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GTAP Resource #2367

"Productivity Shock and National Food Security for Japan"
by Tanaka, Tetsuji and Nobuhiro Hosoe

Ministry of Agriculture, Forestry, and Fisheries (MAFF) of Japan proposes a concept of gnational food securityh to manage vulnerability of food supply to shocks such as bad crops and embargoes by protecting and subsidizing domestic agricultural sectors as well as with emergency food stocks. Our haunting nightmare of crop failure and embargos empower domestic protectionists to be against agricultural trade liberalization and to set extremely high tariff and non-tariff barriers to agricultural imports, particularly rice. On one hand, trade liberalization lowers the self-sufficiency rate of food further and possibly makes the economy more vulnerable to such shocks. On the other hand, trade liberalization also improves efficiency of resource allocation. The overall evaluation of impacts of agricultural trade liberalization requires detailed quantitative analysis taking account of shocks in agricultural sectors.

For this purpose, we develop a world trade stochastic computable general equilibrium (CGE) model and carry out Monte Carlo simulations focusing on stochastic aspects of paddy rice productivity in Japan and the rest of the world.

Major findings of our analysis are as follows. (1) There is no statistically significant chance for Japanese economy to be worse off by trade liberalization of rice even though the trade liberalization would increase fluctuations of her welfare caused by productivity shocks abroad. (2) When productivity shocks are assumed in the domestic rice sector in Japan, trade liberalization of rice would contribute to both increases of expected welfare and decreases of welfare fluctuations. Among these two cases in regard to location of productivity shocks, the latter impacts are found overwhelming.

In addition, (3) the current policy to secure rice supply with buffer stocks would not be effective in the sense that the expected gains achieved by the buffer stocks would be clearly less than their annual maintenance costs.

Resource Details (Export Citation) GTAP Keywords
Category: 2007 Conference Paper
Status: Published
By/In: Presented at the 10th Annual Conference on Global Economic Analysis, Purdue University, USA
Date: 2007
Created: Tanaka, T. (4/14/2007)
Updated: Tanaka, T. (4/15/2007)
Visits: 4,946
- Agricultural policies
- The GTAP Data Base and extensions
- Asia (East)

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