Brief Summary of Minutes of Annual Meeting

WERA-101: 2006 Conference Agenda China's Evolving Agricultural Economy: Biotechnology, Food Markets and Policy Liberalization Monday, April 24th 9:00-9:15 - Welcome and Opening Ceremonies, Neil Conklin, USDA, ERS 9:15-10:35 - Brad Gilmour, Moderator "An Overview of Food and Agricultural Prices in China," Fred Gale and Francis Tuan, USDA, ERS "Wheat Marketing Reform and Quality Enhancement in China," Bryan Lohmar, USDA, ERS "Self-employment with Chinese Characteristics: the Forgotten Engine of Rural China's Growth," Jian Zhang, Linxiu Zhang*, Scott Rozelle and Steve Boucher, UC Davis, and China Academy of Sciences* 10:50-12:10 - Bryan Lohmar, Moderator "Irrigation Water Pricing Policy in China," QQ Huang and Scott Rozelle, UC Davis Jinxia Wang and Jikun Huang, CCAP, CAS "Village Elections, Participation in Voting and Women in Rural China," Xiaopeng Pang, Renmin University, China "Towards a Functioning Agri-Rural Credit System in Rural China: The Key to Improvements in Well-Being and Growth with Equity," Brad Gilmour and G. Cheng, Agriculture Canada 1:30-3:20 - Tom Wahl, Moderator "A Dynamic Analysis of Food Demand Patterns in Urban China," Hui Liao and Wen S. Chern, The Ohio State University "How does Biotech Labeling Affect Consumers" Purchasing Behavior? A Case Study of Vegetable Oils in Nanjing, China, William Lin and Francis Tuan, USDA, ERS "Food Fear and Food Faith: Chinese Consumer Mindscapes of Genetically Engineered and Organic Foods," Brenda Sternquist, Craig Harris and Kami Silk, Michigan State University "Food Safety and Chinese Horticulture," Linda Calvin, Dinghuan Hu*, Fred Gale, and Bryan Lohmar USDA, ERS, and Chinese Academy of Agricultural Science* 3:35-4:30 - Fred Gale, Moderator "Fluid Milk Consumption in Urban China and its Affect Factors: Empirical Evidence from Survey Data," Junfei Bai and Thomas I. Wahl, Washington State University "China's Dairy Industry: Current Situation and Long-Term Projections," James R. Simpson 4:30-5:10 - Election of Officers and Business Meeting - Tom Wahl Tuesday, April 25th 9:00-10:25 - Scott Rozelle, Moderator "China's Cotton Futures Market and the Law of One Price," Stephen MacDonald, USDA, ERS "China: A Japanese Perspective on Food Trade," Wei Ruan, Louisiana State University "Global Agricultural Trade Reform and End of the Doha Agreement," Kym Anderson and Will Martin, World Bank 10:40-12:30 - Cheryl Christensen, Moderator "China Research and Projects at International Food Policy Research Institute," Xiaobo Zhang, (IFPRI) "China Canada Agriculture Development Program," Dave Wasylyshen "China Research and Projects at ERS," by China Team ERS Business Meeting of WERA-101

In the absence of incoming Chair Kynda Curtis, Tom Wahl, Jim Hansen and Brad Gilmour shared the Chair's duties. Tom Wahl opened the meeting, welcomed members and other participants. Members were invited to review the previous year's minutes, which were passed without amendment.

Election of officers was held, with the following results:

Chair: Kynda Curtis (University of Nevada, Reno)

Vice Chair: Xiangdong Qin, (Shanghai Jiatong University)

Secretariat Head / Permanent Co-Chair: Tom Wahl (Washington State University)

Past Chair: Jim Hansen (USDA-ERS)

Secretariat Administrator: Charli Hochsprung (WSU)

Communication and Outreach Co-leads: Brad Gilmour (AAFC) and Tom Wahl (WSU)

Location of Next Workshop + Meeting.

Newly elected Vice Chair Xiangdong Qin agreed to look into either Shanghai or Beijing as the possible site of the next meeting. Scott Rozelle and Michel Paggi agreed to look into a California location as a back-up. Some effort may be made to integrate this meeting with the 2007 IATRC meeting, which may also be held in China.

