The EU Budget and the CAP: An Agenda for the Review?

The promised review of the EU Budget in 2008 offers an opportunity to bring CAP financing into line with logic, justice and the rest of EU policy. Currently, the CAP is unique amongst European policies in being both mandatory and requiring 100 per cent financing by the EU budget. While this made good sense at the policy's inception, it is now an obsolete anachronism. A sensible and defensible agenda for financial reform, which is all that is on the reform agenda at present, is to make the EU budget responsible for only a fraction (say 25 per cent) of the costs of the current CAP, instead of the present 100 per cent. This would bring CAP financing into line with other EU policies, and make member states separately responsible for the balance for their own farmers, as they so wish, up to the CAP budgetary ceiling already agreed. Any resulting competition between member states in the extent and means by which they continue (or not) to support farmers through direct payments would be controlled through EU Competition and single market policies. Such competition would also provide a good opportunity for experiments with policy development, to the advantage of all, since different policies are required for the different stages of development and different local conditions now evident within the EU.     

The Distribution of CAP Benefits among Member States and the Impact of a Partial Re‐nationalisation: A Note

Using an approach based on the PSE/CSE methodology, this paper estimates the distribution of benefits due to the CAP among the EU member states and the impact on them of a CAP partial re‐nationalisation scenario under the current policy mix as well as under full decoupling. Currently, Ireland, Denmark, Greece, Spain and France are found to benefit from the operation of the CAP. Full decoupling increases the benefits to these countries and the losses of Germany and the UK, while it decreases the losses of some others. Re‐nationalisation benefits today's losers, particularly Germany. Overall, the CAP is found to promote cohesion among EU member states, especially when moving closer to full decoupling. Partial re‐nationalisation decreases the CAP effect on cohesion.     

Developments in the Doha Round and WTO dispute settlement: some implications for EU agricultural policy

Progress in the Doha Round is assessed against the changes tothe common agricultural policy (CAP) brought about by the Fischlerreforms of 2003–2004, and that proposed for sugar. Anelimination of export subsidies could place EU exports of processedfoods at a competitive disadvantage because of high sugar andmilk prices. Provided the single payment scheme falls withinthe green box, the likely new limits on domestic support shouldnot be problematic for the post-Fischler CAP. However, an ambitiousmarket access package could open up EU markets and bring pressurefor further reform. If there is no Doha agreement, existingprovisions will continue to apply, but without the protectionof the Peace Clause; and increased litigation is likely. FurtherCAP reform is to be expected.     

Re‐evaluating the Harbinson Proposal – Prospects for the EU25: A Note

In this study, we use the Harbinson Proposal and July Framework to compare a ‘likely’ Doha scenario with a realistic baseline. The novelty of this study is that we focus exclusively on the trade‐led welfare impacts in selected EU member states. The important features of this note are the: (i) usage of the latest Global Trade Analysis Project (version 6) data; (ii) focus on EU25 regions incorporating all major Common Agricultural Policy instruments and reforms; and (iii) inclusion of binding tariff overhangs into the Harbinson tariff reductions. Results show the damping effects of tariff‐binding overhangs on welfare outcomes. This and other factors which limit the gains to liberalisation mean that the EU25 only realises 10% of its long‐run welfare gain potential, as defined by complete liberalisation.     

The End of a Romance? A Note on the Quantitative Impacts of a ‘Brexit’ from the EU

This study suggests UK equivalent variation (EV) gains of €8.9 billion on withdrawal from the EU budget. Factoring in associated trade facilitation costs from the loss of UK access to the single market, annual UK EV losses could be as high as €14.0 billion, with the EU‐28 facing a corresponding loss of €40.4 billion. Interestingly, the extrapolated UK gain arising from withdrawal from the ‘CAP’ component of the EU budget exceeds estimated lower and upper bound trade facilitation costs exclusively on EU agrofood trade. Accordingly, the UK should realistically remain as an EU member, although continue to lobby for reductions in the CAP budget.     

