Czech Agrarian Foreign Trade According to the Degree of Processing

Karina PohlováLuboš SmutkaAdriana LaputkováMiroslav Svatoš

DOI 10.7160/aol.2018.100309
No 3/2018, September
pp. 103-118

Pohlová, K., Smutka, L., Laputková, A. and Svatoš, M. (2018) “Czech Agrarian Foreign Trade According to the Degree of Processing", AGRIS on-line Papers in Economics and Informatics, Vol. 10, No. 3, pp. 103-118. ISSN 1804-1930. DOI 10.7160/aol.2018.100309.

Abstract

Added value of Czech agrarian trade is a frequently discussed topic. The goal of the New Strategy of the Ministry of Agriculture with the outlook until 2030 and of the Export Strategy of the Czech Republic for 2012-2020 is to improve the commodity structure of Czech agrarian exports and to increase the proportion of exported processed products and food with high added value. One of the key aspects to understanding the current state of the development of agrarian trade added value is methodology used for trade performance analysis. In fact, there are several methodologies related to attempts to estimate the real state of added value distribution in relation to foreign trade performance. None of the methods seems flawless, each is suitable for a different purpose in understanding the commodity structure specifics. Czech authorities apply methodology originally proposed by Regmi (2005) which, however, does not truly reflect the real state of the current commodity structure. The Research Institute of Agricultural Economics and Informatics is interested in developing its own method suitable for better understanding of the Czech agrarian foreign trade specifics. The objective of this paper is to specify the basic idea of the proposed methodology, to compare it with the already applied methodology and to present basic differences between the old and the new approaches. Presumably, the new classification can serve as a suitable tool for Czech agrarian trade analysis and provides a more precise overview of the degree of processing of traded commodities than other types of categorisation. Its advantages prevail over the disadvantages, which are less important. The new classification of unprocessed and processed products requires regular inspection and more frequent updates, as the 8-digit codes of the customs nomenclature continually change. At the end of the paper the agricultural trade performance is calculated according to the currently applied methodology and also according to the new proposed methodology. The results between both applied approaches are significant especially in mutual relation between processed and unprocessed items share in total trade. There are significant differences both in relation to EU countries and also non-EU countries.

Keywords

Agrarian foreign trade, degree of processing, unprocessed commodities, processed products.

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