An Econometric analysis of the U.S.-Japan-Korea market for U.S. white wheat

Graduation date: 1983The U.S. white wheat industry relies heavily on export markets.\ud Since the early 1960s these markets have been geographically concentrated\ud in a few countries in Asia. This suggests that developments\ud in a few Asian countries may significantly affect the prospects for\ud U.S. white wheat exports and thereby the economic well being of the\ud U.S. white wheat production-consumption system. However, very few\ud studies have been undertaken of the U.S. white wheat market in these\ud Asian countries.\ud The objective of this study is to analyze and evaluate the effects\ud of variations in: U.S. white wheat price, income, domestic wheat production,\ud the availability of other food grains, shipments of U.S. white\ud wheat under P.L. 480 programs, imports of Australian standard (white)\ud wheat, and exchange rates on the Japanese and Korean import demand for\ud U.S. white wheat. Three short-run empirical models of the U.S.-Japan-\ud Korea market for U.S. white wheat are estimated by fitting regression\ud curves using annual data over the period 1963-1964 to 1980-1981.\ud The results of the study indicate that an inelastic import demand\ud curve for U.S. white wheat is present in both Japan and Korea. This\ud finding along with other evidence suggest that both the Japanese and\ud Korean governments have greatly distorted the Japanese and the Korean\ud import demand for U.S. white wheat.\ud In the Japanese case, import demand for U.S. white wheat is\ud strongly affected by domestic (soft) wheat production as well as the\ud quantity imported of Australian standard (white) wheat. Per capita\ud real income, the quantity of rice available, and the real exchange rate\ud (as an interaction with average shipping costs paid in U.S. dollars),\ud however, did not meaningfully affect the Japanese purchases of U.S.\ud white wheat.\ud In the Korean case, import demand for U.S. white wheat is closely\ud associated with the quantity of rice available, the amount of U.S.\ud white wheat imports under P.L. 480 programs, the quantity of barley\ud available and Korean per capita real income. On the other hand,\ud domestic (soft) wheat production and the real exchange rate (as\ud defined earlier) did not meaningfully affect the Korean purchases of\ud U.S. white wheat