Brief Summary of Minutes of Annual Meeting

Western Coordinating Committee - 101

Business Meeting Minutes
Washington DC

16 April 2002

1. Brad Gilmour (chair) called the meeting to order at about 8:30. Others in attendence included: David Holder, Wen Chern, Tom Wahl, Brenda Sternquist, Bryan Lohmar, Cathy Durham, and Scott Rozelle. He welcomed all members and participants to the meeting.
2. Brad thanked the workshop coordinator, Bryan Lohmar, and commended Charli Hochsprung and Brenda Campbell for their roles in setting up the conference, and recognized and thanked the many members of USDA for their assistance in organizing the meeting including the ERS Administrator, the Office of the Director for Market and Trade Economics Division, the Asia Western Hemisphere Branch Chief, Praveen Dixit, the China team (Frances Tuan, Fred Gale, Hsin Hui Hsu), Bill Coyle , John Wanio, John Dyck. Others recognized for their contribution included Susan Offutt, Neil Conklin, Cheryl Christensen, Joy Harwood, and Mary Bohman. The committee examined the minutes from the last business meeting and passed them without amendment.
3. The selection of Portland (Oregon) as the site of the next meeting was revisited and confirmed. Cathy Durham agreed to serve as workshop coordinator.
4. Portland, OR approved as site for next meeting. Cathy Durham will act as coordinator.
5. Manuscripts for proceedings due at end of April, these should be sent to Charli Hochsprung at WSU via e-mail, and cc‘d‘d to Tom Wahl, Brad Gilmour and Bryan Lohmar.
6. Date for next meeting was discussed and a Thurs/Fri in mid-April 2003 is the likely date. A 1.5 day meeting with a close at 3PM on Friday was discussed.
7. The next order of business was the election of officers. As determined at the 2001 meetings the current committee secretary/vice chair, Cathy Durham, had been intended as the next chair, and this was confirmed by the committee. Bryan Lohmar was nominated as new committee secretary/vice chair, he accepted the nomination and was voted in as new Vice Chair and Secretary. Both positions effective after the business meeting.
8. Holder informed the group that the proposed budget indicates a doubling of NRI funding, and that Ins. for Future Food and Ag Systems may possibly be another source.
9. Chern raised issue of visibility and suggested holding a meeting in China, an animated discussion followed and some problems such as cost were raised. The ideas will be further discussed, and consideration made towards applying for funding for such an activity.
10. A committee consisting of Sternquist, Rozelle, Holder, and Lohmar was formed to develop this idea.
11. Agreement to explore making better use of available funds such as NRI, IFAS.
12. As there was no other business, Brad moved that the meeting be adjourned, seconded by Scott Rozelle. Chair Gilmour adjourned the meeting at approximately 9:00AM.

Accomplishments A two day symposium was planned by Praveen Dixit, Bryan Lohmar and Francis Tuan at ERS/MTED. This was widely advertised to other agencies, universities and agencies who deal with Chinese agricultural projects. A third day was hosted by ERS as an introduction to a new program.

Keynote speaker was Carol Brookins, U.S. Executive Director of the World Bank. She spoke about a program for development in China (RISE). Jikun Huang, Director, Center for Chinese Agricultural Policy, Beijing spoke about implications of China‘s Accession to WTO. Presentations made are highlighted below and published in a proceedings. For a complete PDF version of the proceedings see the WCC-101 web site at www.china.wsu.edu .

Surging Markets, Ineffective Intervention,: The Performance of Agricultural Commodity Markets during the 1900s. Min Chang, Hsin-hui Hsu, Jikun Huang and Scott Rozelle - Examined the integration of China‘s grain markets from the mid-1990s - present. Discussed the extent to which price shocks associated with China‘s entry into WTO would affect farmers in inland regions. Methodologies applied were the cointegration test and parity bound model analysis, using data from the Research Center for Rural Economy, MOA. Preliminary results from the cointegration test show that China‘s grain markets are integrated. As China enters the world grain markets, the inland farmers in China will be affected as much as their coastal counterparts.

