Gary D. Thompson

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Estimating Import Demand for Fresh Citrus

• Gary D. Thompson
• Almuhanad Melhim
• The University of Arizona

Linda Calvin Economic Research Service
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Why Study Import Demand?

• Quantify Impacts of SPS Measures
• Elasticities (Own- Cross-Price)
• Flexibility Estimates
• Estimate Welfare of Impacts SPS

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Characteristics of SPS Measures

• Clementines from Spain
• Country- Even Region-Specific
• Date-Specific
• ? Aggregated Data Not Appropriate

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U.S. Mandarin Imports, 2000-03
Spain
Australia
S. Africa
Morocco
Source FATUS
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Supply Side Drives Availability

• Clementines from Spain
• Zero Import Quantity ? No Import Price
• Unobservable, Not Unobserved
• Not Censoring Partial Truncation
• Missing Price Quantity
• Micro-Data Censoring Models Not Appropriate

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Possible Approaches to Truncation

• Incidental Truncation
• Sample selection is typically cross-sectional.
• Sample selection of import availability depends
  on agro-climatic factors
• (e.g. weather throughout the year)

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Truncation Demand Systems

• Multiple selectivity equations Demand system
  equations
• Cross-Sectional - Sequential Selectivity Models
  (Lahiri Song)

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Partial Truncation at Product Level
Mandarins
Oranges
Tangerines
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Selectivity Equations Probit/Logit

• Binary Regression
• Dep. Vbl. 0 if no imports
• 1 if positive imports
• Exp. Vbls. Temperature Precipitation
• in Production Region

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Marshallian Demand Equations

• Incomplete Demand System
• LINQUAD
• Weak integrability guarantees reliable
  elasticity and welfare measures.

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Demand Equations Truncation

• Introduce Correction for Partial Truncation as
  Demographic Shifter in LINQUAD
• ? Not just inverse Mills ratio
• ? Multivariate normal is maintained

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Choice of Samples for Estimation

• 1. Consecutive Months Each Year
• Oct. - Feb. Season 1992-93 to 2002-03
• Aggregate Temporally to Eliminate Zero
• Quantities Missing Prices
• Semi-annual 1989 - 2003

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Uncompensated Elasticities, Sample Median
Tangerine Mandarin Orange Tangerine
-0.026 -4.016 0.463 Mandarin -0.006 -4.375 0.039
Orange 0.374 -0.670 -2.268 Sample Monthly,
Oct.-Feb., 1992 2003 (T 55)
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Uncompensated Elasticities, Sample Median
Tangerine Mandarin Orange Tangerine
-2.193 0.543 -0.134 Mandarin 0.020 -0.326 -0.463
Orange 0.133 -0.498 -0.101 Sample
Semi-annual, 1989 2003 (T 30)
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Own-Price Elasticity, Mandarins
Oct 02
Oct 99
Oct 00
Oct 01
Suspension of Spanish Imports
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Cross-Price Elasticity, Mand.-Orange
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Correction for Truncation

• Necessary for modeling seasonal availability of
  imports (or exports).
• Yields reasonable, if highly variable, elasticity
  estimates.
• Uses data readily available, e.g. FATUS, NOAA.

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Future Work

• Demand for Domestic Imported Fresh Citrus
• Apply to other specialty crops, e.g. asparagus,
  fresh tomatoes.
• MLE or Non-Parametric Estimation