Impacts of free trade in soybean meal market on soybean industry and meat industry: Welfare approach
1999
Pracha Koonnathamdee (Thammasat Univ., Bangkok (Thailand). Faculty of Economics)
Findings indicate that the government interventions on soybean meal market such as tariff, quota with local content requirement, and surcharge create protection benefits to the soybean planters and oil refineries, while depress benefits of meat producer, consumers and society. The meat producers and consumers lose some benefit due to the higher cost and society loses in term of the dead weight loss or efficiency loss. The removal of interventions on soybean meal market would lead to a reduction in domestic production of soybean seed, soybean oil, and soybean meal. At the same time, the consumption and the import in these markets increase. The free trade in soybean meal market also causes expansion in meat production. The equilibrium prices of swine and eggs declined. The social welfare changes indicate the positive gain in each market (soybean and its product markets, broiler market, swine market, and egg market). It means that the efficiency is returned to six markets also. It is recommended that government policies concerning soybean meal need to be adjusted. Liberalization will benefit the industries, livestock production as well as consumers.
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