Agriculture versus fish – Norway in WTO

The Norwegian agriculture is highly protected and subsidised. The opposite is the case for fisheries and fish farming which suffer from foreign market restrictions. Using a computational general equilibrium model, the gain for Norway of a complete elimination of food subsidies and tariffs is estimated to be in the range of 1.2 - 2.7 per cent of GDP. Most of this gain stems from domestic farm sector iberalisation. The gain from free market access for seafood is estimated to 4.4 per cent of the seafood export value. Consequently, Norway has much to gain from offering other countries market access for agricultural products. In return, Norway should demand free access for their fish products.general equilibrium model; cost of agricultural policy; trade liberalisation; food industry; fisheries.

Can a Warmer Climate Save Northern Agriculture?

Agriculture at high latitudes is expected to be a main beneficiary of a man-made climate change. A numerical model, using Norway as a case, is employed to analyze the impacts of a warmer climate on northern agriculture. The computations indicate that the current degree of self-sufficiency can be achieved with less budget support and higher economic welfare. However, it may be argued that environmental goods, such as landscape and biodiversity preservation, and rural settlement, are more important than self-sufficiency for northern agriculture. It is demonstrated that, in that case, welfare gains are substantially lower, and can even be negative.climate change, northern agriculture, environmental goods, numerical model, Environmental Economics and Policy, Resource /Energy Economics and Policy, L52, Q18, Q24,

Efficiency losses in milk marketing boards – the importance of exports

A milk marketing board (MMB) is a legislatively specified compulsory marketing institution, and a common way to regulate markets for dairy products. MMBs are based on price discrimination. As price discrimination leads to unequal profitability between products, receipts from sales are pooled and farmers receive a single price adjusted for composition and quality. It is well documented that price discrimination through MMBs incurs an efficiency loss to the society. Earlier contributions, Ippolito and Masson (1978) and Serck-Hansen (1979), point to the fact that a particular high loss is incurred if export of dairy products is included in the MMB. It proves difficult to find examples where this is the case. MMB countries are either large with a low export share in dairy products (USA and Japan), have economies of scale (Australia) or exports are excluded from the MMB arrangement (Canada). We find Norway to be the only example. Using a numerical model of the Norwegian agricultural sector we show that substantial efficiency gain may be achieved by deregulating the dairy sector, mainly due to the elimination of exports. It is estimated that a transition to cost based pricing may increase the economic surplus by 1.4 billion NOK, which is 25 % of the production value. This computed gain from deregulation is far larger than for the other MMB-countries.Dairy policy; milk marketing boards; price discrimination; deregulation; numerical model.

Multifunctionality of Agriculture: An Inquiry Into the Complementarity Between Landscape Preservation and Food Security

Without support, the levels of agricultural public goods will fall short of the demand in high cost countries like Norway, Finland and Iceland. However, as demonstrated in this paper using Norway as a case, the current support and agricultural activity is far out of proportions from a public goods perspective. Model simulations show that at most 40% of the current support level can be defended by the public good argument. Furthermore, the present support, stimulating high production levels, is badly targeted at the public goods in question. Since agricultural land is a major component of both food security and landscape preservation, thus giving rise to a high degree of cost complementarities between the two public goods, it would be more efficient to support land extensive production techniques, than production per se.food security, landscape preservation, public goods, agricultural policy, numerical model, Food Security and Poverty, Land Economics/Use,

Copenhagen meets Doha: Greenhouse gas emission reduction and trade liberalization in Norwegian agriculture

As a result of substantial government support, Norway is more or less self-sufficient in its main agricultural products. This contributes to both trade distortions and higher greenhouse gas (GHG) emissions. In multinational negotiations separate efforts are being made to liberalize trade (through the World Trade Organization) and to reduce global GHG emissions (through the United Nations). Using a model of Norwegian agriculture, we explore interconnections between trade liberalization and GHG emission reductions. We show that the Doha proposals would involve no major cut in either agricultural production or GHG emissions due to weakness in the disciplines on trade distorting support. We contrast further trade liberalization and the use of a carbon tax to achieve emission reductions. Trade liberalization involves relatively large impacts on agricultural activity. Trade distortions decrease, and, economic welfare increases substantially due to lower production. For a high cost country like Norway, this indicates that the GHG abatement cost is negative in the sector if no value is attributed to agricultural activity beyond the world market price of food. A more targeted policy to reduce GHG emissions is to use a carbon tax. Compared to the trade liberalization case, both production and land use can be kept at a higher level with only a modest decrease in economic welfare. The side-effect is, however, higher trade distortions.Agricultural and Food Policy, Environmental Economics and Policy, International Relations/Trade, Resource /Energy Economics and Policy,

