Reforms
moderately increase world prices for most commodities,
with larger increases for sugar, rice and dairy. Dairy
and livestock sectors are directly impacted, which in
turn affects feed sectors. U.S. export expansion is
large for pork, beef and rice and moderate for corn and
wheat. U.S. cotton exports decline under the proposal.
In many cases, the removal of coupled domestic support
in the EU and the United States is not fully compensated
by world price increases and gains in world markets.
Decoupled payments could be put in place to balance the
loss of farm income from coupled payments and would not
have to be as large since distortions would be removed
and world prices would be higher.
U.S. corn exports and feed consumption both
increase, contributing to a modest increase in U.S. corn
prices, driven by larger net imports by the EU and South
Korea. World wheat prices increase by almost 3 percent
because of higher export demand from Japan and China and
reduced export supplies of Canada, Russia and Ukraine.
Higher prices result in a slight increase in wheat
production, limited by the increase in returns for feed
grains.
World prices for rice increase by 8 to 25 percent,
depending on the variety, driven by greater market
access in Japan and South Korea. China, the United
States, Australia and Egypt gain market shares in
medium-grain rice trade, and long-grain rice exports
increase for all major producers. Decreased livestock
production in Japan and the EU causes a reduction in
U.S. soybean meal exports. This is offset by an increase
in domestic soybean meal consumption driven by expanding
U.S. livestock production. The world price of soybean
oil increases by 4 percent by 2014. World consumption of
all protein meal declines in tandem with animal
production.
World prices of pork and beef products increase
significantly while poultry price changes are moderate.
World trade of pork increases the most, followed by beef
and then poultry. Japanese imports of U.S. meat expand
under lower import duties. The elimination of export
subsidies and increased market access result in an
increase in EU meat imports. Beef would become a
sensitive product in the EU, which limits potential
import expansion. In many importing countries, lower
domestic prices resulting from tariff reduction are more
than offset by the higher world meat prices. Brazil,
Argentina, Australia, Canada and the United States
expand their meat exports.
Major dairy changes occur in the EU, Canada and Japan.
Without an export subsidy and with reduced intervention
prices, EU dairy production and exports decrease
substantially. Domestic EU consumption increases because
of lower domestic prices. The EU becomes a marginal
player in world markets for nonfat dry milk and butter.
Australia, New Zealand, Argentina, Ukraine and India
partially make up for the decline in EU exports, which
leads to higher world prices for butter, cheese, nonfat
dry milk and whole milk powder. Canada becomes a net
importer of nonfat dry milk as export subsidies
disappear and tariffs are lowered.
The EU would declare sugar as sensitive, creating a
larger TRQ and reduced tariffs. The world sugar price
increases by an average of 24 percent. The EU becomes a
net importer of sugar. Net exporting countries, such as
Brazil, Australia, Colombia, Argentina and Cuba, respond
to the higher world price with increased sugar
production, lower sugar consumption and increased
exports.
World cotton prices increase by 2 percent. Given other
countries' modest policy adjustments, the primary impact
in the sector comes through a reduction in domestic
supports, which lowers U.S. production and exports.
Larger exports out of Africa, Brazil and Central Asia
partially offset the lower volume of U.S. cotton
exports.
