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,

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,

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,

The Effects of Energy Price Increases on Dutch Horticulture

This paper elaborates on the effects of a rise in energy costs for Dutch glasshouse horticultural producers. The effects on production, bilateral trade and consumption in 25 European countries plus Morocco, Turkey and the Rest of the World, are estimated using a version of the HORTUS partial equilibrium supply and demand model. This model includes 11 sorts of fruit and vegetables, and two categories of ornamental plants and flowers. As energy, especially natural gas, is a major intermediate input in Dutch glasshouse horticulture, it has potentially large impacts on producers and trade. The results indicate that a 10 percent increase in energy prices could cause significant shifts in production and trade flows, as well as some changes in consumption patterns. The effects are larger for more export oriented products, and dependent on the nature of competition on foreign as well as domestic markets.energy costs, glasshouse vegetables and flowers, model of international trade, Crop Production/Industries, Resource /Energy Economics and Policy, F15, F17, Q17,

Promoting Floriculture Using VAT Regulation

In twelve EU countries, the lower VAT-tariff is applied to flowers and plants in order to promote the production and employment in floriculture. This paper assesses whether the VAT-regulation for flowers and plants achieves the goals set – promoting consumer demand and production and employment in the ornamental supply chain - (effectiveness) and at what cost (efficiency). The empirical results show that the VAT-regulation for floriculture is effective, but not very efficient.Flowers and plants, Economic policy evaluation, Value Added Tax (VAT), Marketing,

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

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

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

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