Italy and China Agri-Food Trade: Integration, Similarity and Competition

The paper looks at the increasing integration of China into the world market, with a specific focus on agricultural and food trade and on the Italian market. Agricultural trade among Italy and China has been limited to secondary products, especially originated in the livestock sector. However, in the last decade exchanges have been constantly increasing and the set of products changing deeply. Specifically, Italian exports to China have been specialising towards the typical "Made in Italy" processed products, showing a potential market for Italian agricultural and food products. In order to test the opportunity and the risks of the integration of China into the world agro-food markets, some similarity indices have been calculated, with refer to two different markets: the EU-15 and the Chinese market. In the first case the similarity of Chinese exports with those of some EU partners on the EU-15 market was considered; in the second the similarity of exports of some EU Member States to China was calculated. Taking into account the different level of quality of agro-food products, the main result of the analysis is that Chinese products entering EU are more complementary than similar to the EU products; at the same time, China is a great potential market for EU products, and Italy will compete with other EU countries in the gain of quotas on the Chinese agro-food market.International trade, similarity index, agri-food trade, International Relations/Trade, F1, Q17,

Old and new partners: similarity and competition in the EU foreign trade

The paper analyses the trade relationships among EU- 15 members and some emerging partners: the NMS, Turkey and China. The EU enlargement to 10 countries has modified quite remarkably the features of agri-food trade in Europe. Some of the NMS, such as Poland, Hungary and the Check Republic, contribute to a large extent to the international agri-food trade and, since the beginning of the process of EU accession, have modified dramatically the exchanges with the EU- 15. More recently, other countries are facing new relationships with the EU: Turkey and China. Turkey is a large Mediterranean country and, as a candidate to the EU accession, enjoys a differential treatment in the agri- food trade relationships with the EU. China can be considered as a new international competitor, growing at faster pace after having joined the WTO and increasing its agri-food trade exchanges with the EU. The analysis will focus on the measurement of the similarity of agri-food exports of Italy and other EU-15 member States with the new partners to the EU- 15 market. It will be carried out with the support of three different indicators: the export structure similarity index (ES), the product similarity index (PSI) and the quality similarity index (QSI), using the Eurostat database with an eight "digit" merchandise disaggregation and with reference only to agri-food exchanges. It can be concluded that the similarity is quite low, especially if compared to that of the exports of the EU- 15 countries to the EU market. Moreover, looking at the level of quality of export products, it is highlighted how quality remains a crucial factor for Italian and European agri- food products to compete with external products. Keywords : International Competitiveness, Export Similarity, EU Agri- Food Market, EU Enlargement.International Relations/Trade, F1, Q17.,

The fortune of modulation in the process of CAP reform

Direct payments have progressively become the largest and most visible form of support in the CAP tool-box. Analyses on direct payments have always highlighted a large inequality in their distribution, both between Member States and, within them, among farmers and territories where, on one side, a relevant amount of payments is concentrated in the hands of a few beneficiaries; on the other, a small share of support is divided among many heads. The European Commission has faced the problem of the volume and the distribution of the direct payments with two main instruments: the modulation and the capping. Modulation was originally conceived as a temporary tool aimed at filling the gap between pillars, but in the last years it has changed shape and rules alongside with the CAP process path and it has become one of the milestones of the CAP tool-box. The capping has received high attention during each step of the recent CAP reform process, however, it has been never implemented so far. Both the instruments have relevant implications about the total amount of payments received by farms and by the Member States and about their distribution; however, the way they are implemented and combined together is crucial to fully evaluate their effects. The main goal of this paper is to reconstruct the evolution of modulation in the process of CAP reform, from the voluntary one launched by Agenda 2000 till the most recent proposal of the CAP Health Check, that combines in one single tool modulation and direct payments’ capping. Simulations of the most recent proposal of modulation show that the goal of Pillar 2 reinforcement has prevailed over the distributional one, through the creation of a sort of national envelope that shifts resources from Pillar 1 to Pillar 2, even though it is not very clear so far how and for what that envelope will be spent. Moreover, the capping goal within the progressive modulation is not very effective and only affects to some limited extent direct payments in few Member States.CAP Budget, CAP Pillars, Health Check, Rural Development Policies, Agricultural and Food Policy, Political Economy, Q18,

The Consistency of Rural Development Policies with the Position of the European Union on NTCS

