Global Food Production under Alternative Scenarios

global food production, agriculture trade liberalisation, climate policy, EU agricultural subsidies, economic recession, Agribusiness, Q17, Q18, Q54,

The Next WTO Round on Agriculture and EU Enlargement: Pressures on the EU Dairy Sector

The EU dairy sector will be one of the most sensitive sectors to be affected by the outcome of the on-going negotiations for the new WTO round for agriculture. Nevertheless, if the Next WTO Round is going to be along the same lines as the Uruguay Round, the EU may be able to stay within the WTO commitments for export subsidy in the dairy sector without further reforms in the Common Agricultural Policy. Certainly, some minor reforms are needed to relieve the binding commitments for cheese and other milk products. The upcoming reform in the dairy sector under Agenda 2000 starting from year 2005 may help in reforming the dairy sector for the new round. In contrast, a steeper reduction in the export subsidy commitments compared to the Uruguay Round may cause problems for cheese and other milk products because the majority of exports in these products will have to be exported without any export subsidy. After enlargement, in particular with a steeper reduction formula, the EU may face troubles in the categories of butter, skim milk powder, cheese, and other milk products. The reforms under Agenda 2000 may not be sufficient because the difference between the EU internal market price and world market price is still too high for EU dairy products to allow unsubsidised exports to the world market. The EU internal market will have to absorb the dairy products intended for the export market. Consequently, the EU internal market for dairy products will be under pressure for further price reduction, and the EU world market share in dairy products will shrink.EU, WTO, enlargement, dairy sector, export subsidy, International Relations/Trade,

The Effects of China's Tariff Reductions on EU Agricultural Exports

China's accession to the WTO means significant increases in export opportunities for China's trading partners. This study attempts to identify and measure quantitatively the effects of changing economic environment and trade policies on China's agricultural imports from the European Union (EU). The approach is to estimate demand functions for China's agri-food imports from the EU using semi-annual data from 1980 to 2000. The demand functions are used to measure the impacts of relative-price and trade policy changes on EU agricultural exports to China. The results suggest that in China, there is a relatively strong demand response for agrifood imports to changes in income and prices. Furthermore, the results indicate that relative-price variations affect significantly the export market shares of the EU. Trade liberalisation in the form of tariff reductions is found to be relatively significant in changing the quantity of agri-food imports demand from China.China, WTO, agricultural trade, tariffs, demand functions, estimation, International Relations/Trade,

Implications of Trade Liberalization and Domestic Reforms on EU Agricultural Markets

The objective of this paper is to explore the overall effects of further trade liberalization and the implemented CAP reforms on EU agricultural production, imports and exports within different EU regions by using the Global Trade Analysis Project (GTAP) model. The GTAP model is used to compare a lower tariff reduction formula (EU Proposal) with a higher reduction formula (US Proposal) in order to show how sensitive the examined agricultural commodity/sector is to the different tariff reduction formulae. This analysis reveals that EU imports would escalate and EU exports would plummet with declining EU production because of trade liberalization and domestic policy reforms in the EU agricultural markets and sectors.EU, WTO, CAP reforms, tariff reductions, export subsidies, Agricultural and Food Policy, Agricultural Finance, Demand and Price Analysis, Environmental Economics and Policy, Financial Economics, International Relations/Trade, Q1,

Expansion of Mercosur's Agricultural Exports to the EU: An Empirical Assessment of the Trade Flows

This paper provides new evidence on income and price elasticities of demand for agricultural exports from Mercosur countries to the EU. Econometric models are constructed for eight agricultural commodities - beef, cocoa, coffee, orange juice, poultry, sugar, soya and wheat - exported from Mercosur to the EU. A modelling approach based on the error correction mechanism is used in order to emphasise the importance of the dynamics of trade functions. The results indicate that there is a relatively weak demand response to income and price changes in the EU. However, the results also suggest that relative-price variations affect significantly the demand for Mercosur commodity exports, implying that the exporter's market share is influenced by price competitiveness.agricultural trade, European Union, Mercosur, econometric models, cointegration, International Relations/Trade, C22, Q17,

First filter test of market power in Finnish food retailing sector

Buyer power and competition policy in food supply chains has emerged as an important economic issue and a highly sensitive item on the policy agenda all around the world. Claims that large retailers and food companies are depressing farm prices because of their market power have been made in many countries around the world (Swinnen and Vandeplas, 2009). Arising concentration of retailer sector increases the concern of existence and gradual growth of buyer power in this sector. The key reason is that the growing buyer power may have the effect of considerably distorting both retail and producer competition, and eventually it may damage economic welfare. In Finland, the increased concentration of the retail sector, with fewer outlets and the growth of the large supermarket chains, has been particularly fast. The two leading Finnish retail chains of food and daily goods increased their market share from 55 per cent in 1990 to nearly 75 per cent in 2008 (Niemi and Ahlstedt 2009).. The purpose of this paper is to investigate the possible existence of buyer power in Finnish food retail food industry. In details, we follow an approach used by Lloyd et al (2009) to measures oligopoly and oligopsony market power in the Finnish food retail industry. This offers a ‘first-filter’ test of price data that may be used as part of the preliminary analyses into the presence of buyer power in food markets. In practice, we apply a vector error correction mechanism (VECM) to perform two-stage tests: First is to test the hypothesis of cointegration between the supply and demand price indices with expected signs for the coefficients irrespective of the degree of retail competition; second is to test the null hypothesis of the perfect competition. The model also serves as a useful device for characterising how prices are transmitted in food market, albeit in simplified form.concentration, market power, VECM, Agribusiness, Agricultural and Food Policy, Community/Rural/Urban Development, Food Consumption/Nutrition/Food Safety, Labor and Human Capital,

Agricultural policy analysis in Finland with the AGMEMOD model: Lessons to be learnt?

The objective of this paper is to assess empirically the impacts of further reform of the Common Agricultural Policy (CAP) on the agri-food sector in Finland. To meet the objective, an econometric model for Finnish agriculture - built as a part of the AGMEMOD project - was utilised. The projection and policy simulations presented in the paper demonstrate that the model provides the basis for relatively straightforward baseline projection, and an initial framework for agricultural policy analysis. Yet, there remains substantial scope for further work on the model. In particular, the effects of big policy shocks are clearly not adequately captured by the model. The linear equations of supply together with low elasticities estimated from historical data generate simulation results, which do not in our opinion fully capture farmers’ reactions to these changes.policy analysis, econometric models, Finland, commodity markets, Agricultural and Food Policy, C54, E17, Q18.,

Renationalization of the Common Agricultural Policy: Mission Impossible?

The Common Agricultural Policy (CAP) of the EU does not currently meet the different needs of diverse agricultural conditions of different member countries in a just and equal way. To meet this challenge has become inevitably more difficult as new and diverse Central and Eastern European countries have entered the Community. Several commentators and economists have thus suggested that a renationalization of the CAP would be an applicable way to proceed in an attempt to pursue a policy sensitive enough to national and regional or local needs and priorities. Renationalization mainly deals with two issues: (i) should member states have more power and freedom on decisions of agricultural policy, and (ii) should there be a shift from common financing back to national funds? This paper discusses these issues from a political-economy perspective.CAP, Renationalization, Regionalization, Subsidiary, Agricultural and Food Policy,