Modelling the EU sugar supply to assess sectoral policy reforms

We investigate the possible linkages between the EU sugar productionunder quota and the supply of C sugar. We calibrate the implicitcross-subsidy between in-quota sugar and out-of-quota sugar.The resulting supply specification is included in a computablegeneral equilibrium model of the EU economy detailing the agriculturalsector. We simulate the effects of the 2006 reform of the EUsugar regime and the effects of a ban on sugar export subsidies.Results suggest that the reform makes it possible to fill therequirements of the 2005 World Trade Organisation panel butthat further adjustment will be needed to eliminate all exportsubsidies as is scheduled for 2013.     

Reallocating sugar beet contracts: can sugar production survive in Denmark?

The reform of the EU sugar regime involves significant pricereductions for sugar and sugar beet. We examine whether theDanish sugar industry can maintain production and profit levelsby reallocating production from less to more efficient farmers.The impact of alternative reallocation mechanisms is estimatedusing a DEA model of sugar beet production, together with informationabout processing capacity at the three Danish plants, beet transportationcosts and alternative crop options. The analysis shows thatthe present allocation is far from efficient. With the new reformfully implemented and the quota efficiently reallocated, actualproduction will fall by only 25 per cent, although profit willbe substantially lower.     

The Effects of Direct Payments on Technical Efficiency of Irish Beef Farms: A Stochastic Frontier Analysis

The 2003 Mid‐Term Review of the CAP sought to refocus the EU's farm support policy to foster a more competitive and market‐orientated agricultural sector. The foundation of this reform comprised the introduction of decoupled payments to farmers, replacing the EU's previous system of supports that were directly linked to production of designated crops and livestock. This paper explores the effect of coupled payments and their subsequent replacement by decoupled support, on the technical efficiency of specialist beef farms in Ireland. Given the high reliance of beef farmers in Ireland on CAP payments, the decoupling of payments has been especially important for the sector. A stochastic production frontier is estimated using a panel dataset comprising detailed accountancy data for Irish beef farms between the years 2000 and 2013. Our results indicate that technical efficiency in the beef farming sector has been consistently poor, with an average efficiency score of only 0.53 during the period analysed. However, we found that direct income received in the form of coupled payments had a positive impact on farm efficiency, and that this positive effect was maintained after their replacement with decoupled income support.     

Is there a future for small farms in developed countries? Evidence from the French case

This research aims to identify the specific characteristics of small farms in developed countries and the factors that influence their survival and growth. Using the case of France, we employ statistical and econometric analysis of data from the Farm Structure Survey (N = 70,000) for the period 2000–2007. The principal findings suggest that small farms are no more likely than other farms to employ “alternative” strategies to the predominant model of increasing farm size, nor are they more likely to diversify on‐farm activities or operate under quality‐labeled production systems, with the notable exception of organic agriculture. However, where small farms do adopt or practice these activities, they are seen to have a favorable effect in ensuring their survival and growth. In contrast, we are unable to conclude that pluriactivity of farm households has a positive impact on the survival of small enterprises. The effect of geographical location on small farms is largely expressed in their concentration in mountainous or disadvantaged regions. Overall, the trajectory of small farms is marked by farm exit, principally as the result of farmers retiring at the end of their careers. The small farm sector is also revitalized by both larger farms declining and thus being reclassified as small farms, as well as the progressive entry into agriculture of small farm holders whose income was previously derived largely off‐farm.     

EU Reform of the Sugar Beet Regime: Implications for UK Agriculture

The purpose of this article is to discuss possible scenarios for UK sugar beet production after the reform of the sugar regime. The analysis is built on an evaluation undertaken by the University of Cambridge and The Royal Agricultural College of the impact that reforming the EU sugar regime may have on UK agriculture. The analysis focuses on the implications of reductions in quota and the support price and on the possible reactions by British Sugar, as the final outcome in terms of production will depend on the interaction between British Sugar and sugar beet farmers. The analysis indicates that British Sugar strategies such as reallocating the available quota to the more efficient producers or paying higher beet prices might mitigate the impacts of the reform. The key factor in limiting the overall impact on production is the extent that the industry can restructure and reduce its cost base. For example, following a 40 per cent reduction in the sugar beet price we estimate that if farmers could reduce their average costs by 20 per cent, about 52 per cent of UK beet production would still be viable, compared to less than 20 per cent if costs were not altered.     

