Abstract
Liberalizing trade in world cereals market is neither cure-all, nor perilous: Environmental merits by agricultural trade liberalization would not be so large as indicated by GATT, because the intensive application of chemicals dues not only to the government farm protection, but to other factors such as population density. Increase in food import by industrial countries would make most developing countries better off. World grain market is not so unstable in a long run. But it is necessary to improve production and marketing technology of food in the regions where cereals production would be extended in accordance with an increase in the world price. The structure of world cereals market is not so competitive as an import country's private firms can enjoy the gains of free trade. The demand elasticity of price for Japanese delicious rices is not so high as to allow them to keep their superiority over imported rices.
It is suggested that the government direct intervention in improving environment would be effective. The technological aid for farm peoduction countries would make the world grain market stable. Japan as an importer of food should keep a market power in the imperfect competitive world cereals market for a while. Farmers should compete with foreign producers by diversification of their products.