Members agreed to work together to develop the workshop theme and solicit private and public participation and funding.

The annual meeting and symposium of the committee brings together China researchers and specialists from the U.S. and Canada as well as from China to present their research and discuss current and future issues affecting Chinese agriculture and trade with China. The papers presented at the conference are assembled into proceedings that are published on the WERA-101 website (www.china.wsu.edu). The conferences provide an opportunity for members to discuss their research to find common interests and collaborative projects. Committee members have organized symposia on China at meetings of the American and Western Agricultural Economics Associations and the annual meeting of the International Agricultural Trade Research Consortium. In 2006, a conference, China's Evolving Agricultural Economy: Biotechnology, Food Markets and Policy Liberalization, was held April 25-26 at USDA, ERS, Washington DC. The conference was attended by 38 academics from the U.S., Canada and China; researchers from the Economic Research Service of USDA; and several industry consultants. A number of presentations were made by graduate students on their research. The proceedings will be available on the WERA-101 website. See following information for synopsis of reports. China's Evolving Agricultural Economy: Biotechnology, Food Markets and Policy Liberalization

1.01 "An Overview of Food & Agricultural Prices in China," Fred Gale & Francis Tuan (USDA-ERS) provided an excellent overview of China's agri-food competitiveness at the primary, wholesaling and retail level. Their analysis will be helpful in making assessments of prospects for China emerging as a competitor in some sub-sectors and as a prospective market in others.

1.02 "Wheat Marketing Reform and Quality Enhancement in China," Bryan Lohmar, (USDA-ERS) provided an intriguing overview of reforms in wheat marketing, grading, extension and seed subsidies in China. Chinese authorities are trying to encourage, with some success, the production of higher quality, more consistent wheat varieties with medium to high gluten and protein levels. These wheats compete, to some extent, with U.S. DNS wheats and the bottom protein level of Canadian CWRS wheats.

1.03 "Self-employment with Chinese Characteristics: An Engine of Rural Growth," Jian Zhang, Linxiu Zhang* (China Academy of Sciences), Scott Rozelle & Steve Boucher (UC Davis) provided an excellent overview of the growth of self-employed individuals in China. In spite of official discrimination, these individuals have contributed much to increases in productivity and value-added in rural areas. Innovative means of financing their activities were also discussed.

2.01 "Irrigation Water Pricing Policy in China," QQ Huang and Scott Rozelle (UC Davis) and Jinxia Wang and Jikun Huang (CCAP) have undertaken some very unique and informative work relating to water and water scarcity in China, particularly on the North China Plain. This piece, a combination of both theoretical work and applied sample survey, examined the repercussions of pricing incentives on water use in agriculture. They found that water prices would have to be increased substantially before farmers would embrace progressive water conservation practices. Given the gravity of the situation with respect to water resources in China, it seems almost inevitable that such incentives will be embraced sooner or later. Corn and wheat production will drop the most in the face of such changes, if embraced.

2.02 "Village Elections, Participation in Voting and Women in Rural China," Xiaopeng Pang of Renmin University discussed the incidence of women's involvement in local-level in China. Participation was surprisingly high, but it was noted that women's spouses, fathers-in-law, and village leaders also exercised a degree of control over womens' selections. Local leaders that were actually elected were more responsive and progressive on the economic front as well.

2.03 "Towards a Functioning Credit System in Rural China: A Key to Improvements in Well-Being" Brad Gilmour (AAFC) and Guoqiang Cheng (China DRC) provided an overview of the evolution of China's rural credit system. Systemic discrimination against farmers, small-holders and entrepreneurs often drives them to embrace informal credit to support their enterprises. Favoritism of state-owned and state-linked enterprises discriminates handicapped rural residents in two ways: 1) it makes access to official banking services difficult; 2) it allows SOEs to engage in competing activities using subsidized credit.

