The EU's Import Regime for Oranges - Much Ado about Nothing?

EU imports of oranges are restricted not only by ad valorem tariffs but also by the entry price system establishing a minimum import price. In addition, the EU applies a comprehensive system of trade preferences. The hypothesis of this paper is that, in contrast to its complexity, the effectiveness of the EU import system for oranges is low with respect to its goals, i.e. protecting EU producers on the one hand an d creating imports from preference receiving countries on the other. The comparison of import prices for oranges from extra-EU countries with the EU entry price shows that the former are about 40% higher than the latter on average. Also, it is pointed out that at least 72% of extra-EU orange imports during the EU harvest season en ter the EU tariff free. As a conclusion, the contribution of the import regime to the protection of EU producers is low. Concordantly, the preferential entry price is not utilized by orange preference receiving countries. Besides, although orange quotas increased from 1991 to 2003, actual exports from Mediterranean countries and thus quota filling rates have decreased o ver the same period. It is shown that EU trade preferences for oranges were not decisive for the development of Mediterranean countries' orange exports to the EU. In the light of the low effectiveness of the entry price system for oranges along with high transaction costs involved, its abolishment should be co nsidered. Yet, results cannot be generalized, even not for citrus fruit, as is demonstrated for mandarins.trade preferences, oranges, tariff rate quota, entry price, International Relations/Trade, F13, Q13, Q17, Q18,

How effective is the EU's import regime for oranges?

EU imports of oranges are restricted not only by ad valorem tariffs but also by the entry price system establishing a minimum import price. In addition, the EU applies a comprehensive system of trade preferences. The hypothesis of this paper is that, in contrast to its complexity, the effectiveness of the EU import system for oranges is low with respect to its goals, i.e. protecting EU producers and creating imports from preference receiving countries. The comparison of import prices for oranges from extra-EU countries with the EU entry price shows that the former are about 40% higher than the latter on average. Also, it is pointed out that at least 72% of extra-EU orange imports during the EU harvest season enter the EU tariff free. As a conclusion, the contribution of the import regime to the protection of EU producers is low. Concordantly, the preferential entry price is not utilized by orange preference receiving countries. Besides, although orange quotas increased from 1991 to 2003, actual exports from Mediterranean countries and thus quota filling rates have decreased over the same period. It is shown that EU trade preferences for oranges were not decisive for the development of Mediterranean countries' orange exports to the EU. In the light of the low effectiveness of the entry price system for oranges along with high transaction costs involved, its abolishment should be considered. Yet, results cannot be generalized, even not for citrus fruit, as is demonstrated for mandarins.trade preferences, oranges, tariff rate quota, entry price, International Relations/Trade,

How effective is the EU Entry Price System for Fresh Fruits and Vegetables?

The EU protects EU growers of 15 kinds of fresh fruits and vegetables against international competition not only by the means of ad valorem tariffs of up to 20%, but also by the EU entry-price system (EPS), which is designed to restrict imports below the product-specific, politically designated entry price level. This study investigates the influence of the EPS on import prices of fruits and vegetables per product and country of origin. We utilise a unique data set comprising about 60,000 observations of daily synthetic import prices. We develop two indicators for the effectiveness of the EPS, which serve as variables in a cluster analysis identifying four classes differing in the relevance of the EPS. Results suggest that the relevance of the EPS is heterogeneous among products as well as countries of origin for most fruits and vegetables. Thus, an adequate assessment of the importance of the EPS requires not only a product-specific but also a country-specific analysis. Overall, our results indicate that the effectiveness of the EPS is highest for the import of artichokes, courgettes, cucumbers, lemons, plums and tomatoes. The influence of the EPS on apples, clementines and pears is significantly lower, and of least relevance for EU imports of apricots, mandarins, oranges, peaches and nectarines and table grapes. The EPS has the greatest effect on countries which neighbour the EU, whereas it is of minor importance for exports from far-away countries with the exception of China and South Africa.threshold cointegration, spatial price transmission, vector error correction model, Agricultural and Food Policy, Demand and Price Analysis,

THE GROWING MIDDLE CLASS IN DEVELOPING COUNTRIES AND THE MARKET FOR HIGH-VALUE FOOD PRODUCTS

The central hypothesis of this paper is that the largest global growth opportunity for high-value food products is the emerging middle class in many developing countries. Using data for Lima, Peru, 20 percent of households are classified as middle or upper class based on the prevalence of ownership of major durable goods, such as refrigerators and automobiles. Monthly expenditures by the middle class on more expensive foods, such as fresh fruit and red meat, and especially for high value-added products, such as food away from home, are substantially higher, markedly so in some cases. By extrapolating from these results for Lima, a minimum per capita gross national income (GNI) of $6,000 is required for an emerging middle class lifestyle. Based on World Bank data for GNI and income distribution, the size of the middle class is estimated for eleven low and middle income countries with large populations or high rates of economic growth. In China there are some 290 million people in the emerging middle class, in India 91 million and in Brazil 58 million, for example.Food Consumption/Nutrition/Food Safety, International Development, Marketing,

INFLUENCES OF THE GOVERNMENTAL MARKET INTERVENTIONS ON WHEAT MARKETS IN SERBIA DURING THE FOOD CRISIS 2007/2008

This paper analyzes how the market interventions of the Serbian government during the food crisis 2007/2008, inter alia a de facto export ban, have affected domestic wheat markets. Besides a comprehensive description of the crisis policy and its effects on the Serbian wheat market, we investigate how it influences the equilibrium and stability of the Serbian wheat market and its integration with the world market within a price transmission model. Applying a Markov-switching error correction model to weekly wheat grower prices in Serbia and world market prices, two states of the wheat market are identified. Our results suggest that although the long-run price elasticity did not change during the crisis, the market equilibrium was disrupted and the market stability reduced. Also, we find that the price dampening effect of the export restrictions was only short-lived, and that Serbian wheat grower prices even increased above the world market level.international market integration, Markov-Switching Error Correction Model, Serbia, wheat market, world market price transmission, Agricultural and Food Policy, Crop Production/Industries, C34, Q11, Q13, Q17, Q18,