EU agri-environmental programs and the "restaurant table effect"

The share of agricultural area enrolled in EU agri-environmental programs varies significantly between EU member states. These national differences are explained, based on a model that reflects both, that these programs internalize externalities and the political economy. We identify six factors that affect the extent to which agri-environmental programs are implemented: environmental benefits, opportunity costs of participation, budgetary pressure, the share of program expenditures financed by the EU, the political weight attributed to farmers at the national, and the political influence of each country at the EU level. In addition, we demonstrate that, if the policy decision-making process is noncooperative at the EU level, countries that contribute less to the EU budget will ceteris paribus implement more programs. Using data of four years and feasible generalized least square methods, we are able to confirm our theoretical results including a noncooperative behavior of EU member states.     

Unconstrained trade: The impact of EU cage bans on exports of poultry-keeping equipment

This study evaluates the impact of conventional cage bans for laying hens in the EU on exports of poultry-keeping equipment. Using detailed data on international trade in poultry-keeping equipment combined with an event study regression approach yields several new findings. The results suggest that the cage bans were associated with an increase in intra-EU trade, and also an increase in exports of poultry equipment from EU member states to non-EU countries where conventional cages are still permitted. The results suggest that some banned cages were likely exported to countries outside the EU to be used in egg production.     

A quick scan tool to assess the relative prospects of European regions for sustainable agriculture in a liberal market

The European Union (EU) most likely will continue to adapt its Common Agricultural Policy (CAP) to a more liberal market policy. We assume that this process will take place in the next 20 years. A relevant question then is which European regions, under such conditions, have prospects to maintain a sustainable agriculture in terms of the objectives within the ‘People, Profit and Planet’ framework of sustainability. We explored the question by defining simple indicators for the 3 P-objectives, quantifying the indicators per region, ranking the regions per indicator and defining the prospect of a region in comparison to other regions. The approach is very robust, easy to update and indicative for quickly assessing future prospects of regions. The results are presented in three maps showing more than 160 regions of the EU-25 member countries classified according to their agricultural prospects for competitiveness (Profit), employment (People) and land use (Planet). By considering the three maps in combination, the overall prospects for sustainable agriculture under “liberalised” conditions can be assessed. Based on this quick scan, it is concluded that: (a) the few highly developed and highly productive regions in the UK, the Netherlands, France and Germany will out-compete the numerous still poorly developed and low-productive regions in the Southern and Eastern EU member states; (b) these regions in the UK, the Netherlands, France and Germany will maintain their already minimized and highly productive employment at the expense of the member states with a relatively high agrarian employment, notably Poland and the Baltic states; (c) the sparsely populated regions of France, Denmark, Scotland, Ireland, Czech Republic and Germany will maintain their agrarian land use, at the expense of densely populated regions with relatively small holdings in Poland, Italy, Germany, Portugal and Spain. Policy makers and entrepreneurs can obtain an integrative view by taking into account the three prospect maps to support decision-making on long-term policies and sustainable investments in terms of the 3 Ps.     

Assessment of regulation of legal relations of territorial planning: A case study in Lithuania

Land management is inevitably linked to the regulation of activities of its proprietor or operator stipulated by legislation and documents of territorial planning. In Lithuania, as in many European countries, territorial planning is a key measure for the formation of landscape and the alteration of its elements. With the help of territorial planning documents, governing authorities has the opportunity to orderly regulate the layout of long-term stable elements of landscape and the sustainable territorial development. However, in comparison with other European Union (hereinafter – EU) countries, territorial planning system valid in Lithuania until January 1, 2014 is still “young” and having specific features with former countries of the Soviet bloc legal regulation. The system did not provided a consistent and sustainable territorial development mechanism: there was the lack of measures allowing to manage the development processes of residential areas and implementation of territorial planning documents (especially the municipal master plans) solutions for the creation of a harmonious functional spatial system. The aim of the present paper is to assess the regulation of legal relations of territorial planning in Lithuania and the EU member states. The assessment summarizes processes of the formation of a landscape during the territorial planning, introduces new opportunities to more accurately predict the results of the current process of landscape planning, and highlights legal and sustainable elements of territorial planning system optimization. As can be seen from the assessment carried out, one of the most important territorial planning objectives was and still remains the balance of mutual relations (hierarchy of plans) of territorial planning documents in shaping the cultural landscape to ensure the rational distribution of the land fund, combining a variety of activities as well as often different land users’ and public interests. Therefore, the implementation of the territorial planning reform of Lithuania capacitates for the transition to an integrated territorial planning, ensuring sustainable development.     

