Summary: The authors provide estimates of the impact that removing all merchandise trade distortions (including agricultural subsidies) would have on food and agricultural production, trade, and incomes. Using the latest versions of the Global Trade Analysis Project (GTAP) database and the World Bank's LINKAGE model of the global economy (projected to 2015), their results suggest farm employment, the real value of agricultural output and exports, the real returns to farm land and unskilled labor, and real net farm incomes would all rise substantially in developing country regions with a move to free merchandise trade, thereby alleviating rural poverty-despite the decline in international terms of trade for developing countries that are net food importers or are enjoying preferential access to agricultural markets of high-income countries.

The next step is to measure the prospective effects of removing all agricultural subsidies plus those tariffs summarized in Table 2 over the 2005-2010 period. ... Our LINKAGE model’s answer to that question is that it would lead to global gains by 2015 of $287 billion per year. The distribution across regions of that economic welfare (or equivalent variation in income) gain, reported in Table 3, suggests two-thirds would accrue to high-income countries. However, as a share of national income, developing countries would gain more, with an average increase of 0.8 percent compared with 0.6 percent for high-income countries. The results vary widely across developing countries, ranging from little impact in the case of Bangladesh and Mexico to 4 or 5 percent increases in parts of East Asia.

The impact of full trade reform on agricultural and food output and trade is shown for each country/region in Table 6, where it is clear that exports are enhanced much more than output. As a consequence, the global share of agricultural and food production exported rises, from 9.5 to 13.2 percent (or from 6.6 to 11.6 percent when intra-EU trade is excluded). The increase in exports of those goods from developing countries would be a huge $191 billion per year more.

Would freeing global merchandise trade lead to more trade gain for developing countries than for high-income countries, given the latter’s high protection rates in agriculture and textiles? This question is pertinent for trade negotiators, who often think more in terms of the boost to the value of trade than to changes in economic welfare. Table 8 suggests any imbalance of that sort is not likely to be a major problem, even with complete trade liberalization. Certainly in those 13
two protected sectors exports would increase more for developing than for high-income countries, but for other manufactures the trade growth for the two regions would have the opposite bias. Also, much of the developing countries’ trade growth is with other developing countries. Hence for merchandise trade as a whole, developing countries would sell an extra $318 billion to high-income countries under free trade whereas high-income countries would sell an extra $290 billion to developing countries. A small amount of services trade liberalization by developing countries would be sufficient to close that gap, if full reciprocity were sought.

Lessons, implications and areas for further research
The following are the key messages that emerge from our analysis:
• The potential gains from global trade reform are large, including for developing countries and especially when they participate in the reform, despite its adverse terms of tradeimpact on many developing countries;
• Agriculture is where the greatest gains from liberalization would occur;
• Liberalization would cause farm output and farm employment to be greater in developing countries relative to the baseline, except in South Asia;
• It is the poorest people that appear to be most likely to gain from global trade liberalization, namely farmers and unskilled laborers in developing countries; and, inparticular,
• Net farm income would be enhanced in all developing country regions other than South Asia (where job growth would be greater in non-farm activities).

Free trade helps the rich, not the poor because the rich buy from the poor. That's how the system works in simple, no bullshit non-economic terms.

I agree that buying food from farmers is a good thing. The problem occurs when that food becomes too cheap. Many people in my family are farmers and they curse when they get a bumper crop. Why? because it makes their crop worth less and they will not be able to sell all of it. Cheap food hurts farmers and bennifits consumers. In this case, there is going to be the same amount of food grown initially, but many farmers will not be able to make a living off of growing it. That means there will be fewer farmers and less food. That is very bad for developing nations that rely on agriculture for the majority of their income. While it is good for the US and Canada because we get cheap rice, peanuts, and bananas out of it

Map & Graph: Economy: Trade with US - US exports of wheat
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Definition: US exports of wheat, USD Thousands, 2004

Country Description Amount
1. Japan 515,635
2. China 495,118
3. Mexico 471,135
4. Egypt 426,482
5. Nigeria 388,027
6. Philippines 223,085
7. Taiwan 189,028
8. Peru 151,294
9. Israel 117,950
10. Venezuela 112,367
11. Colombia 107,797
12. Thailand 98,682
13. Yemen 98,229
14. Italy 94,197
15. Algeria 71,956
16. Romania 64,748
17. Ethiopia 64,642
18. Cuba 57,516
19. Pakistan 55,584
20. Dominican Republic 54,312
21. South Africa 52,299
22. Iraq 50,764
23. Jordan 46,709
24. El Salvador 45,182
25. Haiti 43,898

the US exports wheat to Russia?



