Tthe Impact of Agriculture on Imports - Essay Example

Journal

Abstract

Import competition has an impact on the agricultural industry in the United States. As the U.S. policymakers pinpoint, it has the potential to cause uncertainties and unpredictability to the sector. In the end, the international market becomes inaccessible. Losing the position and advancement of other exporters in international trade relates to U.S. farmers' exposure to importation.

Besides, the competition between U.S. farmers and the imported goods pushes the production factors such as labor out of the sector. Driving out such factors adds intensity to the loss in the international markets. However, there is one policy mechanism with the potential to bring development, maintenance, and expansion of the commercial export market for agricultural commodities in the United States. That is the enhancement of the participation of the labor force in the U.S. agriculture sector.

Introduction

Both domestic and international competition has been an aggressive threat to U.S. farmers. Loss of stake in the market has been an alarm to the policymakers. The response has been implementing specific programs that, in turn, gears to advance, expand and uphold the exportation of U.S. agricultural products. They include the Market Access Programme and the Foreign Market Development Cooperator Program. The U.S. policymakers have also implemented the E (Kika) De La Garza Emerging Markets Program and the Technical Assistance for Specialty Crops.

Other than the competitions from the domestic and international trade, other uncertainties are facing the U.S. farmers. They include limited access to financial support in the U.S. agriculture sector. Besides, there are also problems with invasive plant species, weather conditions, and market fluctuations. Moreover, it is notable that the Covid-19 pandemic could interrupt the supply chains at the international level. All these details emphasize the importance policy implementation, to assist in the development of sustainable local agricultural sectors. If possible, domestic farmers should be granted permission to boost their existence in international trade.

This paper seeks to evaluate the encouragement of labor force participation as a tool for the policymakers targeting development, maintenance, and expansion of the market for U.S. farmers.

Specialists have examined how U.S. imports affect domestic factors. All educational groups have experienced a reduction in wages while individuals with a high school degree see a decline in employment opportunities due to Chinese imports in the United States (Greenland and Lopresti, 2016)

(McManus and Schaur 2016) shows a 13 percent increase in the injury risks at small establishments in the using back-of-the-envelope calculations. That is a representation of a 1-2 percent decline in the workers' wages.

This paper investigates the role of labor force participation in the U.S. agriculture sector in the enhancement of local production and involvement of U.S. farmers in international trade.

Agricultural and Livestock products have a dynamic trade pattern. However, the United States is reputable as a consistent world supplier of agricultural and food commodities.

On average, there has been a decrease in the United States' share of international trade. As per figure 1, the U.S. farmers have seen an increase in the import competitions with only slight declines in 2009, 2012 and 2015.

The export shares from the United States in international trade has been on the rise for ten years from 1995 but decreasing later. A revelation from disaggregated data shows an average decline in the U.S. export market share in over 58.60 percent of the importing countries. However, during the same period, there has been an increase in the exports in 60 percent of the countries accessing the United States market. Additionally, there is a notable decline in the trade surplus in the Agricultural and Livestock products from 2008.

While policymakers point fingers on other countries, some challenges in the domestic set up could be part of the problem. The policymakers credit the long-term loss in the international market's accessibility to the trade actions from other countries.

Many studies have revealed the shortage of labor supply in the U.S. agricultural sector. Goecker, et al. (2015) noted that college graduates in the United States with expertise in agriculture, environment, and renewable natural resources would find good employment opportunities.

While there have been expectations of an increase in demand for agricultural commodities, there is a shortage in the agriculture talent. The report also indicates that only 3 percent would choose agriculture as a career (Land O’Lakes, Inc., 2016)

We seek to carry an analysis of how the labor force participation could help the domestic production and the link between performance in exports and imports.

The first thing to use is the logistic, LMM, and OLS to portray the effects of U.S. imports to the U.S. export market share, provided the method addresses the endogeneity problem more efficiently with the use of internal instruments for endogenous variables.

We understand that participation of the U.S. producers in a given importing country affects the input of other exporting countries. Therefore, for direct analysis of the impact of U.S. imports on export performance, we use the gravity model. Besides, it will help us in examining the role of labor force participation in the import and export performance relationship.

Other than the United States, we will also use Agriculture and livestock data from 176-215 exporter countries between 1996 and 2016. The use of data from a single sector allows for indirect control of possible variations.

From our results, higher import competition in the United States relates positively to the export performance of other exporters. On the contrary, it relates negatively to lower international trade share for U.S. agricultural commodities. The positive correlation between the U.S. imports and exports from other countries receives a counterbalance from higher labor force contribution in the U.S. agricultural sector.

It means that as competition increase in the agricultural sector, the demand for U.S. agricultural commodities declines. The result is a decrease in the income of production factors. The reduced income drives the factors out of the agricultural industry. Besides, there is a high likelihood of a decline in production and, in turn, less participation of the United States in international trade. At the same time, there is an enhancement in the export capacity of other countries.

Our suggestion to the policymakers is to consolidate the international trade positions by responding to the domestic production factors on imported goods. To be more specific, policies that encourage labor force participation in the United States could equalize import competition. That will, in turn, enhance the presence of U.S. farmers in international trade.

Organization of the rest of the paper

Section two contains the estimation methodology and data.

Section three has a report and an explanation of the empirical results.

Section four contains the conclusion.

Policy implementation

Our findings maintain the employment of policy strategies that promote the labor force involved in the U.S. agricultural industry. Young Farmers Access Act and Student Loan Forgiveness for Farmers and Ranchers Act are among the bills that harmonize with the need to promote labor force involvement. While the previous tables portray our overall concept, we have additionally simulated Table two results using data intervals of 5 and 10 years. Our main outcomes are validated.

Conclusion

This paper evaluates how U.S. imports influence export performance in the Agricultural and Livestock international trade.

We employ the gravity model to study labor force participation in the performance of imports and exports. Through it, we also directly come up with an analysis of the U.S. imports on exports' performance. We take into account the recent advancements in the gravity literature.

Our empirical results disclose that higher U.S. imports initiate lower U.S. export performance and enhance that of other countries.

Decline on the production factors income shuns away labor from the agriculture sector which impacts production and capacity to export in the future. Therefore, the united states lose market share in the international trade as that of other countries increases.

Failure to make policies that reduce the response of the income factors to the imports diminishes the market positions of a country while strengthening that of other exporters. Policy makers have to inspect the response of domestic factors to the imports. Therefore, there will be enhancement of the capacity of domestic producers to compete in the international trade.