Activity level, emission intensity, and optimal GHG abatement policy: An application to Norwegian agriculture

Despite the failure of the U.N. Copenhagen climate conference in December 2009 efforts are continuing to reach agreement on binding global commitments on greenhouse gas (GHG) emissions. At the same time, efforts are still underway to conclude the Doha Round of trade negotiations through the World Trade Organization (WTO). Both of these agreements could have a significant impact on the level of activity in agriculture and the GHG emissions that it generates. In this paper we explore strategies to comply with both trade liberalization and GHG emission reduction commitments. We examine the implications of trade liberalization and a carbon tax, both of which affect agricultural output, as means of achieving emission reductions. We emphasize two diametrically different responses to a carbon tax. One adaptation is to change the way agricultural commodities are produced, i.e., choosing less polluting techniques, which we argue will require more land per unit of output. The second response is to use agricultural land for carbon sequestration purposes (offsets), e.g., for perennial grasses or forestry. We show that when an offset option is introduced, production intensity tends to increase, such that emissions per unit of output rise. The theoretical results are illustrated by using a partial equilibrium model of the Norwegian agricultural sector.Environmental Economics and Policy,

Agriculture versus fish – Norway in WTO

The Norwegian agriculture is highly protected and subsidised. The opposite is the case for fisheries and fish farming which suffer from foreign market restrictions. Using a computational general equilibrium model, the gain for Norway of a complete elimination of food subsidies and tariffs is estimated to be in the range of 1.2 - 2.7 per cent of GDP. Most of this gain stems from domestic farm sector liberalisation. The gain from free market access for seafood is estimated to 4.4 per cent of the seafood export value. Consequently, Norway has much to gain from offering other countries market access for agricultural products. In return, Norway should demand free access for their fish products

Efficiency losses in milk marketing boards - the importance of exports

A milk marketing board (MMB) is a well known instrument for regulating the markets for dairy products. MMBs are based on price discrimination, and receipts from sales are pooled so that the farmers receive a single price adjusted for composition and quality. Using a numerical model, we find that the economic welfare cost of the Norwegian MMB, is as much as 26.3% of the milk production value. This computed cost is far larger than for the other countries with MMBs. The main reasons are that exports are a major ingredient of the Norwegian system, and that production costs are very highMilk marketing boards, Norwegian dairy policy, price discrimination

Multifunctionality of agriculture: An inquiry into the complementarity between landscape preservation and food security

Without support, the levels of agricultural public goods will fall short of the demand in high cost countries like Norway, Finland and Iceland. However, as demonstrated in this paper using Norway as a case, the current support and agricultural activity is far out of proportions from a public goods perspective. Model simulations show that at most 40% of the current support level can be defended by the public good argument. Furthermore, the present support, stimulating high production levels, is badly targeted at the public goods in question. Since agricultural land is a major component of both food security and landscape preservation, thus giving rise to a high degree of cost complementarities between the two public goods, it would be more efficient to support land extensive production techniques, than production per se.Food security; landscape preservation; public goods; agricultural policy; numerical model.

How Effective are WTO Disciplines on Domestic Support and Market Access for Agriculture?

A new round of trade negotiations under the World Trade Organization (WTO) was launched in 2001. One of the major aims of the Doha Development Round is to reduce agricultural protection and impose greater discipline on domestic agricultural subsidies, particularly those that are the most trade distorting. In this paper we examine whether the proposed WTO modalities for agriculture will actually achieve this aim in Norway, which ranks among the top providers of government assistance for agriculture. Norway has a complex system of farm subsidies buttressed by substantial import protection. The extent to which its agricultural support policies will have to be changed in response to new WTO disciplines provides an important indication of how successful these are likely to be. We find that Norway will probably be able to sustain its current agricultural activity and production levels while staying within the new WTO rules. Following recent practice in some other WTO members, Norway will be able to reduce its notified support without making real changes in some of its programs. However, there will have to be a shift from market price support, which is paid for by consumers through higher food prices, to budgetary support paid by taxpayers and that could generate internal pressures for policy reform.WTO; Doha-round; domestic support; market access; partial equilibrium model