skip to main content
US FlagAn official website of the United States government
dot gov icon
Official websites use .gov
A .gov website belongs to an official government organization in the United States.
https lock icon
Secure .gov websites use HTTPS
A lock ( lock ) or https:// means you've safely connected to the .gov website. Share sensitive information only on official, secure websites.

Explore Research Products in the PAR
It may take a few hours for recently added research products to appear in PAR search results.


Title: Optimization of national grain imports to balance risk and return: a portfolio theory approach
Abstract Global grain trade plays a key role in food security. Many nations rely on imported grain to meet their dietary requirements. Grain imports may be at risk due to weather shocks, economic crises, or international conflicts. Countries aim to balance import risk with the expected return of their grain supplies. This research brings these dual objectives together in an innovative modern portfolio theory framework. Modern portfolio theory provides a set of concepts to formulate the trade-off between risk and expected return in national grain imports. Using Markowitz’s mean-variance optimization model, we identify opportunities to reduce risk in existing national grain import accounts, without increasing costs under realistic supply mass constraints of trade partners. Several major grain importers may be able to reduce risk in their grain imports without increasing cost, such as wheat imports in Egypt, maize imports in Vietnam, and rice imports in Saudi Arabia. However, some countries would indeed have to pay more to achieve more stable grain supplies, such as wheat imports in Turkey. This study provides a framework to quantify the different costs, benefits, and levels of risk in grain trade that can inform future research and decision-making.  more » « less
Award ID(s):
2115405 1844773
PAR ID:
10490667
Author(s) / Creator(s):
;
Publisher / Repository:
IOP Publishing
Date Published:
Journal Name:
Environmental Research: Food Systems
Volume:
1
Issue:
1
ISSN:
2976-601X
Format(s):
Medium: X Size: Article No. 011001
Size(s):
Article No. 011001
Sponsoring Org:
National Science Foundation
More Like this
  1. ; ; ; (, Scientific Reports)
    null (Ed.)
    Abstract Rapid increases in meat trade generate complex global networks across countries. However, there has been little research quantifying the dynamics of meat trade networks and the underlying forces that structure them. Using longitudinal network data for 134 countries from 1995 to 2015, we combined network modeling and cluster analysis to simultaneously identify the structural changes in meat trade networks and the factors that influence the networks themselves. The integrated network approach uncovers a general consolidation of global meat trade networks over time, although some global events may have weakened this consolidation both regionally and globally. In consolidated networks, the presence of trade agreements and short geographic distances between pairs of countries are associated with increases in meat trade. Countries with rapid population and income growth greatly depend on meat imports. Furthermore, countries with high food availability import large quantities of meat products to satisfy their various meat preferences. The findings from this network approach provide key insights that can be used to better understand the social and environmental consequences of increasing global meat trade. 
    more » « less
  2. ; ; (, AEA Papers and Proceedings)
    Johnson, William R (Ed.)
    During the recovery from the COVID-19 pandemic, international shipping and logistics capacity was strained, limiting the quantity of imports. We investigate the impact of an import constraint on inflation, following an increase in domestic demand. Whether the binding import constraint raises inflation depends on how it affects trade intermediation costs. If the binding constraint raises trade costs, then import price inflation also increases. In this case, however, foreign producer price inflation falls and import quantities rise more for inputs than final goods. Both these model results appear counterfactual, which suggests that import constraints may not explain observed import price inflation. 
