Preference erosion effects on the agricultural sector of the EU’s Mediterranean Partner Countries

This paper analyses preference erosion effects on the agricultural sector of the EU’s Mediterranean Partner Countries (MPCs) with the partial equilibrium multi-commodity multi-region world trade model AGRISIM. Supposing that the preferences to the MPCs granted by the EU remain as of 2001 then the effects are evident for high protected markets like beef in Turkey, milk and rice in Morocco and olive oil in the MPCs. Supposing a free trade area between the EU and the MPCs, then the impacts are high for beef, milk and sugar. The farmers’ income decreases, but the consumers and the taxpayers benefit from lower prices and the overall welfare in all MPCs increases.preference erosion, multilateral liberalisation, Mediterranean Partner Countries, AGRISIM, Agricultural and Food Policy, Q17, Q18, Q13,

Evolution of olive oil import demand structures in nonproducing countries: the cases of Germany and the UK

Consumption patterns of olive oil have changed over recent years influencing the supply chain. The consumption has increased in countries where olive oil is not part of the traditional diet as for example Germany and the UK, where the average consumption grew by 11 and 13% respectively during the period 1995-2003. The opening of new non-traditional markets has shifted exports and re-structured the supply chain. Mediterranean countries have been the traditional suppliers of olive oil with the EU Mediterranean Member States being the main exporters and with the non-EU Mediterranean countries trying to gain market shares in the EU markets in an attempt to benefit from the preferential access due to the Barcelona Agreement. This paper tries to identify which factors influenced olive oil demand of non-traditional consumers using Germany and the UK as case studies with the help of a gravity model. The results of the random effects models corrected for serial correlation and heteroskedasticity indicate that the Barcelona Agreement has boosted the non-EU Mediterranean exports to Germany and the UK while olive oil exports are positively related to direct marketing strategies and tourism, implying that these factors have the largest impact on the olive oil exports from producing countries and consequently on the overall supply chain.Olive oil, gravity model, import demand, Germany, UK, Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety,

CAP Reform and the Mediterranean EU-Member States

In the previous years the Mediterranean Member States of the EU came across the Reform of the CAP and especially last year faced the second wave of the Reform for three typical Mediterranean products, namely cotton, olive oil and tobacco. In this paper a partial equilibrium model is used to simulate the impacts of decoupling, as a key point of the decided CAP Reform. The second wave of the Reform appears to be of crucial importance for the southern EU countries and although the producer's income is reduced, there are positive welfare effects.decoupling, partial equilibrium model, CAP reform, Greece, Italy, Spain, Agricultural and Food Policy, Q18, Q17, D59,

Modelling agricultural policy reforms in the Mediterranean basin - Adjustments of AGRISIM

In recent years the Mediterranean countries encounter a number of changes of the agricultural policy that could influence significantly their agricultural sector and thus their overall economy. They are faced with the ongoing trade liberalisation, the Reform of the Common Agricultural Policy (CAP) of the European Union (EU), since the EU is one of the major trade partners of the Mediterranean countries and the establishment of a Free Trade Area between the EU and the Mediterranean Countries after 2010. The latest is/will be accomplished through the Euro- Mediterranean Association Agreements, was decided in the Summit of Barcelona in 1995 and is particularly up- to date after 2005, 10 years after the establishment of the Barcelona Agreement. These changes are expected above all to influence the trade flows between the EU and the Mediterranean Partner Countries (MPC) and therefore, to have impacts on the production, consumption, domestic and border prices and welfare. Aim of the paper is to discuss methodological issues connected with the modelling of policy changes in the Mediterranean basin and to provide more insights on the modification of the model AGRISIM so as to make it a suitable tool to analyse the trade flows in the Mediterranean basin.MPCs, Euro- Mediterranean Association, Agricultural and Food Policy,

Explaining German imports of olive oil: evidence from a gravity model

In this study the case of olive oil imports of Germany is examined since olive oil is a traditional Mediterranean commodity and Germany is the biggest importer in the EU. A gravity model has been employed so as to analyse those factors that explain the German imports of olive oil that were identified in a preceding analysis of the German olive oil supply chain. The results of two random-effects models corrected for serial correlation and heteroskedasticity suggest that being a Mediterranean Partner country of the EU has the highest impact on trade flows to Germany, thus supporting further Euromediterranean trade integration. The level of trade to Germany is positively related to existence of direct marketing channels and to tourism implying that these factors should be explored more in the future by the Mediterranean countries so as to boost their exports.gravity model, olive oil, Germany, International Relations/Trade,

Shocks in economic growth = shocking effects on agricultural markets?

Projections on the development of agricultural commodity markets underlie a given set of assumptions on economic growth. However, recent economic and financial crisis, as well as signs of quicker recovery in emerging economies, increase uncertainty in the forecasts of macroeconomic developments. This paper analyses the effects of different economic growth scenarios on agricultural commodity markets. In particular we assess the potential impacts of a faster economic growth in emerging economies on the one hand and of a replication of the recent economic downturn on the other hand. The empirical analysis uses the AGLINKCOSIMO model and builds upon the recently published European agricultural outlook of the EU Commission. The simulation results demonstrate that higher economic growth influences demand more than supply, resulting in higher world market prices. Emerging economies tend to import more and stock less in order to cover their demand needs, while the rest of the world increases its exports. In total the ending stocks decrease and combined with the increased consumption, the stock-to-use ratio decreases. Replication of an economic downturn affects the markets differently, depending on how elastic or inelastic the markets react to price signals. Livestock markets appear more stable and do not regain their baseline levels within a 5-year period. The magnitude of the effects is smaller the longer the simulated time path is and certainly depends on the introduced shock.economic growth, agricultural commodity markets, AGLINK-COSIMO, International Relations/Trade,

