"Impact of Agricultural Trade with MERCOSUR on the State of Food Security in China"

Abstract

This paper aims to show that the exports of agricultural commodities from MERCOSUR countries to China has a significant effect in the state of food security in China. MERCOSUR countries have become key suppliers of several agricultural commodities for China, especially soybeans and beef. This suggests that MERCOSUR countries may have an important role in the provision of proteins to the Chinese population. We focus on two dimensions of food security in China: availability and access. We use lineal regression to show that the trade with MERCOSUR countries accounted for 8.2% of the total protein supply, or 10.42 grams per person per day, in mainland China, mainly due to trade in soybeans with Brazil. Then we use a cointegration model to prove that the international prices of soybeans are integrated across its main importers, China and the EU, and its main exporters, Brazil, the USA, and Argentina. This shows that there is stable connection between the international prices of this commodity, which has an effect on costs associated with food price stability policies in China. Finally, we use an IRF to find that Brazilian export prices of soybeans have a delayed and permanent effect on Chinese import prices of that commodity. A 1% increase in the soybeans exports price in Brazil can be expected to produce a 0.32% increase in the import price in China after one month and a 2.8% permanent rise after approximately 8 months. This findings will help inform policymakers and scholars in the field of food security and international trade in China and MERCOSUR.