Post on 28-Dec-2015
The impact of trade liberalization on the global oilseed complex
Rebalancing the complex with supply, demand, processing shifts
The impact of trade liberalization on the global oilseed complex
Rebalancing the complex with supply, demand, processing shiftsRobert Broeska, President, IASC &
Canadian Oilseed Processors Association
The impact of trade liberalization on the global oilseed complex
The impact of trade liberalization on the global oilseed complex
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
0
5
10
1980 1990 2000 2010 2020 2030 2040 2050
billi
ons
China India Other countries
Per capita oils & fats consumptionPer capita oils & fats consumption
0
10
20
30
40
50
60
1980 1985 1990 1995 2000 2006
kilo
gram
s
World China India EU
Vegetable oil disappearanceVegetable oil disappearance
0
20
40
60
80
100
120
140
1980 1985 1990 1995 2000 2006
mil
lion
ton
nes
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
0
50
100
150
200
250
300
350
400
450
1980 1985 1990 1995 2000 2006
mil
lion
ton
nes
Oils & fats Oilmeals Oilseeds
Soybean productionSoybean production
0
50
100
150
200
250
1980 1985 1990 1995 2000 2006
mil
lion
ton
nes
United States South America Other countries
Palm oil productionPalm oil production
0
5
10
15
20
25
30
35
40
1980 1985 1990 1995 2000 2006
mil
lion
ton
nes
Malaysia Indonesia Other countries
Rapeseed & sunflower productionRapeseed & sunflower production
0
10
20
30
40
50
60
1980 1985 1990 1995 2000 2006
mil
lion
ton
nes
Rapeseed Sunflower seed
World oilseed crush and GDPWorld oilseed crush and GDP
0
50
100
150
200
250
300
350
1980 1985 1990 1995 2000 2006
Cru
sh (
mil
lion
ton
nes)
0
10000
20000
30000
40000
50000
60000
GD
P (
bill
ion
US$
)
Crush GDP
GATT Tokyo Round
GATT Uruguay Round
China WTO accession
Vegetable oil exportsVegetable oil exports
0
10
20
30
40
50
60
1980 1985 1990 1995 2000 2006
mil
lion
ton
nes
Soy oil Palm oil Rape oil Sun oil Other veg oils
Oilmeal exportsOilmeal exports
0
10
20
30
40
50
60
70
1980 1985 1990 1995 2000 2006
mil
lion
ton
nes
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
3. Trade reform – the China case 3. Trade reform – the China case
4. Doha WTO negotiations4. Doha WTO negotiations
5. WTO impact on industry5. WTO impact on industry
Trade of oilseeds & productsTrade of oilseeds & products
0
10
20
30
40
50
60
70
80
90
1980 1985 1990 1995 2000 2006
mil
lion
ton
nes
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
The global oils & fats marketThe global oils & fats market
3. Trade reform – the China case 3. Trade reform – the China case
4. Doha WTO negotiations4. Doha WTO negotiations
5. WTO impact on industry5. WTO impact on industry
China oilseed situationChina oilseed situation
0
10
20
30
40
50
60
70
1980 1985 1990 1995 2000 2006
Cru
sh &
impo
rts
(mil
lion
ton
nes)
0
500
1000
1500
2000
2500
3000
GD
P (
bill
ion
US$
)
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
0
5
10
15
20
25
1980 1985 1990 1995 2000 2006
mil
lion
ton
nes
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
05
101520253035404550
1980 1985 1990 1995 2000 2006
mil
lion
ton
nes
Soy meal Rape meal Cotton meal
Groundnut meal Other oilmeals
China oilseed importsChina oilseed imports
0
5
10
15
20
25
30
1980 1985 1990 1995 2000 2006
mil
lion
ton
nes
Soybeans Rapeseed Sesame seed Other oilseeds
China vegetable oil importsChina vegetable oil imports
0123456789
10
1980 1985 1990 1995 2000 2006
mil
lion
ton
nes
Soy oil Palm oil Rape oil Other veg oils
The global oils & fats marketThe global oils & fats market
4. Doha WTO negotiations4. Doha WTO negotiations
5. WTO impact on industry5. WTO impact on industry
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
The global oils & fats marketThe global oils & fats market
5. WTO impact on industry5. WTO impact on industry
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
0
50
100
150
200
250
300
mil
lion
ton
nes
of m
eal/
oil
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
0
5
10
15
20
25
30
35
40
45
50
55
% c
hang
e af
ter
libe
rali
zati
on
Soybeans Rapeseed Sunflower Palm
After liberalization
Source: LMC International, 2006
World recoverable oil before & after liberalizationWorld recoverable oil before & after liberalization
0
10
20
30
40
50
60
mil
lion
ton
nes
of o
il
Soybeans Rapeseed Sunflower Palm & palmkernel oil
Before liberalization After liberalization
Source: LMC International, 2006
Soybean production before & after liberalizationSoybean production before & after liberalization
0
10
20
30
40
50
60
70
80
90
100
mil
lion
ton
nes
of s
oybe
an
Argentina Brazil USA China India
Before liberalization After liberalization
Source: LMC International, 2006
Rapeseed production before & after liberalizationRapeseed production before & after liberalization
0
2
4
6
8
10
12
14
16
18
20
mil
lion
ton
nes
of r
apes
eed
Canada China India EU Australia
Before liberalization After liberalization
Source: LMC International, 2006
Sunflower seed production before & after liberalizationSunflower seed production before & after liberalization
0
1
2
3
4
5
6
7
8
9
10
mil
lion
ton
nes
of s
unfl
ower
see
d
Argentina USA EU Ukraine Russia
Before liberalization After liberalization
Source: LMC International, 2006
Palm & palm kernel oil production before & after liberalizationPalm & palm kernel oil production before & after liberalization
0
2
4
6
8
10
12
14
16
18
mil
lion
ton
nes
of
com
bin
ed p
alm
oil
s
Indonesia Malaysia Thailand
Before liberalization After liberalization
Source: LMC International, 2006