Why is the issue of land ownership still of major concern in East Central European (ECE) transitional countries and particularly in Hungary?

In recent negotiations related to agriculture in connection with EU accession, the candidate countries asked for and received a period of 7–12 years exemption from EU rules with respect to the free movement of capital for the purpose of purchasing agricultural land. This means that, with some exceptions, foreigners will be prevented from buying land in most new member countries for a transitional period. The negotiating governments of the prospective new Member States claimed that a transitional period would be necessary because land prices are much lower in their countries than in the 15 EU ‘old’ countries. They claimed that without such an exemption, land in their countries would be bought cheaply by people of the ‘old’ EU countries, thus causing land scarcity for domestic farmers. However, statistical data do not support fears about land scarcity at present or in the future. The reasons for ‘keeping away’ foreigners from ‘national land’ are ideological rather than economic. Land continues to play a crucial role in rural-nationalist ideology, which has survived even after the disappearance of its bases, i.e. rural over-population and genuine land scarcity.     

EU Enlargement,the CAP and the Cost of Direct Payments: A Note

Negotiations over EU enlargement have highlighted difficulties in extending the CAP – and in particular direct payments ‐ to the applicant countries, given the spending limits agreed in Berlin in 1999. This note presents estimates of direct payment costs in the Eastern European applicants. It argues that the only way all member states in an enlarged EU can receive the same level of payments is if the payments currently prevailing in the EU15 are reduced.     

Gravity Model of Turkey's Fresh and Processed Fruit and Vegetable Export to the EU

Abstract

This study analyses the factors that determine Turkey's fresh and processed fruit and vegetable exports to the European Union (EU) using a gravity model. Panel data from 1995 to 2001 for 13 EU member countries are utilized. The explanatory variables are GDP, population, distance, Turkish population living in EU member countries, and being non-Mediterranean. Results indicate that the size of the economy, EU population, Turkish population in the EU, and addressing the tastes and preferences of non-Mediterranean countries are significant factors that affect Turkish fruit and vegetable exports. The results suggest that marketing strategies targeting the population of Turkish people in EU countries and non-Mediterranean member countries enhance the export performance of fruit and vegetable exports.     

CAP Reform: Prospects for crop markets in the Enlarged EU: Reform der GAP: Aussichten für die Märkten von Feldfrüchten in der erweiterten EU: La rëforme de la PAC: I'avenir des marchés agricoles dans I'Europe élargie

