Panama canal: How critical to U.S. grain exports?

Stephen W. Fuller, Luis Fellin and Ken Eriksen
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Stephen W. Fuller: Department of Agricultural Economics, Texas A&M University, 2124 TAMU, College Station, TX 77843-2124, Postal: Department of Agricultural Economics, Texas A&M University, 2124 TAMU, College Station, TX 77843-2124
Luis Fellin: Department of Agricultural Economics, Texas A&M University, 2124 TAMU, College Station, TX 77843-2124, Postal: Department of Agricultural Economics, Texas A&M University, 2124 TAMU, College Station, TX 77843-2124
Ken Eriksen: U.S. Department of Agriculture, Agricultural Marketing Service, Transportation and Marketing Program, 1400 Independence Avenue, SW, Washington, DC 20250, Postal: U.S. Department of Agriculture, Agricultural Marketing Service, Transportation and Marketing Program, 1400 Independence Avenue, SW, Washington, DC 20250

Agribusiness, 2000, vol. 16, issue 4, 435-455

Abstract: The administration and operation of the Panama Canal was transferred to the Republic of Panama on December 31, 1999. Shipping and agricultural interests indicate new Canal management may increase tolls in an effort to maximize revenues, and some fear mismanagement may eventually result in Canal closure. Analysis show increasing tolls would reduce exports via U.S. Gulf ports, increase exports via U.S. Pacific Northwest ports, reduce quantities transiting the Canal, and increase maritime movements to East Asia via Africa's Cape of Good Hope. The U.S. role in Asia's corn and soybean markets would decline; however, total U.S. exports would be reduced no more than 2%. Results suggest a revenue-maximizing Canal operator could substantially increase revenues by adjusting tolls up by $2|ton on corn-laden vessels and $1|ton on soybean-laden vessels. This would lower U.S. corn and soybean revenues by about $160 million. If the Canal were to be closed, it is projected that revenues of U.S. corn and soybean producers would decline $303 million per year. [EconLit citations: L910, L920] © 2000 John Wiley & Sons, Inc.

Date: 2000
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DOI: 10.1002/1520-6297(200023)16:4<435::AID-AGR4>3.0.CO;2-I

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