1. OFI China 11-12 September 2007 Guangzhou, China
The impact of trade liberalization on the global oilseed complex Rebalancing the complex with supply, demand, processing shifts
Robert Broeska, President, IASC &
Canadian Oilseed Processors Association

2. The impact of trade liberalization on the global oilseed complex
Market drivers
2. Trade policy - industry position
3. Trade reform – the China case
4. Doha WTO negotiations
5. WTO impact on industry

3. Population current world population 6 billion people
97% of increase in less developed regions
key developing markets are China & India
World population currently stands at around 6 billion people and is growing at around 1.3% each year, which means an extra 78 million people each year to feed – 16 million of these in India. Although growth rates are slowing, the US Census Department predicts the world population will reach 9 billion by 2050 (world population slide). It is interesting to note that from 1804, when the world passed the 1 billion mark, it took 123 years to reach 2 billion people in 1927, 33 years to reach 3 billion in 1960, 14 years to reach 4 billion in 1974, 13 years to reach 5 billion in 1987 and 12 years to reach 6 billion in 1999.
Ninety-seven per cent of the world population increase takes place in the less developed regions. Every year the population of Asia is increasing by more than 50 million, the population of Africa by around 17 million, and that of Latin America and the Caribbean by nearly 8 million. Africa has the highest growth rate amongst all major areas (2.36 per cent). Middle Africa, Eastern Africa and Western Africa have growth rates of 2.5 per cent and over. Europe, on the other hand, has the lowest growth rate (0.03 per cent). Key developing markets for this industry are China and India (China/India pop. slide). You can see from this graph that whilst China is predicted to show some restraint, population growth rates in India continue apace such that the population of India is expected to overtake that of China around 2035.

4. Per capita oils & fats consumption

5. Vegetable oil disappearance
GATT Tokyo Round
China WTO accession
GATT Uruguay Round

6. Production of oilseeds & products

7. Soybean production

8. Palm oil production

9. Rapeseed & sunflower production

10. World oilseed crush and GDP
GATT Tokyo Round
China WTO accession
GATT Uruguay Round

11. Vegetable oil exports

12. Oilmeal exports

13. The global oils & fats market
2. Trade policy - industry position
3. Trade reform – the China case
4. Doha WTO negotiations
5. WTO impact on industry

14. Trade of oilseeds & products
GATT Tokyo Round
China WTO accession
GATT Uruguay Round

15. Trade – IASC policy statement A new vision for the international trade of oilseeds & oilseed products A WTO Development Round sectoral initiative 31 March 2003
The members of the International Association of Seed Crushers Council today announce their support for an oilseed industry sectoral initiative under the auspices of the World Trade Organization. The IASC seeks a broad agreement for the liberalization of global trade in oilseeds, oilseed products and edible oils.
In pursuit of this objective, IASC member associations agree to solicit the support of their national trade authorities and WTO negotiators for a global sectoral agreement, which harmonizes, reduces, and ultimately eliminates all trade distorting policies and practices for oilseeds, oilseed products and edible oils. Such an agreement would accommodate and define the necessary degrees of staging and/or phasing as agreed to by the participants.
The IASC Council envisions that this endeavour will provide a global trading environment, which is conducive to the expansion of production, processing, trade, and consumption of all oilseeds, oilseed products and edible oils. The Council urges all WTO members to avoid trade distorting policies at production or trade levels (i.e. tariff and non-tariff trade barriers, export incentives, export subsidies, export taxes, product-specific supports, etc.).
The Council firmly believes that an open and unfettered food trade system is essential to the efficient provision of food for the world’s next billion citizens and beyond. The elimination of trade barriers will reduce food costs for consumers while creating a larger global marketplace for producers.
The IASC intends to convey this message directly to the Chairman of the WTO Agricultural Negotiating Committee without delay, and agrees to provide any supporting discussion requested.

