the impact of trade liberalization on the global oilseed complex rebalancing the complex with...

The impact of trade liberalization on the global oilseed complex

Rebalancing the complex with supply, demand, processing shifts


Rebalancing the complex with supply, demand, processing shiftsRobert Broeska, President, IASC &

Canadian Oilseed Processors Association



1. Market drivers1. Market drivers

2. Trade policy - industry position 2. Trade policy - industry position

3. Trade reform – the China case 3. Trade reform – the China case

4. Doha WTO negotiations4. Doha WTO negotiations

5. WTO impact on industry 5. WTO impact on industry

PopulationPopulation• current world population 6 billion people• 2050 world population 9 billion• 97% of increase in less developed regions• key developing markets are China & India

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1980 1990 2000 2010 2020 2030 2040 2050

billi

ons

China India Other countries

Per capita oils & fats consumptionPer capita oils & fats consumption

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1980 1985 1990 1995 2000 2006

kilo

gram

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World China India EU

Vegetable oil disappearanceVegetable oil disappearance

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20

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60

80

100

120

140

1980 1985 1990 1995 2000 2006

mil

lion

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Soy oil Palm oil Rape oil Sun oil Other veg oils

GATT Tokyo Round

GATT Uruguay Round

China WTO accession

Production of oilseeds & productsProduction of oilseeds & products

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450

1980 1985 1990 1995 2000 2006

mil

lion

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Oils & fats Oilmeals Oilseeds

Soybean productionSoybean production

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1980 1985 1990 1995 2000 2006

mil

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United States South America Other countries

Palm oil productionPalm oil production

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1980 1985 1990 1995 2000 2006

mil

lion

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Malaysia Indonesia Other countries

Rapeseed & sunflower productionRapeseed & sunflower production

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1980 1985 1990 1995 2000 2006

mil

lion

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Rapeseed Sunflower seed

World oilseed crush and GDPWorld oilseed crush and GDP

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1980 1985 1990 1995 2000 2006

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Crush GDP

GATT Tokyo Round

GATT Uruguay Round

China WTO accession

Vegetable oil exportsVegetable oil exports

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1980 1985 1990 1995 2000 2006

mil

lion

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Soy oil Palm oil Rape oil Sun oil Other veg oils

Oilmeal exportsOilmeal exports

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60

70

1980 1985 1990 1995 2000 2006

mil

lion

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Soy meal - South America Soy meal - total Oilmeals - total

The global oils & fats marketThe global oils & fats market

2. Trade policy - industry position 2. Trade policy - industry position



5. WTO impact on industry5. WTO impact on industry

Trade of oilseeds & productsTrade of oilseeds & products

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90

1980 1985 1990 1995 2000 2006

mil

lion

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Oilseeds Oils & fats Oilmeals

GATT Uruguay Round

China WTO accession

GATT Tokyo Round

Trade – IASC policy statementA new vision for the international trade of oilseeds & oilseed products

A WTO Development Round sectoral initiative31 March 2003

Trade – IASC policy statementA new vision for the international trade of oilseeds & oilseed products

A WTO Development Round sectoral initiative31 March 2003

The members of the International Association of Seed Crushers Council today announce their support for an oilseed industry sectoral initiative under the auspices of the World Trade Organization. The IASC seeks a broad agreement for the liberalization of global trade in oilseeds, oilseed products and edible oils.

• In pursuit of this objective, IASC member associations agree to solicit the support of their national trade authorities and WTO negotiators for a global sectoral agreement, which harmonizes, reduces, and ultimately eliminates all trade distorting policies and practices for oilseeds, oilseed products and edible oils. Such an agreement would accommodate and define the necessary degrees of staging and/or phasing as agreed to by the participants.

• The IASC Council envisions that this endeavour will provide a global trading environment, which is conducive to the expansion of production, processing, trade, and consumption of all oilseeds, oilseed products and edible oils. The Council urges all WTO members to avoid trade distorting policies at production or trade levels (i.e. tariff and non-tariff trade barriers, export incentives, export subsidies, export taxes, product-specific supports, etc.).

• The Council firmly believes that an open and unfettered food trade system is essential to the efficient provision of food for the world’s next billion citizens and beyond. The elimination of trade barriers will reduce food costs for consumers while creating a larger global marketplace for producers.

• The IASC intends to convey this message directly to the Chairman of the WTO Agricultural Negotiating Committee without delay, and agrees to provide any supporting discussion requested.