The set of policy tools that the EU puts under the heading of Rural Development is extremely heterogeneous, such heterogeneity translates into a different degree of coupling support with agriculture production and also brings out the need to discuss the actual consistency of such tools with the UE position on NTCs at WTO. Examined in the present work are the Rural Development Plans (RDPs) and the Regional Operative Plans (ROPs) recently approved by the European Commission for the Italian Regions. The analysis is of a purely qualitative type and is based on currently available information, that is, the measures and the relative project typologies approved within the Plans. Taking into account the EU position on NTCs and their relation with multifunctionality we look at the tools applied for Rural Development in Italy with respect to their degree of de-coupling, production of externalities/non marketable goods and consistency with the EU position on NTCs. Financial allotment by measure typology is also examined. We found out that the present set of actions that fall under rural development is still dominated by a sector−based intervention, even in the case of measures aimed at safeguarding the environment, the least contestable ones. Paradoxically, the measures aimed at the promotion of Rural Development and at training, that better respond to the NTC objectives, are those for which the least resources are located.Non trade concerns, multifunctionality, rural development policies., Community/Rural/Urban Development,

Agri-food exports and the enlarged european union

This paper explores agri-food export dynamics in New Member States (NMS) and Old Member States (OMS) of the European Union during the enlargement process. A quality-oriented survey is conducted by developing an original analytical framework which combines information from trade similarity analysis with elements from the sophistication literature. Country and sector specific features seem to emerge, revealing a more complex picture than that produced by aggregated trade analysis. While for some NMS agri-food exports, patterns converge towards OMS with regard to size, competitiveness and quality improvement process, for other NMS, a low-quality trap seems to prevail.Agri-food sector, export dynamics, EU enlargement, quality upgrading

Sophistication and Performance of Italian Agri‐food Exports

Nonprice competition is increasingly important in world food markets. Recently, the expression ‘export sophistication’ has been introduced in the economic literature to refer to a wide set of attributes that increase product value. An index has been proposed to measure sophistication in an indirect way through the per capita GDP of exporting countries (Lall et al., 2006; Haussmann et al., 2007).The paper applies the sophistication measure to the Italian food export sector, moving from an analysis of trends and performance of Italian food exports. An original way to disentangle different components in the temporal variation of the sophistication index is also proposed.Results show that the sophistication index offers original insights on recent trends in world food exports and with respect to Italian core food exports

Agricultural Expenditure in the Future European Union Budget

Agricultural and Food Policy, Agricultural Finance,

The impact of the reform of the milk quota regime on the Italian dairy sector

This paper analyses the impact of the milk quota regime reform, actually under discussion, on the European countries with a detailed focus on the Italian milk and dairy sector. The dismantling of the milk quota regime is already on the EU agenda, but how and when to do it is still matter of debate. A possibility is to enlarge gradually the size of the national quotas, up to the full dismantling in 2015 (“soft landing”). Meanwhile, the discussion on Health Check of the CAP is under way. In this work we analyse the possible impacts of the reform of the milk quota regime on the basis of a Computable General Equilibrium (CGE) approach, using two models in sequence: the Global Trade Analysis Project (GTAP) model is used to evaluate the impacts of different scenarios of milk quota reform on the EU market and to compute the price changes outside Italy; these, in turn, are used as inputs for the MEG-D model, that focuses on the Italian milk and dairy market. The two models were run together with two specific objectives: the first was to avoid, in evaluating the impacts of reform of the milk sector regime in Italy, running the model with rough price estimates taken for secondary sources; the second, to have more specific results on the outcome at the national level. Particularly, the model takes in account the particular relevance of quality products (GDO) in Italian diary sector. In order to evaluate the impact of the “soft landing” reform scenario, we run a “comparison” scenario where the milk quotas are fully abolished in the 2009.Milk and dairy sector, Quota production, EU Agri-Food Market, PAC, Agricultural and Food Policy, Livestock Production/Industries,

The effects of decoupling on Italian COP sector: an ex-post evaluation

One of the main objectives of the 2003 CAP reform was that to enhance farm competitiveness and make farmers able to catch market signals and adjust their production level and specialization accordingly. The aim of the paper is to evaluate the effects of decoupling in Italy COP sector comparing the estimated results of some structural and economic indicators of a sample of farms before and after the 2003 reform using data from the Italian Institute of Statistics and of the Italian Farm Accountancy Data Network (FADN). The analysis shows an improvement of income in farms that kept COP production specialization through the years under study. At the same time, farms that opted for a different specialisation in the post reform period improved their economic performance. All this suggests that coupled support had become a constraint rather than an opportunity and that the 2003 reform, decoupling farm support from production, has contributed to a more efficient and market-oriented COP sector in Italy.CAP, decoupling, Italian FADN, COP sector, Agricultural and Food Policy, Q18,