FAO COMMODITY AND TRADE POLICY RESEARCH WORKING PAPER No. 8

FAO COMMODITY AND TRADE POLICY RESEARCH WORKING PAPER
No. 8


The Impact of Domestic and Trade Policies on The World Cotton Market

Daneswar Poonyth, Alexander Sarris, Ramesh Sharma and Shangnan Shui
Commodities and Trade Division

April 2004

 

Table of Contents



FAO Commodity and Trade Policy Research Working Papers are published by the Commodities and Trade Division of the Food and Agriculture Organization of the United Nations (FAO). They are working documents and do not reflect the opinion of FAO or its member governments.

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© FAO 2004


NOTES AND ACKNOWLEDGEMENTS

Daneswar Poonyth, Alexander Sarris, Ramesh Sharma and Shangnan Shui are respectively Economist, Director, Senior Economist and Commodity Specialist, all with the Commodities and Trade Division of the Food and Agriculture Organization of the United Nations (FAO).

They would like to thank Hansdeep Khaira for able research assistance.

The views expressed in this paper are those of the authors and should not be attributed to FAO.


Table of Contents

ABSTRACT / RÉSUMÉ / RESUMEN

1 INTRODUCTION

2 MODELLING THE IMPACT OF COTTON SUBSIDIES: THE KEY ANALYTICAL ISSUES

3 MODELLING THE IMPACT OF COTTON SUBSIDIES: THE KEY EMPIRICAL ISSUES

3.1 The level of domestic subsidies on cotton
3.2 Relationship between subsidies and incentives: The issue of coupled versus decoupled subsidies
3.3 Magnitudes of price elasticities of supply and demand
3.4 The world to farm transmission of cotton prices

4 THE STRUCTURE OF THE ATPSM MODEL USED IN THE SIMULATIONS

4.1 Key equations
4.2 Impact indicators
4.3 Data sources and limitations

5 THE DATA UTILIZED IN THE ATPSM COTTON MODEL

6 SIMULATION RESULTS

6.1 Impact on world market prices
6.2 Impacts on production and trade
6.3 Impact on welfare indicators
6.4 Impact on export earnings and trade balances
6.5 Sensitivity test - effects of higher level of domestic subsidies

7 SUMMARY AND CONCLUSIONS

REFERENCES

FIGURE 1

TABLES

ANNEX 1

ANNEX 2: SIMULATION RESULTS WITH ICAC SUBSIDY SCENARIO

FAO COMMODITY AND TRADE POLICY RESEARCH WORKING PAPERS