Agriculture Reference
In-Depth Information
effects of the protection needed to maintain self-sufficiency. The use of
the GTAP model overcomes these lmtatons.
The modelling first projects the base case to 2010 under conservative
output and productvty growth assumptons and then asks two questons.
First, if China's present food self-sufficiency rates are to be held constant
until 2010, will increases in protection be required? Second, what increases in
protection would be required to achieve full food self-sufficiency by 2010 and
what would be the economy-wde and dstrbutonal effects of ths protecton?
Consistent with Yang and Tyers (1989), the base-case projection to 2010 shows
substantial declines in Chinese food self-sufficiency (see Table 1.1), particularly
for beverages, livestock products and feed grains (basically as the result of
income growth), so that substantial increases in protection are needed to
maintain the 2001 levels. To achieve self-sufficiency in all agricultural products
by 2010, considerable further protection would be required. In both cases, this
protection would be contractionary and redistributive, and it would retard
growth n other sectors. The senstvty analyss shows that the strength of
the results rests quite heavily on some parameters, particularly the income
elastcty of demand for lvestock products.
The model employs the orgnal GTAP constant dfference of elastctes
of substtuton (CDE) system. Its non-homothetcty s an asset n that t
permts a range of ncome elastctes to exst ether sde of unty. Whle
ths system s more general than the homothetc ones often used n such
models, it is still restrictive in the width of the parameter range compared
wth stll more general systems. The CDE system s employed here because
of its parametric economy. Because of the restrictiveness of the CDE system,
the lower bound for the income elasticity of rice cannot be set below 0.1,
despite evidence suggesting that it is now negative (Ito et al. 1989; Peterson
et al. 1991). As a result, the differences between the model's income
elasticities of livestock products and processed foods—which are superior
goods—and those of grains are likely to be smaller than they really are. One
consequence of ths s that the results lkely underestmate the growth n
demand for lvestock products and processed foods and hence underestmate
the assocated derved demand for cereal feeds and other agrcultural nputs.
Ths means t s lkely that there s a downward bas n the estmates of the
cost of achieving and maintaining agricultural self-sufficiency.