3.01 "A Dynamic Analysis of Food Demand Patterns in Urban China," Hui Liao and Wen S. Chern (Ohio State University) undertook an extensive study of food Demand in China using a dynamic almost ideal demand system. In all, demands and preferences for almost 3,000 households from Shandong, Henan, Guangdong, and Heilongjiang provinces were analyzed for the years 2002-03. Dynamic effects and habit formation were found to be statistically important & yielding superior estimates and improved predictive performance.

3.02 "How does Biotech Labeling Affect Consumers' Purchasing Behavior?" William Lin and Francis Tuan (USDA-ERS) undertook this case study of consumer attitudes and vegetable oil purchases in Nanjing. They found that consumers were becoming more "aware" of GM issues than they were in previous surveys (2 or 3 years ago) but that they were not necessarily more "informed". They also found that the nature of the labeling and promotional materials could have significant effects on attitudes. As an example, some companies were using "GM free" as a selling point while others were using the idea that GM products could be tailored to meet certain health and nutritional goals as part of their approach.

3.03 "Food Fear & Food Faith: Consumer Mindscapes of Genetically Engineered & Organic Foods," Brenda Sternquist, Craig Harris and Kami Silk (Michigan State University) are building a consumer theory from the bottom-up with a unique and sequential type of survey design that will allow them to more fully understand how Chinese consumers make consumption decisions with respect to new or novel products. While at the beginning of this work, some of the preliminary results suggest that this approach could be useful in designing marketing initiatives in future.

3.04 "Food Safety and Chinese Horticulture," L Calvin, Dinghuan Hu*, F Gale, & B Lohmar (USDA-ERS & Chinese Academy of Ag Science*) discussed the state of China's efforts to improve SPS and Quality Assurance in its horticultural value chains. The range of experiences across China varies considerably from township to township, municipality to municipality, province to province. However, incentives were improving over time and with the dissemination of information. However, there remains a long way to go and China is currently undertaking work in collaboration with USDA to arrive at "best practices" to be applied across the sector. While this work is just underway, it is quite promising.

4.01"Fluid Milk Consumption in Urban China: Empirical Evidence from Survey Data," Junfei Bai and Thomas I. Wahl (Washington State University) reported on the results of consumer "exit data" in Chinese urban centers. This was the promising beginning of a two-year project. However, the authors suggested that preliminary findings suggest that the survey needed to be reworked slightly and that the underlying theory needed to be revisited.

4.02 "China's Dairy Industry: Current Situation and Long-Term Projections," James R. Simpson (Professor Emeritus, Ryukoku U, Florida State U) provided an extremely detailed examination of the productive capacity of China's dairy industry ... starting bottom-up with input supplies like forage, protein meals, etc., and working up to prospective consumption in the year 2020. An excellent piece of analysis as well as a source of data and bio-physical information not easily found elsewhere.

5.01 China's Cotton Futures and the Law of One Price Steve MacDonald (USDA-ERS) gave a very interesting talk on China's cotton market. His search for efficient market behaviour and price integration was frustrated. Ensuing discussion led to discussion of localized fiefdoms and institutional bottlenecks at the national, provincial and regional levels.

5.02 A Japanese Perspective on Food Trade with China Wei Ruan (Ag Bank of Japan & Louisiana State University) provided an excellent overview of how Japan deals with agri-food trade with China from both a macro and a micro perspective. She also shared insights (quite apart from the theme of her talk) about the tensions between the Agricultural Cooperatives in Japan at the primary level and SMEs at the value-added level who have found it difficult to procure product. Ensuing discussion was among the liveliest in the workshop as both Chinese and Japanese ag policy and value-chains were under discussion.

5.03 Global Agricultural Trade Reform Kym Anderson and Will Martin (World Bank) shared both the results of their analysis as well as their insights with respect to WTO negotiations and processes. They illustrated how even the EU proposal could lead to welfare gains, but also how G20 and US proposals would lead to larger gains. A critical issue remained how "sensitive products" would be treated and how much wiggle room was allowed. They observed that it was in these precise areas that the greatest gains could be realized. S&D provisions were also observed to adversely affect developing countries' well-being, when considered in aggregate. While these observations are not new, they are worth repeating.

