EFFECTS OF PL-480 WHEAT IMPORTS ON LATIN AMERICAN COUNTRIES

foreign policy tool and its popularity is likely to continue as worldwide poverty and the need to manage grain supplies in developed countries persist. However, because an increase in local grain supplies provided by food aid can depress local prices and/or lead to inadequate food production and dependence on food imports, the price and policy disincentives of food aid in recipient countries should be evaluated. This study analyzes the effects of U.S. Public Law (P.L.) 480 wheat imports on the agricultural development of Brazil, Colombia, and Peru from 1952 to 1975 and provides a basis for evaluating the effects of future food aid policy decisions. An econometric, multiequation commodity model is presented for measuring P.L. 480"s effect on supply and demand for cereals, income generation, commercial grain imports, market clearing, the interrelationships of production and consumption, and government policies affecting agricultural production, consumption, and trade. Both the Brazilian and Colombian governments set commodity import prices and use the revenue generated to finance domestic support prices. The Peruvian Government, which rarely intervened in grain marketing before l970 and has received small amounts of P.L. 480., is used as a control case against which to measure Brazil and Colombia. Analysis revealed that the effect of P.L. 480 on producer prices and on domestic production could be positive because these governments have control over commercial and P.L. 480 wheat imports and use revenues from the resale of these imports to support prices to local producers of wheat or other grains; and because of P.L. 480"s role in increasing government import revenues. Specifically, wheat support prices and production were bolstered in Brazil, while in Colombia rice production benefited because rice producers possessed greater political power than did wheat farmers and because of rice"s higher price elasticity. A 54-item reference list (l958-78) in English and Spanish and country data results are appended.