CAP Reform: Prospects for crop markets in the Enlarged EU Agricultural Policy Modelling in the EU has become more complicated due to the recent CAP reform and EU Enlargement. Under the AGMEMOD (Agricultural Member States Modelling) Partnership, teams of economists with specialist knowledge of agriculture in their own countries have come together to build the AGMEMOD model. The model can be used to analyse the impact of policy reform at a country level in EU member states and at an aggregate EU level. The model covers a wide variety of agricultural commodities, but this article focuses specifically on the impact of the policy reform on the cereals sector. Results are presented for the EU15 in aggregate, the New Member States (NMS), Bulgaria and Romania. The implication of EU Enlargement is also examined for the accession countries. For the EU15, results suggest that there would be a modest reduction in grain production and a slightly larger reduction in oilseeds production by 2010, as a response to the decoupling of cereal payments. Results for the NMS suggest that their accession will bring some modest growth in grains production by 2010, This result is not greatly different from that which might have been achieved had these countries remained outside the EU. The recent reforms limit the extent to which the CAP stimulates increased production in the NMS. La réforme de la PAC: l'avenir des marches agricoles dans l'Europe élargie Avec l'elargissement et la recente reforme de la PAC, modeliser la politique agricole europeenne devient de plus en plus difficile. C'est pour cela que plusieurs Cquipes d'kconomistes ‐ chacune selectionnee sur la base de ses connaissances accumulees sur l'agriculture de son propre pays ‐ se sont associees pour construire le modele AGMEMOD, dans le cadre du partenariat MAEM (Modelisation Agricole des Etats Membres). Ce modkle est utilisable pour analyser l'impact des reformes de la politique agricole, tant au niveau de l'Europe entiere qu'i celui de chacun des Etats membres. Il couvre une vaste variete de produits agricoles, mme si le present article met I'accent sur les cereales. k s resultats sont prksentes pour les agrigats ‘Europe a 15’, ‘NMS’ (nouveaux ktats membres), Bulgarie et Roumanie. On examine aussi, ici, les implications de I'elargissement de I'Union pour les nouveaux membres. Pour 1'Europe a 15, a la suite du dkcouplage des aides cerealieres, les resultats conduisent i envisager a I'horizon 2010 une modeste reduction de la production de cereales et une reduction un peu plus forte de la production dolkagineux. Dans le mCme temps, les NMS devraient connaitre un faible accroissement de leur production de cereales. Ceci n'est pas fondamentalement different de ce qui serait arrive si ces pays etaient restes en dehors de 1'Europe. Dans les NMS, les reformes recentes ont pour effet de brider les accroissements de production auxquels I'application de la PAC aurait permis de s'attendre. Reform der GAP: Aussichten für die Märkte von Feldfruchten in der erweiterten EU Die Modellierung von Agrarpolitiken in der EU gestaltet sich auf Grund der kurzlich durchgefiihrten Reform der GAP und der EU‐Erweiterung zunehmend schwieriger. Im Rahmen der AGMEMOD (Agricultural Member States Modelling, Agrarmodellierung von Mitgliedstaaten)‐Partnerschaft haben sich Okonomen zusammengefunden, die im Hinblick auf die Landwirtschaft in ihren Heimatlandern uber Fachkenntnisse verfiigen, um das AGMEMOD‐Modell zu erarbeiten. Mit Hilfe dieses Modells konnen die Auswirkungen der Politikreformen sowohl auf Ebene der EU‐Mitgliedstaaten als auch auf aggregierter EU‐Ebene analysiert werden. Das Modell deckt eine groRe Anzahl von landwirtschaftlichen Produkten ab; dieser Artikel behandelt jedoch insbesondere die Auswirkungen der Politikreformen auf dem Getreidesektor. Die Ergebnisse werden fiir die aggregierte EU‐15, die neuen Mitgliedstaaten (NMS) sowie fiir Bulgarien und Rumanien dargestellt. Die Auswirkungen der ELI‐Erweiterung werden ebenfalls ftir die Beitrittslander untersucht. Im Fall der EU‐15 zeigen die Ergebnisse einen geingen Ruckgang bei der Getreideproduktion und einen etwas hoheren Ruckgang bei der Olsaatenproduktion bis zum Jahr 2010 als Folge der Entkopplung der Getreidezahlungen. Die Ergebnisse fiir die NMS deuten darauf hin, dass sich ein geringes Wachstum der Getreideproduktion bis zum Jahr 2010 ergeben wird. Dieses Ergebnis unterscheidet sich nicht wesentlich von einem Szenarium, in welchem diese Lander der EU nicht beigetreten waren. Die kurzlich durchgefiihrten Reformen begrenzen die produktionssteigernde Wirkung der GAP in den NMS.     

Importance of Standardizing Raw Milk Quality for the Enhancement of Croatian Market Competitiveness

In the European Union member states (EU), it is necessary to evaluate hygienic condition of milk in order to determine milk price. Similar requirement was set by the Republic of Croatia in 2000. The Rulebook defines minimal quality criteria that fresh raw milk must have in order to be purchased. Upon completion of analysis, milk is classified into quality classes, each having a defined price. Increased value of somatic cell count (higher than 400,000/ml) and micro ogranism (MO; higher than 100,000/ml) directly decreases the raw milk price, whereas higher content of fat and protein causes its increase. Since the system of market milk price formation was established, producers have been stimulated to produce milk of higher quality: in a total of milk being purchased, the highest quality milk share increased from 23.3% to 34.2%. Referring to a trend of milk purchase price reduction in the EU, and considering the current high milk purchase price in Croatia, Croatian producers have an opportunity to improve conditions in milk industry before the country joins the EU. Current milk production needs to be increased and milk quality also needs to be improved in order to make Croatian milk production more competitive on the European and world market.     

