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40 Years of Agricultural Trade, Distortions and Policies
Division Director at the Division Director of the Markets, Trade, and Institutions Division
International Food Policy Research Institute
Maximo Torero
Real Price Evolution in US$ 2015
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1960
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1963
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1966
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2015
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2015
USD
per
Met
ric T
ons
Soybeans (US$/mt) SOYBEANS
Maize (US$/mt) MAIZE
Periods of Excessive Volatility
Note: This figure shows the results of a model of the dynamic evolution of daily returns based on historical data going back to 1954 (known as the Nonparametric Extreme Quantile (NEXQ) Model). This model is then combined with extreme value theory to estimate higher-order quantiles of the return series, allowing for classification of any particular realized return (that is, effective return in the futures market) as extremely high or not. A period of time characterized by extreme price variation (volatility) is a period of time in which we observe a large number of extreme positive returns. An extreme positive return is defined to be a return that exceeds a certain pre-established threshold. This threshold is taken to be a high order (95%) conditional quantile, (i.e. a value of return that is exceeded with low probability: 5 %). One or two such returns do not necessarily indicate a period of excessive volatility. Periods of excessive volatility are identified based a statistical test applied to the number of times the extreme value occurs in a window of consecutive 60 days.
Source: Martins-Filho, Torero, and Yao 2010. See details at http://www.foodsecurityportal.org/soft-wheat-price-volatility-alert-mechanism.
2014
Please note Days of Excessive volatility for 2014 are through March 2014
Different problems but same policies
A continuous trend towards internationalization of food markets
1975 1985 1995 2005 2015
18.2%
13.9%12.3%
19.1%
16.1%
Share of produced calories crossing an international border
Globalization and/or Regionalization
-
2,000
4,000
6,000
8,000
10,000
12,000
Average distance (km) travelled by imported calories
1995 2000 2005 2010
Cumulative number of preferential trade agreements (PTAs) in force
Note: it includes notified and non-notified PTAs by country group
Evolution by region of the price support through border measure
-60.0%
-50.0%
-40.0%
-30.0%
-20.0%
-10.0%
0.0%
10.0%
20.0%
Africa Asia Eastern Europe LAC HIC World
Average Nominal Rates of Assistance (NRA) through Border Measure
1975 1985 1995 2005
… and DOHA?
But mega trade deals are becoming strategic
TPP
USA
TTIP
TISA
VietnamBruneiSingaporeMalaysia
Australia Canada TaiwanJapan Chile Mexico PeruSouth Korea New Zealand Norway
SwitzerlandIceland
IsraelUruguayHong Kong
Costa RicaColombiaPanama
ParaguayTurkey
Austria Bulgaria Belgium France Czech Republic Ireland Denmark
Germany Estonia Portugal Romania Poland Netherlands Lithuania UK
Sweden Luxembourg Slovenia Hungary Slovenia Italy Spain
Greece Finland Malta
CroatiaLativia Cyprus