Why has US sorghum lost the market share in the Japanese market?

About 20 years ago, the United States had the largest market share of sorghum in the Japanese market. However, in recent years, Australia’s share of the same market has been constantly growing and has now claimed the top position. A possible explanation suggests that US sorghum lost price competitiveness in the Japanese market. However, the analysis of the ratio of US vs Australian sorghum prices in Japan, shows that there has been little change over the past 20 years. This paper investigates whether prices of Australian sorghum has affected the demand for US sorghum in the Japanese market. If it is not the case, the quality differential between those two grains might be a factor which can explain the decline of US sorghum market share in Japan. A modified Armington model was used for this analysis. This model used an ITSUR (Iterated Seemingly unrelated regression) method to estimate the effects of prices of five grains (US sorghum, Australian sorghum, US corn, sorghum imported from the rest of world) and Japanese farms’ feeding expenditure on the demands of those five grains.

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JEL Codes:
Q17 C30 D21

 Record created 2017-04-01, last modified 2020-10-28

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