Are you thinking of another crop?

In other words dgthe3, Toro couldn't care less what happens to your families farm.

Again the irritating human factor gets in the way again. Who knew numbers needed to make a living and eat, hard to know when you live in a bubble.

Again the irritating human factor gets in the way again. Who knew numbers needed to make a living and eat, hard to know when you live in a bubble.

New FAO report on agricultural trade and poverty

Agricultural trade reform offers benefits, but the poor could be left behind

7 December 2005, Rome/Geneva - Only days ahead of next week’s make-or-break World Trade Organization meeting in Hong Kong, where a final push will be made to reach an agreement to liberalize agricultural trade, the FAO today warned that the benefits of trade reform may not reach the poor unless urgent complementary policies and investments are made.

The State of Food and Agriculture 2005 (SOFA 2005) examines agricultural trade and poverty, seeking to answer the question: Can trade work for the poor?

According to SOFA 2005, the answer is yes, but trade liberalization alone is not enough. Policies and investments must be put in place to allow the poor to benefit from trade opportunities and to protect the vulnerable against trade-related shocks. “Agricultural trade and further trade liberalization can unlock the potential of the agriculture sector to promote pro-poor growth, but these benefits are not guaranteed.”

Who wins and who loses in trade reform

The FAO report says that industrial countries have the most to gain from agriculture trade liberalization, because their agriculture sectors are the most distorted by existing policies. “Consumers in currently protected markets and producers in countries with low levels of domestic support would tend to gain the most.”

Developing countries as a whole would also benefit from liberalization, but SOFA 2005 warns that some groups could be hurt in the short run. Those groups include net food importing countries and countries that have been given preferential access to the highly protected markets of wealthier member countries of the Organization for Economic Cooperation and Development (OECD).

While acknowledging that OECD subsidies help net food importing countries keep their food import bills down, Hartwig de Haen, FAO Assistant Director-General, Economic and Social Department, said, “OECD subsidies to agriculture send incorrect signals to these countries leading them to neglect their own agriculture.”

For developing countries as a whole the greatest potential gains from agricultural liberalization will depend not on reform of the agriculture support system in OECD countries but on reforming their own trade policies, which would encourage greater trade between them. Between 70 and 85 percent of the potential benefits for developing countries would derive from their own reform policies in agriculture.

Trade liberalization can raise incomes for the poor

SOFA 2005 says that the benefits of trade liberalization go well beyond the immediate impact on producers and consumers because the reforms would contribute significantly to economic growth and to raising the wages of unskilled workers in developing countries. Trade can be a catalyst for change, promoting conditions that enable the poor to raise their incomes and live longer, healthier and more productive lives.

Because most of the world’s poor and food insecure people live in rural areas and depend on agriculture for their livelihoods, SOFA 2005 argues that a growing agricultural sector is crucial for sustainable poverty reduction. “Trade reforms that stimulate agricultural production often lead to a general increase in unskilled wages.” The report calls for policies that enable the poor to take advantage of their most valuable asset: their own labor.

But, the report warns, the poor often survive on so little that they are particularly vulnerable during any reform process, especially in the short term while productive sectors and labor markets are in transition.

The FAO report has a number of recommendations to ensure that liberalization supports pro-poor outcomes.

It calls for basic market institutions and infrastructure to be set up before opening national agricultural markets to international competition, especially from subsidized competitors. The report recommends consistent and sustained policies to provide “appropriate signals for pro-poor, pro-growth outcomes” and warns that “stop-and-go reforms” are particularly damaging.

To ensure that the poor benefit from trade, SOFA 2005 urges a twin-track approach that would on the one hand invest in educating people, building institutions and infrastructure and on the other provide safety nets to protect the most vulnerable people in society during the transition to freer trade.

Case studies cited by the FAO report show that reforms can help reduce hunger and poverty if they are designed and implemented within an explicit pro-poor strategy. The studies also show a clear need to provide carefully targeted investments and transitional compensatory measures for the poor during the early stages of trade liberalization.