    more » « less
  3. ; (, Econometrica)
    Trade liberalization changes the volatility of returns by reducing the negative correlation between local prices and productivity shocks. In this paper, we explore these second‐moment effects of trade. Using forty years of agricultural micro‐data from India, we show that falling trade costs due to expansions of the Indian highway network reduced the responsiveness of local prices to local yields but increased the responsiveness of local prices to yields elsewhere. In response, farmers shifted their production toward crops with less volatile yields, especially so for those with poor access to risk mitigating technologies such as banks. We then characterize how volatility affects farmers' crop allocation using a portfolio choice framework where returns are determined in general equilibrium by a many‐location, many‐good Ricardian trade model with flexible trade costs. Finally, we structurally estimate the model—recovering farmers' risk‐return preferences from the gradient of the mean‐variance frontier at their observed crop choices—to quantify the second‐moment effects of trade. The simultaneous expansion of both the highway and rural bank networks increased the mean and the variance of farmer real income, with the first‐moment effect dominating such that expected welfare rose 4.4%. But had rural bank access remained unchanged, welfare gains would have been only half as great, as risk mitigating technologies allowed farmers to take advantage of higher‐risk higher‐return allocations. 
    more » « less
  4. ; ; ; ; ; (, Environmental Research Letters)
    Abstract China increasingly relies on agricultural imports, driven by its rising population and income, as well as dietary shifts. International trade offers an opportunity to relieve pressures on resource depletion and pollution, such as nitrogen (N) pollution, while it poses multiple socioeconomic challenges, such as food availability. To quantify such trade-offs considering the roles of different crop types, we developed a unique crop-specific N budget database and assessed the impacts of the crop trade on multiple sustainability concerns including N pollution caused by crop production, crop land area, independence of food supply, and trade expenditures. We quantified the ‘virtual’ N inputs and harvested areas, which are the amount of N inputs and land resources used in exporting countries for China’s crop import. In addition, we proposed the concepts of ‘alternative’ N inputs and harvested area to quantify the resources needed if imported crops were produced in China. By comparing results from ‘alternative’ and ‘virtual’ concepts, we assessed the role of trade in Chinese crops over the past 30 years (i.e. 1986–2015) in alleviating N pollution and saving cropland in China and the world. Crop imports accounted for 31% of Chinese crop N consumption in 2015, and these crop imports eased the need for an additional cropland area of 62 million ha. It also avoided an N surplus by 56 and 36 Tg (Tg = 109kg) for China and the world respectively but led to $621 billion crop trade expenditures over the 30 year period. The N pollution damage avoided by crop imports in economic terms was priced at $22 ± 16 billion in 2015, which is lower than the crop trade expenditures but may be surpassed in the future with the development of the Chinese economy. Optimizing a crop trade portfolio can shift domestic production from N-intensive crop production (e.g. maize, fruits, and vegetables) to N-efficient crop production (e.g. soybeans), and consequently mitigate an N surplus by up to 12%. Improving N use efficiency for individual crops can further increase the mitigation potential of N surplus to 30%–50%, but requires technology advancement and policy incentives. 
    more » « less
  5. ; ; ; ; ; ; (, Earth System Dynamics)
    Abstract. The global food trade system is resilient to minor disruptions but vulnerable to major ones. Major shocks can arise from global catastrophic risks, such as abrupt sunlight reduction scenarios (e.g. nuclear war) or global catastrophic infrastructure loss (e.g. due to severe geomagnetic storms or a global pandemic). We use a network model to examine how these two scenarios could impact global food trade, focusing on wheat, maize, soybeans, and rice, accounting for about 60 % of global calorie intake. Our findings indicate that an abrupt sunlight reduction scenario, with soot emissions equivalent to a major nuclear war between India and Pakistan (37 Tg), could severely disrupt trade, causing most countries to lose the vast majority of their food imports (50 %–100 % decrease), primarily due to the main exporting countries being heavily affected. Global catastrophic infrastructure loss with a comparable impact on yields as the abrupt sunlight reduction has a more homogeneous distribution of yield declines, resulting in most countries losing up to half of their food imports (25 %–50 % decrease). Thus, our analysis shows that both scenarios could significantly impact the food trade. However, the abrupt sunlight reduction scenario is likely more disruptive than global catastrophic infrastructure loss regarding the effects of yield reductions on food trade. This study underscores the vulnerabilities of the global food trade network to catastrophic risks and the need for enhanced preparedness. 
    more » « less
  • Citation Formats
  • MLA
  • APA
  • Chicago
  • BibTeX
  • Save / Share this Record
  • Send to Email