THE CAP AND THE AUSTRIAN AGRICULTURAL SECTOR: IMPACTS OF POSSIBLE FUTURE MILK MARKET REGULATIONS

The European milk market is regulated by a quota system, which is limited by March 2015 for the time being. Using Austrian FADN data and applying a mathematical programming model, the impact of the CAP reform on Austrian farms with milk quota endowments as well as the impact of future milk market regulations after 2015 will be analysed. Possible options include either a continuation of the quota system or its abolishment. The model simulations show that in the scenario referring to 2008 most farms are better off due to the Austrian implementation of the CAP reform compared to a pre-reform situation. Whether farms are better off with or without a milk quota system in 2015 depends on the assumed level of the milk price. However, smaller farms are, on average, better off without a quota regulation.2003 CAP reform, milk quota, mathematical programming, Austria, Agricultural and Food Policy, Demand and Price Analysis, Livestock Production/Industries,

Promoting Organic Food: Information Policy Versus Production Subsidy

In developed countries governments aim to increase the market share of organic products. Assuming that organic farming creates a positive externality, we address the question of how this environmental benefit can be internalized best. Using the concept of heterogeneous producers and consumers we compare two policy options to enhance organic supply and demand with respect to their efficiency and distributional effect: First, we analyze the effect of a supply-side oriented policy like a subsidy on organic production. Second, we compare this policy measure to a demand-side oriented information policy, which aims to enhance the acceptance and identification of an organic food label. Third, we assume a mix of both policy measures. The main findings of this paper are that conventional consumers and organic producers and consumers experience a gain in welfare. The efficiency of any policy measure considered strongly depends on the utility enhancement experienced by organic consumers due to an information policy and the costs of transferring the information to the consumer.organic food, labeling, production subsidy, information policy, welfare, Agricultural and Food Policy, D61, D62, L15, Q18,

PROMOTING ORGANIC FOOD: INFORMATION POLICY VERSUS PRODUCTION SUBSIDY

Governments in developed countries aim to increase the market share of organic products as a possibility to improve the environment or animal welfare or as a reaction to food crises and changing consumer preferences. Assuming that organic farming creates a positive externality, we address the question of how this environmental benefit can be internalized best. We use the concepts of heterogeneous producers with different unit production costs and heterogeneous consumers with different preferences for conventional and organic food, and compare two policy options to enhance organic supply and demand with respect to their efficiency and distributional effect: Firstly, we analyze the effect of a supply-side oriented policy like a subsidy on organic production on equilibrium prices and quantities, and producer and consumer welfare. Secondly, we compare this policy measure with a demand-side oriented information policy, which aims to enhance the acceptance and identification of an organic label. The main findings of this paper are that in either case, producers and consumers of conventional food are worse off, organic producers and consumers experience a gain in welfare, but the change in welfare is identical under the two policy options.Marketing,

Spatial Competition of Milk Processing Cooperatives in Northern Germany

In this paper we develop a theoretical model of competition among marketing cooperatives (co-ops) in a spatial market setting assuming uniform delivered pricing and Loschian conduct. The model is an extension to Alvarez et al.'s (2000) spatial competition model for investorowned firms (IOF). Theoretical results include i) that the prices for raw milk are, ceteris paribus, higher in a pure market of coops than in a pure IOF market; ii) that even coops may imperfectly transmit price changes upstream; and iii) that the price farmers receive for their raw product is a function of economic space (distance times transportation costs) between coops. We test our theoretical findings for milk processing co-ops in Northern Germany using data of monthly average farm-gate prices for raw milk between 1999 and 2003 and estimating a reduced form regression model. Empirical results confirm our theoretical findings to a great extent.spatial competition, oligopsony, milk processing, cooperatives, Agribusiness, L13, Q13,