The Guanxi Hypothesis: Marketing Grass Seed in China. Cathy Durham, E. Vega-H and A. Johnson - It is important for policy and strategic reasons to determine whether relationship development and personal contacts with Chinese decision-makers have influenced demand for US agricultural products. A history of two decades of market development activities for Oregon grass seed to China was examined. Authors discussed the types of programs undertaken by the Oregon Seed Council, Chinese policies regarding grass seed use for erosion control and beautification, and the experience of US producers as part of the program efforts and their selling experiences with their grass seed in China.

Retail Food Buyer-Supplier Relationships in the People‘s Republic of China. Brenda Sternquist, Z. Chen and Y. Wang - . In Chinese, guanxi is a general term for social networks. In a study of Chinese executives, social connection was the only item consistently chosen as a key business-success factor. The respondents attributed the importance of social connections to the ambiguity of Chinese legislation. A major requirement of WTO admission is that China apply the Rule of Law to business transactions. We began this research project with the belief that guanxi was of primary importance in Chinese business dealings, yet our findings show that the major chain food retailers forbid buyers from developing personal relationships with suppliers and do not allow gifts to be accepted. Our revised view of this relationship is that it is built on solid performance of products. A shift from reliance on networks of bilateral (often mutual) trust towards a culture of institutional trust (generalized reciprocity) is one of the factors in explaining what happens to the informal structure of organizations as they gain in size (Abell 1996).

Off-Farm Labor Markets and Household Risk-Coping Behavior in China. John Giles - Discussed off-farm labor markets and household risk-coping behavior in rural China. His analysis suggests that rural residents would suffer from urban policies restricting the in-flow of migrants in two ways. Households sending temporary migrants to cities will suffer both a loss of income and a loss of insurance against the income effects of shocks on-farm. In fact, the analysis suggests that the welfare of Chinese farm households in rural communities can be further improved by eliminating the remaining institutional obstacles to expansion of migrant employment opportunities.

Agricultural Insurance and its Role in Risk Management Policy in China. Hsin-Hui Hsu, B. Lohmar and F. Gale - China‘s membership in the WTO and growing commercialization of agriculture and insurance are leading policymakers to examine the role of insurance in agricultural risk management. Although various forms of agricultural insurance-protection against crop yield shortfalls and losses of livestock-are available currently in several regions of China, coverage is usually restricted to single-perils, such as hail, fire or flood, and participation by farmers has been low. China‘s crop insurance limits risks insured in order to guard against actuarial problems, such as adverse selection and moral hazard. Also, unlike in the United States and other countries with multi-peril crop insurance, insurance companies and farmers in China do not receive direct government subsidies to provide and participate in agricultural insurance. Barriers to increased use of agricultural insurance in China include farmers‘ lack of cash to pay insurance premiums, small sizes of agricultural holdings, and questions about incentives for private, profit-seeking insurance companies to provide insurance coverage.

The Nature of Distortions to Agricultural Incentives in China and Implications of WTO Accession. Jikun Huang and Scott Rozelle - The authors discussed a project to understand how WTO will affect agricultural sector in China including measures of the distortions in China‘s agricultural sector immediately prior to accession to WTO. Only a small part of the effects of WTO will come from agriculture. Larger and more positive effects are expected to come in the non-farm sector. To the extent this is true, we should expect that WTO‘s accession will generally have a small, negative effect and larger positive effect on households. As China enters the 21st century, it should combine trade policy and investment liberalization policy with a number of other transition and rural development policies in order to push for as rapid an evolution of China towards as modern an economy as possible.

China‘s Accession to WTO: Impacts and Policy Alternatives. Funing Zhong and Francis Tuan - The current problems in China‘s agriculture, such as the slowdown in production and income growth, the increase in production costs, other burdens on farmers, and the changing supply-demand balance in domestic markets are largely internal issues. However, as those problems are closely related to the farm scale and labor/land ratio, foreign competition following the accession to the WTO will reinforce the heavy pressures on Chinese farmers and the agricultural sector. The central government could encourage and facilitate structural adjustments in the sector, in order to improve efficiency in resource allocation and to reduce production costs. The central government may invest more in agricultural research and infrastructure, in order to increase production, and more importantly, to reduce farmers‘ production and marketing costs, as well as to raise the value of farm products sold on market. Finally, the government should understand that large-scale re-allocation of its labor force is the most crucial measure to improve comparative advantage of Chinese farm products in the world market, and to improve Chinese farmers‘ income.

