Texas Tech University

Researcher Receives USDA Grant to Study Global Farm and Trade Policy Effects on Agriculture

George Watson

April 21, 2020


Stephen Devadoss is an expert in international trade, policy and economics.

The U.S. is the world's largest exporter of numerous agricultural products, including soybeans, cotton, corn, pork and wheat. Any change in domestic agricultural or trade policy, whether it's at home or abroad, affects America's agricultural economy.

Over the last few years, several countries, including the U.S., have enacted new domestic policies or broken trade agreements and developed new ones. This has influenced, both positively and negatively, the U.S. export market, which is vital for American farmers, growers and agribusiness firms.

Just what those effects are, or could be, is the subject of a new study by Stephen Devadoss, the Emabeth Thompson Endowed Professor in the Department of Agricultural and Applied Economics in the College of Agricultural Sciences & Natural Resources at Texas Tech University. Along with Sherzod Akhundjanov, an assistant professor of applied econometrics and statistics at Utah State University, the researchers will attempt to develop a comprehensive trade model and analyze the effects of farm subsidies and trade policies on U.S. agriculture.

Their study is supported by a $499,770 grant from the United States Department of Agriculture (USDA).

Stephen Devadoss

"The United States is the leading exporter of many agricultural commodities, so the export market is vital for U.S. farmers, growers and agribusiness firms," Devadoss said. "Increasing trade tensions, as have been playing out recently, will harm the U.S. agricultural sector. This study researches this important topic to assess how various countries' domestic policies and trade policies impact U.S. exports and the sustainability of U.S. agriculture."

The U.S. agricultural export market has seen quite a bit of change and volatility over the last few years.

According to Devadoss' research, the North American Free Trade Agreement (NAFTA), created in 1994, has increased trade over the last 25 years from $293 billion to $1.1 trillion. Under the current administration, NAFTA was renegotiated into the U.S., Mexican, Canadian Agreement (USMCA).

U.S. agriculture is heavily dependent on Canada and Mexico, the two biggest agricultural export market for the U.S., accounting for 28 percent of the U.S. corn market and 8 percent of soybean exports. So, the USMCA, once it is implemented, will have a significant effect on U.S. agricultural export efficiency.

Also, the U.S. has engaged in trade disputes with countries around the world that have led to trade wars and retaliatory tariffs imposed by both sides. Devadoss said these trade wars will have significant impacts on the U.S. agricultural sector, even when the trade wars don't initially involve agricultural products.

For example, the U.S. and China entered into a trade dispute that saw the U.S. impose tariffs on Chinese aluminum and steel imports. This led China to impose retaliatory tariffs on goods that it viewed would hurt the U.S. the most, particularly farm products such as soybeans, corn, sorghum, beef, pork and poultry. Canada imposed tariffs on U.S. commodities such as orange juice, maple syrup, farm chemicals and cucumbers when the U.S. imposed tariffs on Canadian steel and aluminum.

Through this research project, Devadoss hopes to develop and implement theoretical trade models, then simulate that model to show the effects brought on by the various trade agreements and trade wars around the world.

"It is worth noting that even when the disputes are related to non-agricultural commodities, such as intellectual properties, steel and aluminum, other countries engage in a tit-for-tat fight by strategically targeting sensitive U.S. agricultural commodities for tariff retaliation," Devadoss said in the research proposal. "Since the U.S. is the No. 1 exporter of agricultural products in the world, with more than $135 billion worth of exports, these trade wars overwhelmingly hurt U.S. agriculture."