Intranational Trade Costs, Reallocation, and Technical Change: Evidence from a Canadian Agricultural Trade Policy Reform

Mark Brown, Shon M. Ferguson, Crina Viju-Miljusevic

Chapter in NBER book Agricultural Productivity and Producer Behavior (2019), Wolfram Schlenker, editor (p. 125 - 155)
Conference held May 11-12, 2017
Published in November 2019 by University of Chicago Press
© 2019 by the National Bureau of Economic Research

The 1995 removal of a railway transportation subsidy for exports of grains from Western Canada led to large aggregate changes in technology adoption and land use. We decompose the impact of the reform on seeding methods and cropping patterns to study how aggregate changes were driven by reallocation versus within-farm adaptation. Using detailed census data covering over 30,000 farms in Alberta, Saskatchewan and Manitoba, Canada we find a range of new results. We find that the reform-induced shift from producing low-value to high-value crops for export, the adoption of new seeding technologies and reduction in summerfallow observed at the aggregate level between 1991 and 2001 were driven mainly by the within-farm effect. In the longer run, however, reallocation of land from shrinking and exiting farms to growing and new farms explains more than half of the aggregate changes in technology adoption and land use between 1991 and 2011.

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This chapter first appeared as NBER working paper w23857, Agricultural Trade Reform, Reallocation and Technical Change: Evidence from the Canadian Prairies, Mark Brown, Shon M. Ferguson, Crina Viju
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