Carter, C.A. and A. Estrin "Opening of China's Trade, Labor Market Reform and Impact on Rural Wages." The World Economy Vol 28., No 6., June 2005. Carter, C.A. and X. Li "Trends in China's Horticultural Trade" Journal of International Agricultural Trade and Development. Vol 1, No1. 2005. Dong, Fenxia and Allen Fetherstone. "Technical and Scale Efficiencies for Chinese Rural Credit Cooperatives: A Bootstrapping Approach in Data Envelopment Analysis." Journal of Chinese Economics and Business Studies 4(1) (Feb. 2006): 57-75. Fuller, Frank, Jikun Huang, Hengyun Ma, and Scott Rozelle. 2005. "The Rapid Rise of China's Dairy Sector: Factors Behind the Growth in Demand and Supply" Center for Agricultural and Rural Development, Iowa State University, Working Paper 05-WP 394, May. Fuller, Frank and Hu Dinghuan. Forthcoming. 2005. "Dairy Products in Southwestern China: Anecdotal Evidence from Kunming." In China's Agri-Food Value Chain: Opportunities and Challenges, Proceedings of the WERA-101 Annual Meetings, Reno, Nevada, April 25-26. Gilmour, B (2006) China's Evolving Agri-Food Sector: Challenges for NAFTA Countries, discussant's remarks on Rozelle et al's "Rising Demand, Trade Prospects and the Rise of China's Horticultural Industry" at the North American Agri-Food Market Integration Workshop, Calgary, Alberta, 1 June (http://naamic.tamu.edu) Gilmour, B (2006) Aspect politiques en Chine et leurs impacts sur le secteur agroalimentaire de la Chine, Seminaire, Agriculture et Agroalimentaire Canada, 9 May, Ottawa Gilmour, B and G Cheng (2006) Towards a Functioning Credit System in Rural China, paper presented at the 2006 WERA workshop China's Evolving Agricultural Economy: Biotechnology, Food Markets and Policy Liberalization, Washington, DC., April 24-25. Gilmour, B (2006) Policy Issues in China and their impacts on China's Agri-Food Sector, paper presented at the OMAFRA Seminar "China's Agri-Food Market: Opportunities and Threats", Double Tree Hotel, Toronto, Ontario, March 2. Rae, A.N., Ma, H., Huang, J. and Rozelle, S. (2006) "Livestock in China: Commodity-Specific Total Factor Productivity Decomposition Using New Panel Data." American Journal of Agricultural Economics (forthcoming, August). Ma, Hengyun; Rae, Allan; Huang, Jikun and Rozelle, Scott. (2006) "Enhancing Productivity on Dairy Farms in China: Taking the Cows to Town" China Agriculture Project Working Paper 1/06, Centre For Applied Economics and Policy Studies, Massey University, Palmerston North, New Zealand. http://econ.massey.ac.nz/caps/China_WP_1_06.pdf. Simpson, James R., Ou Li and Fuping Li and Yoshio Kawamura. Structural Analysis of Tibetan Minority Pastoralists in the Qinghai Plateau Area of Sichuan Province of China. (Society and Culture: Journal of the Socio-Cultural Research Institute, Ryukoku University,) Vol. 7, March 2005, pp 253-266 (in English). Wahl, Thomas I. and Kynda Curtis eds. "China's Agri-Food Value Chain: Opportunities and Challenges" a proceedings from WERA-101 annual meeting, April 2005. Suwen Pan, Mark Welch, Samarendu Mohanty, Mohammadou Fadiga, and Don Ethridge. "Assessing the Impacts of the Chinese TRQ System and U.S. Subsidies on the World Cotton Market." The Estey Centre Journal of International Law and Trade Policy, 6 (No. 2, 2005): 251-273. Suwen Pan, Samarendu Mohanty, Don Ethridge, and Mohammadou Fadiga. "Chinese Tariff Rate Quotas vs. U.S. Subsidies: what Affects the Cotton Market More?" American Agricultural Economics Assn. Meetings, 2005. Paper posted on AgEcon Search (http://agecon.lib.umn.edu).