-the-art event study designs, we find that the fertilizer ban led to dramatic declines in agricultural production and trade. Using a quantitative trade model, we find that welfare effects differed across regions, depending on the propensity of the region to grow fertilizer-intensive crops and whether households were net consumers or producers.

Quality Incentives in Supply Chains: Evidence from Ugandan Coffee

Lauren Bergquist
,
Yale University
Jie Bai
,
Harvard University
Ameet Morjaria
,
Northwestern University
Russell Morton
,
University of Michigan
Yulu Tang
,
Harvard University

Abstract

Quality upgrading is seen as an important step in accessing export markets and promoting economic growth in low-income countries. How are quality incentives distributed along the supply chain and how are these incentives shaped by market structure along the chain? We study these questions in the context of Uganda’s coffee supply chain. We first map out the supply chains that link farm gates to export gates, featuring upstream producers and multiple layers of intermediation. Next, leveraging high-frequency transaction-level data of coffee traded along the supply chain, including prices and detailed lab quality assessments, we document a diminishing price-quality gradient as we move up the supply chain. We develop a model featuring upstream-downstream linkages and fixed costs of accessing the high-quality segment of the markets for the downstream intermediaries. The model explains how differential intermediary market power across quality segments depresses the quality premium in the upstream and diminishes upstream producers’ incentive to invest in quality. To structurally estimate the model, we randomize contracts to produce high-quality coffee along the supply chain and use a novel methodology, based on the Becker-DeGroot-Marschak (BDM) mechanism, to identify quality-specific cost functions from the randomized contract variations. Finally, we use the model to quantify the distortion in the pass-through of quality premium and total quality provision due to market power, and perform policy counterfactuals that encourage greater competition among the downstream intermediaries and/or lower the costs of accessing the high-quality markets among the upstream producers.

Food Policy in a Warming World

Jacob Moscona
,
Harvard University
Allan Hsiao
,
Princeton University
Karthik Sastry
,
Princeton University

Abstract

This paper studies the interaction between climate change and agricultural policy. Using a model of tax policy in an open agricultural economy, we show that the effect of climate shocks on policy is theoretically ambiguous and depends on how the government weighs constituent welfare against fiscal revenue. To study these relationships empirically, we construct a new global dataset of agricultural policy, trade, production, and extreme heat exposure by country and crop from 1980 to 2011. We find that extreme heat shocks to domestic production lead to consumer assistance, particularly in election years when politicians may prioritize redistribution over revenue. Extreme heat shocks to import partners lead to producer assistance, implying that foreign policy responses may partially offset, rather than amplify, domestic policy responses. Our estimates, combined with the model, suggest that endogenous trade policy explains 14% of predicted damages from end-of-century climate change, with stark distributional consequences both within and across countries. Our results underscore how climate change affects agricultural policy, which in turn shapes adaptation to global warming.
JEL Classifications
  • F1 - Trade
  • Q1 - Agriculture