Peeling tomato paste subsidies

The Common Market Organisation (CMO) for fruit and vegetable products is currently evaluated by the European Commission. The evaluation may lead to a reform of the CMO. One of the elements under debate is the production subsidy for processing tomatoes. The processing tomato sector is one of most heavily subsidized sectors in primary production of fruit and vegetables. The current production subsidy equals approximately 50% of producer turnover. This paper evaluates two possible reforms of the processing tomato supply chain: (1) an abolishment of the production subsidy and (2) a replacement of the production subsidy by area payments (decoupling). The evaluation focuses on the impact the reform may have on production and trade patterns of fruits and vegetables in Europe. On the basis of a simulation model, the paper argues that in the first scenario production will shift in the Mediterranean from processing tomatoes and extensive crop production in general towards fruit and fruit vegetables. The abolishment of the production subsidy will lead to a production shift in the direction in which Mediterranean countries have a comparative advantage. In the second scenario, Mediterranean production will remain stuck in extensive crop production: processing tomatoes, extensive vegetables and arable crops. In the first scenario, Mediterranean countries will crowd out North European fruit production. As a result, North European production shifts towards vegetable production. In the second scenario, the impact on North Europe is negligible.International Relations/Trade,

Codes for Tasks and R\'enyi Entropy Rate

A task is randomly drawn from a finite set of tasks and is described using a fixed number of bits. All the tasks that share its description must be performed. Upper and lower bounds on the minimum $\rho$-th moment of the number of performed tasks are derived. The key is an analog of the Kraft Inequality for partitions of finite sets. When a sequence of tasks is produced by a source of a given R\'enyi entropy rate of order $1/(1+\rho)$ and $n$ tasks are jointly described using $nR$ bits, it is shown that for $R$ larger than the R\'enyi entropy rate, the $\rho$-th moment of the ratio of performed tasks to $n$ can be driven to one as $n$ tends to infinity, and that for $R$ less than the R\'enyi entropy rate it tends to infinity. This generalizes a recent result for IID sources by the same authors. A mismatched version of the direct part is also considered, where the code is designed according to the wrong law. The penalty incurred by the mismatch can be expressed in terms of a divergence measure that was shown by Sundaresan to play a similar role in the Massey-Arikan guessing problem.Comment: 5 pages, to be presented at ISIT 2014; minor changes in the presentation, added a referenc

Thought for Food: The impact of ICT on agribusiness

The paper outlines the impact of ICT on the food economy. On basis of a literature review from four disciplines – knowledge management, management information systems, operations research and logistics, and economics - the paper identifies the demand for new ICT applications, the supply of new applications and the match between demand and supply. Subsequently, the paper discusses the impact of new ICT applications on the food economy. The paper relates the development of new technologies to innovation and adoption processes and economic growth, and to concepts of open innovations and living labs.ICT, Food Economy, Innovation and Adoption, Economic growth, Agricultural and Food Policy,

Liberalising EU Imports for Fruits and Vegetables

This paper quantifies the impact of abolishing EU import barriers with respect to fruits and vegetables for sixteen fruits and vegetables. The estimations made are based on HORTUS, a supply and demand model for fruits and vegetables developed at LEI. HORTUS models the production, consumption and bilateral trade in fruits and vegetables for all EU25-countries, Morocco, Turkey and the Rest of the World. The paper shows that trade liberalisation has a large impact on European fruit production and trade. EU fruit production and exports are likely to fall substantially. European vegetable production and exports are relatively sheltered and are likely to benefit from the decline in EU fruit production.trade liberalisation, economic integration, fruits and vegetables, International Relations/Trade, F15, F17, Q17,

Contestability and sunk costs: An analysis of product R&D competition

The paper shows that Bertrand competition and contestability can be reconciled with sunk costs. When average total costs are constant over a range of output, marginal cost pricing does not conflict with the budget constraint faced by firms. Empirical observations support the notion of constant average total costs. When average total costs are constant, there is no trade-off between dynamic economies and static efficiency. The argument is applied to product R&D competition.industrial organization ;

Asymmetric Price Transmission in Food Supply Chains: Impulse Response Analysis by Local Projections

In this paper we set out Jorda’s (2005) method of local projections by which nonlinear impulse responses can be computed without the need to specify and estimate the underlying nonlinear dynamic system. The method is used to compute price reaction functions that show how the prices of the different stages in the supply chain dynamically respond to one another and whether or not these responses reveal any asymmetric patterns. Empirical applications for the US pork-meat and broiler composite chains illustrate the convenience of the method.Agribusiness,