Prevalence of key developments in trade of agro-food producers in the new member states of the European Union

The ten new member states (NMS-10) of the European Union (EU) have contributed to an enhancement in the agro-food trade among the EU-25 members. Intra-industry trade (IIT) represents only a minor part of NMS-10 trade in agro-food products. Their trade in agro-food products is specialized to different countries in terms of economic distance, factor endowments and/or degree of competitiveness of their agro-food sectors. The borderless EU markets are likely to influence the increase of IIT with implications for the EU trade policy, since more than one-third of agro-food trade in the EU-25 members is represented by NMS-10.     

Governance of the Common Agricultural Policy in the New Member States

Governance of the Common Agricultural Policy in the New Member States The Enlargement of the EU will have significant implications for the governance of the Common Agricultural Policy (CAP). The evolution of the CAP has led to permanent increases in the intensity of regulation, although rates of external protection have declined. Past experience - mainly revealed by the European Court of Auditors - has evidenced many irregularities and even fraud as by-products of the CAR Governance problems are due to badly designed policies, which demand control at the individual farm level. In consequence, incentives might arise for member countries, for administrative regions – which are supposed to implement the policies at the local level – and for individual farms to breach the rules. These problems are likely to increase in the enlarged EU. Recent attempts to measure standards of governance reveal that the average score for the enlarged Union will be lower than it was in the old EU-15. Perceptions of the control of corruption and of the effectiveness of government differ most between old and New Member States. The latter have weaker administrative capacities and are therefore more susceptible to fraud than the old EU. Adequate policy reaction should lead to fundamental changes in the CAP towards less challenging policy measures in terms of governance. Politique agricole commune et gouvernances dans les nouveaux Etats members L'élargissement de l'UE ne sera pas sans conséquences pour la gouvernance de la politique agricole commune (PAC). Méme avec un taux de protection externe en déclin, l'évolution de la PAC s'est traduite par un accroissement constant de la réglernentation. L'éxperience montre que l'un des sous-produits de la PAC se trouve être l'existence de nombreuses irrégularités et de fraudes - la plupart du temps révélées par la Cour des comptes européenne -. Ces problemes sont la conséquence de politiques mal conçues, qui requiérent des contrôles individuels au niveau de chaque exploitation. La conséquence en est que les pays membres, les régions (qui sont supposeées appliquer la PAC au niveau local) et les agriculteurs individuels ont intérêt a enfreindre les régies. Ces difficultés ont toutes les chances de s'aggraver dans l'Europe élargie. Les essais récemment effectués pour mesurer la capacityé de gouvernance ont montré que le score moyen en la matiére pour l'Europe élargie sera inférieur à ce qu'il était dans l'Europe à 15- Dans les anciens Etats membres, la culture en matiére d'efficacité administrative et de lutte contre la corruption est bien différente de ce qu'elle est dans les nouveaux pays. Ces derniers ont moins de capacityé administrative et sont done plus vulnérables à la fraude que l'ancienne UE. La réaction politique la plus adéquate devrait être une modification radicale de la PAC, pour réduire ses exigences en termes de bonne gouvernance. Durchfuhrung der Gemeinsamen Agrarpolitjk in den neuen Mitgliedstaaten Die EU-Erweiterung wird sich bedeutend auf die Durchführung der Gemeinsamen Agrarpolitik (GAP) auswirken. Die Entwicklung der GAP führte zu einem stetigen Anstieg der Verordnungsintensität, obwohl die externen Protektionsraten zurückgegangen sind. Die Erfahrungen aus der Vergangenheit haben zahlreiche Unregelmäßigkeiten und sogar Betrug als Nebenprodukte der GAP nachgewiesen, was hauptsächlich vom Europäischen Rechnungshof aufgedeckt wurde. Probleme bei der Governance sind auf schlecht konzipierte Politikmaßnahmen zurückzuführen, welche eine Kontrolle auf der Ebene des einzelnen Landwirtschaftsbetriebs erfordern. Für Mitgliedstaaten, für Verwaltungsregionen, deren Aufgabe es ist, die Politikmaßnahmen auf lokaler Ebene zu implementieren, und für einzelne Landwirtschaftsbetriebe könnte sich daher der Anreiz ergeben, gegen die Regeln zu verstoßen. Diese Probleme werden in der erweiterten EU wahrscheinlich zunehmen. Neuere Ansätze, die Standards im Bereich der Durchführung zu messen, ergaben, dass das durchschnittliche Ergebnis für die erweiterte EU unter dem Ergebnis fur die alte EU 15 liegt. Im Hinblick auf die Korruptionskontrolle und die Regierungseffektivität ergaben sich fur die alten und die neuen Mitgliedstaaten sehr unterschiedliche Beobachtungen. Die neuen Mitgliedstaaten weisen schwächere Kapazitäten in der Verwaltung auf und sind daher anfälliger für Betrug als die alte EU. Die Politik sollte angemessen darauf reagieren und grundlegende Änderungen in der GAP vornehmen hin zu Politikmaßnahmen, die in Sachen Durchführung geringere Herausforderungen darstellen.     