Supply Chain Analysis of Olive Oil in Germany

Olive oil is a typical product of the Mediterranean basin, where almost all of the world production takes place. Due to campaigns for a healthier way of living, consumption of olive oil has also increased in non Mediterranean countries in recent years. As a result of the expanded demand the different participants in the supply chain of olive oil strengthen their efforts to obtain a higher market share in these non-traditional markets. Germany with 82.5 million inhabitants is of special interest for olive oil producing countries as it serves as an attractive export destination. Although during the period 1997/98 Germany imported only about 2.6 % of the world?s imports of olive oil and consumed about 0.9 % of the world consumption, it is considered to be a very dynamic market (Ward et al., 2002). Olive oil becomes more and more popular in Germany not only through the ?for a healthier life? campaigns but also through immigrants coming from the Mediterranean basin. Another reason for the growing popularity of olive oil is the increasing convergence of the consumption habits of the European people as a consequence of the expanded tourism to southern countries. The Germans are integrating the Mediterranean diet into their own habits and thus changing gradually their way of cooking in using more and more olive oil in their dishes. Against this background this report aims to analyse the supply chain of olive oil in Germany. For this purpose the report is organised in five chapters. Following the introduction, the second chapter deals with the demand and the third one with the supply of olive oil in Germany. Quality and labelling issues related with the consumption of olive oil are discussed in the fourth chapter. In the fifth chapter the institutions and organisations in Germany occupied with olive oil are briefly presented. After the conclusions follows the annex including detailed tables. --

Supply Chain Analysis of Fresh Fruit and Vegetables in Germany

With a population of 82.5 million, the German market is the largest in the EU and therefore of special interest for the trade partners. Despite an unsatisfying economic development in the last years (lowest GDP growth in the EU and rising unemployment, see Table 9 in the annex) Germany is still a very attractive market with well funded consumers. Although agriculture has a small and declining contribution to the country?s gross domestic product, in the wider definition of the agribusiness, it is still one of the most important sectors with regard to turnover and employment. Taking consumers? expenditure for food as a proxy for the total turnover of the agribusiness yields a figure of 240 billion – in 2003, nearly as much as the turnover of the car industry in Germany. In total, 4.5 million people are employed in the agribusiness, which is 11.6% of Germany?s total labour force. Among agricultural markets, the market of fruit and vegetables is of special interest for the trade with Mediterranean countries and also of special importance for the food industry and the food consumption. In 2003 consumers? expenditure for fresh fruit and vegetables were more than 10 billion ?. The processing industry of fruit and vegetables generated another 6.5 billion – turnover, demonstrating the importance of fruit and vegetables in Germany. Bearing in mind that the self sufficiency ratios for fruit and vegetables in Germany are low (13% respectively 50%), the extent of market opportunities for the Mediterranean countries become obvious. Against this background it is the objective of this report to analyse the supply chain of fresh fruit and vegetables in Germany. In the second chapter the current market situation is briefly presented with regard to production, consumption and trade in Germany. Other aspects covered in this chapter are the demographic structure in Germany, important consumer trends and food quality issues. The third chapter is devoted in depth to the analysis of the supply chains for both fruit and vegetables. In this chapter the different actors and market channels are described with regard to their task and importance in the supply chain. In the fourth chapter the overall institutional structure is analysed. After the conclusions in the fifth chapter extensive tables and figures can be found in the annex. --

Shocks in economic growth = shocking effects for food security?

The recent economic and financial turmoil raises the question on how global economic growth affects agricultural commodity markets and, hence, food security. To address this question, this paper assesses the potential impacts of faster economic growth in developed and emerging economies on the one hand and a replication of the recent economic downturn on the other hand. The empirical analysis uses AGLINK-COSIMO, a recursive-dynamic, partial equilibrium, supply-demand model. Simulation results demonstrate that higher economic growth influences demand more than supply, resulting in higher world market prices for agricultural commodities. Emerging economies tend to import more and to stock less in order to cover their demand needs, while the rest of the world increases its exports. The modelled faster economic growth also helps developing countries to improve their trade balance, but does not necessarily give them the incentive to address domestic food security concerns by boosting domestic consumption. A replication of an economic downturn leads to lower world prices, and while the magnitude of the effects decreases over time, markets do not regain their baseline levels within a 5-year period. Due to the lower world market prices, developing countries import more and increase their per capita food calorie intake. However, as developing countries become more import dependent, this also implies that they become more vulnerable to disruptions in agricultural world markets.JRC.J.4-Agriculture and Life Sciences in the Econom

Trade openness and investment in North Africa: A CGE application to deep and comprehensive free trade areas (DCFTAs) between the EU and respectively Egypt, Morocco and Tunisia

The aim of this paper is to provide an impact analysis of deep and comprehensive free trade areas (DCFTAs) between the European Union (EU) and most of the North-African (NAF) countries – namely Egypt, Morocco and Tunisia. Scenarios are modelled with MAGNET, a general equilibrium model, and focus on trade liberalisation including non-tariff measures (NTMs) on the one hand, increases in foreign direct investments (FDIs) and capital flows on the other. They assume either broad productivity gains in all sectors of NAF countries, or targeted productivity gains in the agricultural sector aiming to reduce losses (waste) in NAF countries' agricultural production, post-harvest handling and storage. Results suggest that economic growth is stimulated mostly by widespread productivity gains, and boosted by trade liberalisation. Positive impacts on economic growth could thus be intensified by combining pro-investment policies with comprehensive trade liberalisation, especially the removal of NTMs. The effects on jobs and food security remain ambiguous.JRC.J.4-Agriculture and Life Sciences in the Econom