OILSEED PROCESSORSLEVEL PLAYING FIELD COALITION

JOINT DECLARATIONSeptember 2005

OILSEED PROCESSORSLEVEL PLAYING FIELD COALITION

JOINT DECLARATIONSeptember 2005

In order to establish an international Level Playing Field (LPF) during the Doha Development Agenda negotiations on agriculture, our national associations hereby endorse the following reciprocal objectives to be implemented as part of a WTO Sectoral Agreement which provides that member countries eliminate all trade barriers for oilseeds, oilseed products, and edible oils:

• Eliminate import tariffs for oilseeds, oilseed products, and edible oils• Eliminate export subsidies for oilseeds, oilseed products, and edible oils• Eliminate differential export taxes (DETs) on oilseeds, oilseed products, and edible oils• Provide export credits only in conformance with WTO rules and disciplines

In addition to the above LPF objectives, we support the following mutual undertakings:• To actively encourage our respective governments to provide an increasing portion of

domestic support for agriculture in a decoupled form• Not to implement any other trade distorting practices

ABIOVE - Associaçâo Brasileira das Industrias de Óleos Vegetais, São Paulo, BrasilAOF - Australian Oilseeds Federation, Melbourne, Victoria, AustraliaCIARA - Cámara de la Industria Aceitera de la República Argentina, Buenos Aires, ArgentinaCOPA - Canadian Oilseed Processors Association, Winnipeg, CanadaFEDIOL - Fèderation de l’Industrie d’Huilerie de la CE, Brussels, Belgium, European UnionNOPA - National Oilseed Processors Association, Washington, DC, United States

China oilseed situationChina oilseed situation

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1980 1985 1990 1995 2000 2006

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Crush Oilseed imports Oils & fats imports China GDP

GATT Uruguay Round

China WTO accession

GATT Tokyo Round

Veg oil consumption & global prosperityVeg oil consumption & global prosperity

• As the poor advance economically, they move from grains to veg oils to meat

• Per capita veg oil consumption in the poorest countries is used by IMF as a measure of changing living standards

• Very poor do not purchase meat• In many developing countries, massive job

creation and rapidly advancing incomes spur improved dietary intake

• The result? An unprecedented expansion of veg oil and protein consumption

China vegetable oil disappearanceChina vegetable oil disappearance

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1980 1985 1990 1995 2000 2006

mil

lion

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Soy oil Palm oil Rape oil

Groundnut oil Cotton oil Other veg oils

GATT Uruguay Round

China WTO accession

GATT Tokyo Round

China oilmeal disappearanceChina oilmeal disappearance

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101520253035404550

1980 1985 1990 1995 2000 2006

mil

lion

ton

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Soy meal Rape meal Cotton meal

Groundnut meal Other oilmeals

China oilseed importsChina oilseed imports

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1980 1985 1990 1995 2000 2006

mil

lion

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Soybeans Rapeseed Sesame seed Other oilseeds

China vegetable oil importsChina vegetable oil imports

0123456789

10

1980 1985 1990 1995 2000 2006

mil

lion

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Soy oil Palm oil Rape oil Other veg oils

DOHA WTO NegotiationsDraft modalities text

Crawford Falconer, Chair, Agriculture Committee - July 17, 2007

DOHA WTO NegotiationsDraft modalities text

Crawford Falconer, Chair, Agriculture Committee - July 17, 2007 Main negotiating pillars

1. Domestic supports – a tiered formula for overall phased reduction of trade-distorting domestic supports

2. Market access – a tiered formula for phased tariff and tariff escalation reductions

3. Export competition – parallel elimination of all forms of export subsidies and disciplines on all export measures

4. Other issues – range of issues/positions/proposals that are tabled/referred to and remain of interest, but are not materially advanced and not yet agreed; includes differential export taxes and sectoral initiatives

WTO draft modalities text - July 17, 2007Trade-distorting domestic supports*

WTO draft modalities text - July 17, 2007Trade-distorting domestic supports*

* Base period for calculation 1995-2000** Uruguay Round implementation period: 6 years commencing January 1, 1995

Level of support Phased reduction**

(a) + US $60 billion 75-85%

(b) + US $10 billion;

- US $60 billion

66-73%

(c) - US $10 billion 50-60%

WTO draft modalities text - July 17, 2007Market access: tiered formula

WTO draft modalities text - July 17, 2007Market access: tiered formula

Bound duty –

ad valorem equivalent* Phased reduction

Developed Developing Developed Developing

(a) 0-20% 0-30% 48-52% X 2/3

(b) 21-50% 31-80% 55-60% X 2/3

(c) 51-75% 81-130% 62-65% X 2/3

(d) + 75% + 130% 66-73% X 2/3

* Uruguay Round achievements - Agriculture1. Tariffication and minimum access commitments2. Tariffs reduced by 36% (average), minimum 15%3. Average unweighted ad valorem bound tariff rates post-Uruguay Round for

oilseeds, fats and oils 42% A.V.E.4. NAMA – tariffs reduced by 40% to 3.8% A.V. Avg.