16. OILSEED PROCESSORS LEVEL PLAYING FIELD COALITION JOINT DECLARATION September 2005
In order to establish an international Level Playing Field (LPF) during the Doha Development Agenda negotiations on agriculture, our national associations hereby endorse the following reciprocal objectives to be implemented as part of a WTO Sectoral Agreement which provides that member countries eliminate all trade barriers for oilseeds, oilseed products, and edible oils:
Eliminate import tariffs for oilseeds, oilseed products, and edible oils
Eliminate export subsidies for oilseeds, oilseed products, and edible oils
Eliminate differential export taxes (DETs) on oilseeds, oilseed products, and edible oils
Provide export credits only in conformance with WTO rules and disciplines
In addition to the above LPF objectives, we support the following mutual undertakings:
To actively encourage our respective governments to provide an increasing portion of domestic support for agriculture in a decoupled form
Not to implement any other trade distorting practices
ABIOVE - Associaçâo Brasileira das Industrias de Óleos Vegetais, São Paulo, Brasil
AOF - Australian Oilseeds Federation, Melbourne, Victoria, Australia
CIARA - Cámara de la Industria Aceitera de la República Argentina, Buenos Aires, Argentina
COPA - Canadian Oilseed Processors Association, Winnipeg, Canada
FEDIOL - Fèderation de l’Industrie d’Huilerie de la CE, Brussels, Belgium, European Union
NOPA - National Oilseed Processors Association, Washington, DC, United States

17. The global oils & fats market
3. Trade reform – the China case
4. Doha WTO negotiations
5. WTO impact on industry

18. China oilseed situation
GATT Tokyo Round
China WTO accession
GATT Uruguay Round

19. Veg oil consumption & global prosperity
As the poor advance economically, they move from grains to veg oils to meat
Per capita veg oil consumption in the poorest countries is used by IMF as a measure of changing living standards
Very poor do not purchase meat
In many developing countries, massive job creation and rapidly advancing incomes spur improved dietary intake
The result? An unprecedented expansion of veg oil and protein consumption

20. China vegetable oil disappearance
GATT Tokyo Round
China WTO accession
GATT Uruguay Round

21. China oilmeal disappearance

22. China oilseed imports

23. China vegetable oil imports

24. The global oils & fats market
4. Doha WTO negotiations
5. WTO impact on industry

25. Main negotiating pillars
DOHA WTO Negotiations Draft modalities text Crawford Falconer, Chair, Agriculture Committee - July 17, 2007
Main negotiating pillars
Domestic supports – a tiered formula for overall phased reduction of trade-distorting domestic supports
Market access – a tiered formula for phased tariff and tariff escalation reductions
Export competition – parallel elimination of all forms of export subsidies and disciplines on all export measures
Other issues – range of issues/positions/proposals that are tabled/referred to and remain of interest, but are not materially advanced and not yet agreed; includes differential export taxes and sectoral initiatives

26. WTO draft modalities text - July 17, 2007 Trade-distorting domestic supports*
Level of support
Phased reduction**
(a)
+ US $60 billion
75-85%
(b)
+ US $10 billion;
- US $60 billion
66-73%
(c)
- US $10 billion
50-60%
* Base period for calculation
** Uruguay Round implementation period: 6 years commencing January 1, 1995

27. ad valorem equivalent*
WTO draft modalities text - July 17, 2007 Market access: tiered formula
Bound duty –
ad valorem equivalent*
Phased reduction
Developed
Developing
(a)
0-20%
0-30%
48-52%
X 2/3
(b)
21-50%
31-80%
55-60%
(c)
51-75%
81-130%
62-65%
(d)
+ 75%
+ 130%
66-73%
* Uruguay Round achievements - Agriculture
Tariffication and minimum access commitments
Tariffs reduced by 36% (average), minimum 15%
Average unweighted ad valorem bound tariff rates post-Uruguay Round for oilseeds, fats and oils 42% A.V.E.
NAMA – tariffs reduced by 40% to 3.8% A.V. Avg.