ASYMMETRIC PRICE TRANSMISSION IN THE ISRAELI CITRUS EXPORT SECTOR IN THE AFTERMATH OF LIBERALIZATION

The Israeli citrus export sector was liberalized in 1991 with the aim to increase citrus growers income and to improve overall efficiency of the international citrus marketing channel. However, the former government export monopolys activities were mainly taken over by four large companies accounting for over 90% of total Israeli citrus market exports. In addition, citrus exporters maintained the monopolys consignment system, substantially limiting transparency on how the grower price is determined. This lead the government to intervene in the newly liberalized market by implementing a minimum price agreement in the 1994/95 season to protect citrus growers against exporters abuse of market power. In this paper we analyze whether market power was exerted by exporting companies over citrus growers in the form of asymmetric price transmission. Our study is unique in that it investigates vertical price transmission across international borders, i.e. in the context of Israeli grapefruit exports to France. We explicitly account for possible changes in exporters pricing behaviour in the post-liberalization period. We apply an error correction model (ECM) to disaggregated firm-level Israeli grower price and French import price data. An ECM is estimated individually for each of the major exporting companies within a seemingly unrelated regression (SUR) framework. We find asymmetric price transmission in the first years after liberalisation, but symmetry in the second half of the 1990s. Our results indicate that growers losses due to asymmetry amounted to as much as 2.5% of their total revenues. Our results suggest that liberalization improved the efficiency of the Israeli citrus international marketing channel, but that this took time and was probably accelerated by government intervention.Crop Production/Industries, International Relations/Trade,

Asymmetric Price Transmission in the Israeli Citrus Export Sector in the Aftermath of Liberalization

The Israeli citrus export sector was liberalized in 1991 with the aim to increase citrus growers' income and to improve overall efficiency of the international citrus marketing channel. However, the former government export monopoly's activities were mainly taken over by four large companies accounting for over 90% of total Israeli citrus market exports. In addition, citrus exporters maintained the monopoly's consignment system, substantially limiting transparency on how the grower price is determined. This lead the government to intervene in the newly liberalized market by implementing a minimum price agreement in the 1994/95 season to protect citrus growers against exporters' abuse of market power. In this paper we analyze whether market power was exerted by exporting companies over citrus growers in the form of asymmetric price transmission. Our study is unique in that it investigates vertical price transmission across international borders, i.e. in the context of Israeli grapefruit exports to France. We explicitly account for possible changes in exporters' pricing behaviour in the post-liberalization period. We apply an error correction model (ECM) to disaggregated firm-level Israeli grower price and French import price data. An ECM is estimated individually for each of the major exporting companies within a seemingly unrelated regression (SUR) framework. We find asymmetric price transmission in the first years after liberalisation, but symmetry in the second half of the 1990s. Our results indicate that growers' losses due to asymmetry amounted to as much as 2.5% of their total revenues. Our results suggest that liberalization improved the efficiency of the Israeli citrus international marketing channel, but that this took time and was probably accelerated by government intervention.Demand and Price Analysis,

Impacts of Export Controls On Wheat Markets During the Food Crisis 2007/2008 in Russia and Ukraine

This paper investigates the impacts of export controls in Russia and Ukraine on wheat world market price transmission during the 2007/2008 global food crisis. Russia and Ukraine aimed to reduce wheat exports induced by extraordinarily high world market prices to secure sufficient wheat supply on the domestic markets. Utilizing a Markov-Switching vector error correction model (MSVECM), we find that the temporary export restrictions induced negative effects on wheat markets in Russia and Ukraine. Although instability increased on the world markets itself, we have shown that the increase in the market instability was particularly pronounced in Russia and Ukraine. Also, the export restrictions dampened price transmission to the farmers’ prices, which pushed the growers’ prices below their long-run equilibrium level. Thus, investment incentives in wheat production which could result from high world market prices were foregone.International price transmission, wheat market, food crisis, Markov switching error correction model, Russia, Ukraine, Demand and Price Analysis, International Relations/Trade,

HOW DID POLICY INTERVENTIONS IN WHEAT EXPORT MARKETS IN RUSSIA AND UKRAINE DURING THE FOOD CRISIS 2007/2008 INFLUENCE WORLD MARKET PRICE TRANSMISSION?

International price transmission, wheat market, food crisis, Markov switching error correction model, Russia, Ukraine, Agricultural and Food Policy, Demand and Price Analysis, Research Methods/ Statistical Methods,

Considering threshold effects in the long-run equilibrium in a vector error correction model: An application to the German apple market

We propose a three-step procedure to estimate a regime-dependent vector error correction model (VECM). In this model, not only the short-run adjustment process towards equilibrium is non-linear, as in threshold VECM and Markov switching VECM frameworks, but the long-run equilibrium relationship itself can also display threshold-type non-linearity. The proposed approach is unique in explicitly testing the null hypothesis of linear cointegration against the alternative of threshold cointegration based on the Gonzalo AND PITARAKIS (2006) test. The model is applied to apple price data on wholesale markets in Hamburg and Munich, using the share of domestic apples in total wholesale trade as the threshold variable. We identify four price transmission regimes characterized by different equilibrium relationships and short-run adjustment processes. This proposed approach is particularly suitable for capturing irregular seasonal threshold effects in price transmission typical for fresh fruits and vegetables.threshold cointegration, spatial price transmission, vector error correction model, Marketing,