China‘s WTO Accession and the Chinese Honey Antidumping Case - Implications for China‘s Future Agricultural Exports. Spencer Griffith - In 2001 the U.S. government imposed anti-dumping duties on imports of honey from China. China is by far the world‘s largest honey producer - about 500 million pounds of honey annually. China is also a significant exporter of honey , particularly to the United States and Japan. In 1995 the US Department of Commerce and the Chinese government concluded the first suspension agreement under which a certain volume of Chinese honey would be allowed into the US market free of dumping duties. In 2000, at the expiration of the agreement, a new dumping case was filed against imports of honey from China and Argentina. At a US ITC hearing, the Chinese exporters and US importers presented evidence showing that Chinese imports were not injuring the US producers, but rather that honey prices had fallen as a result of numerous factors unrelated to imports. The ITC ultimately found injury and dumping duties were imposed on Chinese honey. The decisions are now on appeal to the US Court of International Trade.

The Impact of China‘s WTO Accession on US Agricultural Exports. Jonathan Coleman, - A detailed market analysis of China‘s market access commitments based on a comparison of China‘s tariff schedules, pre-and post-accession (including an analysis of China‘s new TRQ system and an examination of China‘s potential use of non-tariff barriers (such as China‘s food safety regulations, labeling requirements, GMO guidelines, practices of state-trading enterprises, and TRQ administration) to block future US exports to China.

China‘s Accession to WTO and its Regional Implications: A Simulation of Policy Changes using CAPSIM. C.P Shi and Hsin-Hui Hsu - This paper provided useful insights for understanding the impacts of China‘s accession to the WTO and demonstrated that CAPSIM can be used as a valuable tool for evaluating trade and domestic policy changes at regional or provincial levels. The policy simulation, based on China‘s accession to the WTO, implies that China‘s rice, wheat and corn imports could be increased. China‘s accession to WTO not only benefits major grain suppliers around the world, including the US and Canada, but also provides an excellent opportunity to lower excessive domestic grains stocks and to promote more pork production or better hog feeding in China.

China‘s Accession to the WTO: Implications for China‘s Agricultural Imports. Bryan Lohmar, J. Hanson, R. Seeley and R. Stillman - China‘s recent accession to the WTO is a positive development for China, the international agricultural economy and for US producers. Under the WTO, China‘s farmers will be better able to access markets for labor intensive products for which they have a comparative advantage. Estimates of the changes in China‘s agricultural trade due to the new trade regime under WTO, suggest that China will substantially increase its imports of corn and wheat under the more liberalized trade regime, and the increased international demand for these products will increase farm incomes in the US. On average, annual US farm incomes will be $0.8 billion higher over the period 2002-2009 due to the increased access to China‘s market under the WTO. Continued economic development and transition to a market economy, along with trade liberalization, will provide greater opportunities for agricultural exports to China in the future.

How Many Nonfarm Jobs in Rural China? Evidence from China‘s Agricultural Census. Fred Gale - China will have to transfer large numbers of workers from agriculture to nonfarm work in order to see significant improvements in rural incomes and farm labor productivity. This study uses data from China‘s agricultural census to assess the size of China‘s rural labor force, the agricultural-nonagricultural engagement of rural workers and the geographic distribution of nonagricultural employment. This analysis of the census data indicates that agriculture was still the predominant rural activity and that the number of persons who did agricultural work exceeded the number reported in China‘s labor force statistics in 1996. Regional analysis shows that rural nonfarm opportunities are much more accessible for persons in the coastal region of China, while many residents of central provinces had to leave their home province to find nonfarm work.

Additional Accomplishments at the end of the Minutes Section

Changes in China‘s Agricultural Sector: Trade, Market and Policy Reform. Thomas Wahl, Bryan Lohmar and Brad Gilmour eds. IMPACT Center Publications, Pullman, WA 99164.