@article{Mendes:338546,
      recid = {338546},
      author = {Mendes, Krisley and Luchine, Andre},
      title = {European Union-Mercosur Agreement: A Partial Equilibrium  Analysis for the Milk Powder Production Chain in Brazil},
      address = {2023},
      year = {2023},
      note = {Presented at the IAAE Inter-Conference Symposium “The Role  of The Agribusiness Sector in the Sustainable Development  of Latin American Economies”, Montevideo, Uruguay, April  19-21, 2023},
      abstract = {Milk is one of the few agricultural products in which  Brazil is not competitive. The domestic market is served by  domestic production and imports from Argentina and Uruguay.  The Mercosur-European Union Bi-regional Association  Agreement provides for the elimination of tariffs and the  harmonization of non-tariff measures (NTMs) between the  parties. Because the EU is one of the most competitive  regions in the world market for powdered milk, this study  analyzes the effects of the agreement on the links in this  production chain in the Brazilian market. A constant,  nested, multisectoral, and vertically integrated elasticity  of substitution model is structured incorporating  uncertainty in the estimates of Armington elasticities  through Monte Carlo simulations, as in Hallren and  Opanasets (2018). The model allows projecting the price  effect (Armington) and the preference effect in the market  shares of Brazil, Mercosur, and the EU on the domestic  market. The results, in the most ambitious scenario of the  agreement and in the most conservative estimate, show that  Brazil would lose 71.7 percentage points in the domestic  market. This means reducing Brazilian production by 475  thousand tons of powdered milk. The national agricultural  link in this scenario would lose 15% of the current dairy  demand. This loss benefits the EU, which would participate  in the national market with a market share of 58.75%.  Mercosur would add 13.41 percentage points to its current  share of the Brazilian market.},
      url = {http://ageconsearch.umn.edu/record/338546},
}