28. WTO draft modalities text - July 17, 2007 Export competition
(a) Export subsidies*
(i) Developed – eliminate by end of 2013; 50% by 2010
(ii) Developing – eliminate in equal annual reductions by year X
(b) Export credits/guarantees/insurance
- maximum repayment schedule – 180 days
- disciplines applied give effect to (a)
(c) State trading enterprises/international food aid
* Uruguay Round reduced volumes of subsidized exports by 21% and budget outlays by 36%; DOHA Round considering a phase-out of differential export taxes by end of implementation period

29. The global oils & fats market
5. WTO impact on industry

30. WTO trade liberalization significantly increases global production, consumption & trade of vegetable oils & protein meals
A study commissioned by the
International Association of Seed Crushers
and undertaken by
LMC International (Oxford, England)
June 2006
Vegetable oil demand would rise by more than 40% & oilseed meal demand by 30% in low-income countries
Global vegetable oil production would increase by about 30% & oilseed meal production by about 40%
In total, world trade would expand by 35% for vegetable oil & by 45% for oilseed meals
An independent report by
IPC (Washington, USA)
October 2005
Global oilseed production (7 major oilseeds) would increase by about 25% (currently from 380 mmt to 475 mmt)
Palm oil production would increase by 39% (currently from 38 mmt to 52 mmt) to meet these increased levels of consumption and trade requirements

31. Notable market access indicators Average price elasticities of demand & import tariffs
Meal
Oil
Demand elasticities
Import tariffs
Argentina
0.94
Free
0.85
Brazil
Canada
0.66
0.49
USA
0.77
0.52
China
1.05 5%
0.88 9%
India
0.20
30%
0.74
45%-90%
Indonesia
0.90
Japan
0.69
0.56
13%
Malaysia
0.70
0.75
Philippines
0.93 3% 7%
Thailand
0.80 4%
0.60
20%-140% EU
6%-10%
Ukraine
0.45
400 EUR/t
0.68
150 EUR/t
Russia
15%
Australia
0.71
0.50
4%-5%
Iran
0.87
Egypt 2%
Bangladesh
0.81
7.5%
Pakistan
10%
32%
Source: USDA ERS and LMC International

32. Before liberalization
Veg oil trade liberalization: a WTO sectoral initiative Oil consumption forecasts (LMC International)
Countries (‘000 tonnes)
Before liberalization
After liberalization
Argentina
654
878
Australia
336
398
Bangladesh
1,041
1,376
Brazil
3,371
4,525
Canada
856
1,007
China
16,921
22,923
Egypt
1,118
1,444 EU
15,522
18,754
India
8,899
11,471
Indonesia
4,087
5,587
Iran
1,140
1,473
Japan
2,189
2,645
Malaysia
3,230
4,182
Pakistan
1,936
2,558
Philippines
401
519
Russia
2,566
3,233
Thailand
839
1,029
Ukraine
719
906
USA
9,603
11,448
World total
108,777
138,957

33. Before liberalization
Protein meal trade liberalization: a WTO sectoral initiative Meal consumption forecasts (LMC International)
Countries (‘000 tonnes)
Before liberalization
After liberalization
Argentina
633
795
Australia
713
844
Bangladesh
410
531
Brazil
8,212
10,313
Canada
2,886
3,362
China
25,538
33,047
Egypt
1,266
1,562 EU
46,143
54,271
India
3,967
4,089
Indonesia
1,873
2,424
Iran
1,057
1,304
Japan
5,312
6,248
Malaysia
1,051
1,240
Pakistan
733
949
Philippines
1,713
2,145
Russia
1,785
1,966
Thailand
3,167
3,836
Ukraine
542
597
USA
30,785
36,988
World total
169,177
204,441

34. Source: LMC International, 2006
World meal and oil production before and after liberalization in soybean meal and oil equivalents
Source: LMC International, 2006

35. Source: LMC International, 2006
Percentage change in world seed/oil/meal production after liberalization, by oilseed
Source: LMC International, 2006

36. World recoverable oil before & after liberalization
Source: LMC International, 2006

37. Soybean production before & after liberalization
Source: LMC International, 2006

38. Rapeseed production before & after liberalization
Source: LMC International, 2006

39. Sunflower seed production before & after liberalization
Source: LMC International, 2006

40. Palm & palm kernel oil production before & after liberalization
Source: LMC International, 2006