Abolition of Raw Milk Quota in the European Union: A CGE Analysis at the Member Country Level

This paper discusses a generic approach to implementing production quotas in an applied general equilibrium framework. The quota rent is interpreted as additional primary factor payments. We analyse the abolition of the raw milk quota and the elimination of export subsidies for dairy products in the European Union at a member country level. The raw milk output increases in Denmark, Ireland, Italy, Luxembourg, the Netherlands and Spain, while it declines in Germany, Greece, Portugal and Sweden. The EU‐wide effect for raw milk production is an output increase of 3% and a price decline of 22%. To assess the robustness of the critical assumption about the raw milk quota rent we apply Arndt and Pearson's Systematic Sensitivity Analysis.     

Agricultural and Economy‐Wide Effects of European Enlargement: Modelling the Common Agricultural Policy

The economic impact of extending the Common Agricultural Policy to the Central and Eastern European countries (CEEC) has become a major issue in the European enlargement debate. This paper provides an assessment of the economy‐wide effects of European enlargement using a global general equilibrium model where special attention is given to modelling the instruments of the Common Agricultural Policy, the Agenda 2000 proposal and the EU budget. The results indicate a substantial potential for increasing agricultural production in the CEEC. The EU budget will increase significantly and the transfers from EU taxpayers to farmers in the CEEC result in significant welfare gains in the new member countries. In spite of these important transfers the macroeconomic costs for the EU are found to be limited.     

Farmers in a deregulated dairy regime: Insights from Ireland's New Entrants Scheme

While the impending review of the European Union (EU) Common Agricultural Policy (CAP) is set to have an impact on all farming sectors across Europe, particularly transformative change is sought by policies relating to dairy farmers. EU milk quota abolition in 2015 will fundamentally revise the terms of dairy production, transitioning from policies of subsidy and protection to a scenario where farmers will produce milk on the open market. Dairy quota abolition essentially represents an economic but also socio-cultural disruption for a sizeable cohort of farmers, requiring adaptation to more market-driven production strategies. Agricultural policy-makers in EU member states are demonstrably preparing for this imminent change and dairy farmers are considering and strategising their responses at farm-level. Our focus in this paper is the interplay between quota abolition and farm-level decision-making in the pre-abolition period. Drawing from a broader mixed-methodological and multi-disciplinary research project, this paper uses qualitative narrative analysis to identify the key determinants arising in dairy farmers’ decision-making processes. How are farmers currently strategising their responses to dairy quota deregulation? Using the qualitative Biographic Narrative Interpretive Method (BNIM), we examine the range of factors determining how a particular group of dairy farmers are strategising their positions on the impending open dairy market. Our analysis highlights how, in the advent of a deregulated dairy production regime, dairy farmers are carefully deliberating their responses at farm level, drawing from policy and market related information, their own personal speculations, and conventional wisdom shared with other members of the farming community. We find that the dairy farmers are influenced not only by motivations to increase productivity and scale but by a tenacious approach to farm sustainability and resilience that is informed by past experiences of farming and seeks to preserve and promote socio-cultural farming values. The paper is of particular interest to policy makers and academics interested in the interchange between policy and farmer behaviour, particularly in the context of current CAP reform.