WTO draft modalities text - July 17, 2007Export competition

WTO draft modalities text - July 17, 2007Export competition

(a) Export subsidies*(i) Developed – eliminate by end of 2013; 50% by 2010

(ii) Developing – eliminate in equal annual reductions by year X

(b) Export credits/guarantees/insurance - maximum repayment schedule – 180 days

- disciplines applied give effect to (a)

(c) State trading enterprises/international food aid- disciplines applied give effect to (a)

* Uruguay Round reduced volumes of subsidized exports by 21% and budget outlays by 36%; DOHA Round considering a phase-out of differential export taxes by end of implementation period

WTO trade liberalization significantly increases global production, consumption & trade of vegetable oils & protein meals

WTO trade liberalization significantly increases global production, consumption & trade of vegetable oils & protein meals

A study commissioned by theInternational Association of Seed Crushers

and undertaken byLMC International (Oxford, England)

June 2006

• Vegetable oil demand would rise by more than 40% & oilseed meal demand by 30% in low-income countries• Global vegetable oil production would increase by about 30% & oilseed meal production by about 40%• In total, world trade would expand by 35% for vegetable oil & by 45% for oilseed meals

An independent report byIPC (Washington, USA)

October 2005• Global oilseed production (7 major oilseeds) would increase by about 25% (currently from 380 mmt to 475 mmt)• Palm oil production would increase by 39% (currently from 38 mmt to 52 mmt) to meet these increased levels of

consumption and trade requirements

Notable market access indicatorsAverage price elasticities of demand & import tariffs

Notable market access indicatorsAverage price elasticities of demand & import tariffs

Meal Oil

Demand elasticities Import tariffs Demand elasticities Import tariffs

Argentina 0.94 Free 0.85 Free

Brazil 0.94 Free 0.85 Free

Canada 0.66 Free 0.49 Free

USA 0.77 Free 0.52 Free

China 1.05 5% 0.88 9%

India 0.20 30% 0.74 45%-90%

Indonesia 1.05 Free 0.90 Free

Japan 0.69 Free 0.56 13%

Malaysia 0.70 Free 0.75 5%

Philippines 0.93 3% 0.75 7%

Thailand 0.80 4% 0.60 20%-140%

EU 0.69 Free 0.56 6%-10%

Ukraine 0.45 400 EUR/t 0.68 150 EUR/t

Russia 0.45 Free 0.68 15%

Australia 0.71 Free 0.50 4%-5%

Iran 0.87 4% 0.74 4%

Egypt 0.87 5% 0.74 2%

Bangladesh 1.05 Free 0.81 7.5%

Pakistan 1.05 10% 0.81 32%

Source: USDA ERS and LMC International

Veg oil trade liberalization: a WTO sectoral initiativeOil consumption forecasts (LMC International)

Veg oil trade liberalization: a WTO sectoral initiativeOil consumption forecasts (LMC International)

Countries (‘000 tonnes) Before liberalization After liberalization

Argentina 654 878

Australia 336 398

Bangladesh 1,041 1,376

Brazil 3,371 4,525

Canada 856 1,007

China 16,921 22,923

Egypt 1,118 1,444

EU 15,522 18,754

India 8,899 11,471

Indonesia 4,087 5,587

Iran 1,140 1,473

Japan 2,189 2,645

Malaysia 3,230 4,182

Pakistan 1,936 2,558

Philippines 401 519

Russia 2,566 3,233

Thailand 839 1,029

Ukraine 719 906

USA 9,603 11,448

World total 108,777 138,957

Protein meal trade liberalization: a WTO sectoral initiativeMeal consumption forecasts (LMC International)

Protein meal trade liberalization: a WTO sectoral initiativeMeal consumption forecasts (LMC International)

Countries (‘000 tonnes) Before liberalization After liberalization

Argentina 633 795

Australia 713 844

Bangladesh 410 531

Brazil 8,212 10,313

Canada 2,886 3,362

China 25,538 33,047

Egypt 1,266 1,562

EU 46,143 54,271

India 3,967 4,089

Indonesia 1,873 2,424

Iran 1,057 1,304

Japan 5,312 6,248

Malaysia 1,051 1,240

Pakistan 733 949

Philippines 1,713 2,145

Russia 1,785 1,966

Thailand 3,167 3,836

Ukraine 542 597

USA 30,785 36,988

World total 169,177 204,441

World meal and oil production before and after liberalization in soybean meal and oil equivalentsWorld meal and oil production before and after

liberalization in soybean meal and oil equivalents

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Before liberalization After liberalization

Meal Oil

Source: LMC International, 2006

Percentage change in world seed/oil/meal production after liberalization, by oilseedPercentage change in world seed/oil/meal production after liberalization, by oilseed

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Soybeans Rapeseed Sunflower Palm

After liberalization


World recoverable oil before & after liberalizationWorld recoverable oil before & after liberalization

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il

Soybeans Rapeseed Sunflower Palm & palmkernel oil



Soybean production before & after liberalizationSoybean production before & after liberalization

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Argentina Brazil USA China India



Rapeseed production before & after liberalizationRapeseed production before & after liberalization

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Canada China India EU Australia



Sunflower seed production before & after liberalizationSunflower seed production before & after liberalization

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Argentina USA EU Ukraine Russia



Palm & palm kernel oil production before & after liberalizationPalm & palm kernel oil production before & after liberalization

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the impact of trade liberalization on the global oilseed complex rebalancing the complex with...

Documents

trade reform

liberalization of global

trade levels

wto impact

trade distorting policies

world trade organization

national trade authorities

elimination of trade