Agricultural Policy Review home

APR: Winter 2021 Articles

Download PDF for Winter 2021

Corn Yields and Climate Change: The Innovation Challenge

GianCarlo Moschini, Yongjie Ji, and Seungki Lee
Production agriculture depends heavily on exogenous environmental conditions, including weather. As such, agriculture is acutely vulnerable to the deleterious long-run effects of climate change. Indeed, mounting evidence suggests the likelihood of large negative impacts. What can be done about it? Actions to deal with climate change can be thought of as pursuing “mitigation” and/or “adaptation”—mitigation is about containing climate change by reducing greenhouse gas emissions, whereas adaptation blunts and counteracts the damaging consequences of climate change. Countries’ free-riding incentives make global cooperation to reduce emissions difficult, and thus mitigation problematic. Adaptation, by contrast, is less vulnerable to opportunistic behavior because investments in adaptation often have local payoffs and substantial private good aspects.

Is China’s Hog Rebuilding Complete? Reconciling Inventory and Price Data

Xi He, Dermot Hayes, and Wendong Zhang
The African swine fever outbreak that started in August 2018 wiped out 40% of China’s sow inventory. China has been making substantial efforts, including subsidizing large hog producers and encouraging industrialization and modernization of hog production, to rebuild and expand its pork production. While China’s governmental inventory data as of December 2020 show sow and hog inventory were 92.1% and 93.1% of their respective 2017 levels, recent record-high piglet, sow, hog, and pork prices suggest a large persistent supply shortage. China’s record pork and live swine imports in 2020 suggest that China’s hog rebuilding might be fast but of low genetic quality. Specifically, it seems likely that the retention of low-quality commercial generation gilts helped rebuild the herd but set back the national breeding system by abandoning purebred grandparents and parent generation propagation.

The United States’ Competitive Positions in Beef, Corn, Pork, Soy, and Wheat Exports: 1980–2019

Chen-Ti Chen, John M. Crespi, and Yongjie Ji
In a recent publication, CARD researchers and USDA economists looked at the international relationships between the United States and its major export competitors in beef. In that article, the researchers examined beef because the 2004 bovine spongiform encephalopathy (“mad cow disease”) event caused a major disruption in US beef exports and the United States’ competitive position. The authors conclude that even when exports return to pre-disruption levels, the disruption could change the structure of the export market. What the researchers found was that it took much longer for the United States’ competitive position in beef to return to pre-disruption levels.

Minimum Wages and Rural and Urban Firm Entry and Exit

Yulong Chen, Liyuan Ma, and Peter F. Orazem
The US federal government has not increased the minimum wage since 2009. However, since then, 29 states and the District of Columbia have increased their minimum wage above the federal level. Many studies analyze the effect of the minimum wage on employment with mixed results. To the extent a consensus exists, it is that the minimum wage likely has small negative effects on low-skill employment. Because prevailing wages are lower in rural markets than in urban markets, rural workers and firms should face the largest positive or negative impacts from a commonly applied minimum wage. While Even and MacPherson did find that rural areas had a greater adverse effect from the minimum wage, Godoy and Rich and Winters find that the lowest wage or least populated areas had the least negative, or even positive, employment effects from minimum wage increases.

USDA Outlook for 2021 Shows Healthy Recovery

Chad Hart and Lee Schulz
Every February, USDA provides its big overall snapshot for the agricultural year ahead at its annual conference, the Ag Outlook Forum. During the Forum, USDA brings together industry, academic, and government experts to discuss the major agricultural issues of the day and examine the near-term market outlook for agriculture. The 2021 forum reflected the ongoing challenges with the COVID-19 pandemic as all of the sessions were virtual and much of the discussion hinged on the US agricultural sector’s rebound from the physical and economic impacts from the pandemic.