| The United States, Canada, Australia, the European Union, and Argentina are the world's major wheat exporters. These five countries account for about 85 percent of world wheat exports; the US is considered as the leading wheat exporter. Changes in wheat market structure and government policy in these five major wheat exporters potentially affect domestic and international wheat markets, especially policy changes in the US and EU which have substantial government intervention in wheat markets.;This study investigates the impact of the changes in domestic wheat policy on internal and external wheat markets in terms of production, consumption, storage, exports and importantly the world wheat reference price. The models are estimated using annual data from 1971 to 2003. All variables are expressed in real terms using the consumer price index (2000=100) as a deflator. The impact multipliers are computed to investigate the response of endogenous variables when there is a shock in an exogenous variable. The model is modified and simulated to reflect the policy changes in the US (1996), the EU (1992), and when all wheat supply regulations are removed. These simulation results are used to study the effect of these changes on wheat area harvested, yield, food use, feed use, seed use, ending storage, exports, and domestic and export prices.;The study finds that a 20 percent increase in US wheat yield reduces world wheat reference price by 3 percent. A 20 percent increase in the rest of the world population also reduces the wheat price by 10 percent. After the 1996 policy changes in the US, US wheat area harvested and stocks goes down while world wheat reference price increases. In contrast, world wheat reference price decreases responding to the changing in the 1992 EU policy. The results of the deregulation scenario show that the EU has the least advantage in the wheat exporting market when the policies are deregulated. Its exports considerably reduce since its wheat market is protected through high supports from the government. The deregulation has almost no effect on Argentina's and Australia's exports.;Keywords. Simulation, Wheat, Supply Policy, Impact Multiplier, Policy Analysis. |
