Agricultural commodity production and trade: a trade economist's view on filling US food supply gaps

Deficiencies in the balance of the American diet have been identified which could necessitate changes in agricultural production and trade. International trade has played only a small role for the products in deficit-fruits, vegetables and dairy products-but will be critical to future market adjustments. The potential to fill food supply gaps via increased imports and from US producers in the future is substantial, as seen in recent worldwide trends for these products. Transportation costs, which encouraged self-sufficiency in these products in the past, have declined. The producer bias of agricultural policy has diminished following reforms in the 1992 and 1996 Farm Bills as well as in the US GATT offer. Evidence that potential exporters of these products may expand sales to the US and that world supplies can cope with the necessary adjustments is presented. Whether and how markets adjust will depend more on changes in consumer preferences than on production technology or policy. An example of trade in tomato juice is used to show that New Trade Theory, and particularly how firms market their products, more so than traditional determinants of comparative advantage, will dictate the path of those adjustments. (C) 1999 Published by Elsevier Science Ltd. All rights reserved.