Measuring and causes of inequality in farm sizes in the United States

This article examines the notion of farm size inequality expressed as sales inequality in the United States. The farm size index (FSI) is developed as a measure of farm size inequality. FSIs are calculated for the farming sector in all 50 states and large variation in farm size across the states and over time is determined. The largest FSIs are calculated for a number of Southern, Southwestern, and Pacific states. Increasing FSIs over time are observed in all states as well. The spatial and temporal (between 1987 and 1997) differences in FSIs are explained by running a pooled, cross‐sectional time‐series model. The most influential variables accounting for the differences have to do with the ownership structure, where a larger presence of individual and family farms relative to corporate farms and cooperatives leads to a lower degree of farm size inequality. Also, states and regions having relatively larger number of farms owned by minorities have higher FSIs. Shrinking opportunities in the agricultural sector relative to the rest of the economy, primarily services, are reflected in a declining share of agricultural sector state income in total gross state product (GSP). This in turn leads to an increase in the farming sector's FSI suggesting that only larger, more profitable operations are the likely candidates to pursue farming activities. Finally, grains farming regions have all lower degree of farm size inequality than livestock or fruits and vegetables regions. Profitable grains farming requires relatively large farm size and equipment investments, which leads to a relatively homogeneous structure of grains farms. A larger variation in the size of profitable farm operations is possible in fruits and vegetables and livestock. This leads to the existence of a large number of very small but still sustainable farms, and a relatively small number of large farms that capture most of market sales share.     

The impact of agricultural policy on farm income concentration: the case of regional implementation of the CAP direct payments in Italy

One of the objectives of agricultural policy worldwide concerns the support of farm income. Common Agricultural Policy direct payments (DPs) are the main instruments to support farm income in the European Union. This article addresses their role in the concentration of farm income. This is done by calculating the Gini coefficient and its disaggregation in a large sample of Italian farms in the period between 2006 and 2007. Although this approach has been used to develop ex‐post analysis in previous studies, this article is innovative given that it is used here in an ex ante analysis aimed at evaluating the likely impact of a recent reform proposal. This latter requests changing the current model to a regional model of DPs application to make payment rates (i.e., payment per hectare) homogeneous among farms in the same region. The analysis shows that DPs and farm incomes are both very concentrated but that DPs allow for an income concentration reduction in Italian farms. The shift to a regional implementation reduces DPs concentration and, to a limited extent, farm income concentration. Of the considered regionalization scenarios, those that redistribute DPs among regions are the most effective in reducing concentration. The extension of the Gini considered approach to an ex ante setting seems effective because it provides insights that could feed the policy debate regarding the forthcoming reform.     

Profitability Development and Resource Reallocation: The Case of Sugar Beet Farming in Germany

Following the 2006 reform of the European Union sugar market, and in anticipation of the quota abolition, a reallocation of sugar production has occurred. Using a Lowe quantity index, we evaluate the productivity and profitability of sugar beet farming in Germany from 2004 to 2013. The results show that an increase in total factor productivity partly compensated for losses in terms of trade. Moreover, the contribution of production reallocation to sector productivity growth varied across regions with distinct ownership structures of sugar processing companies. These findings have implications for policy and industry, as it transitions to a liberalised market.     

Variations in Farm Performance in Transitional Economies: Evidence from the Czech Republic1

This paper revisits the literature on farm restructuring in the CEECs by analysing the variations in farm performance in the Czech Republic a decade after the start of the transition process. It identifies seven clusters of farms that differ in their productivity and profitability usng data from 1998 and 1999. The analysis reveals that the vast majority of farms are unprofitable, and there is no strong evidence that individual farms perform better than corporate farms. In fact, there are large numbers of individual farms that are loss‐making on their agricultural activity with low factor productivity. Producer co‐operatives and limited liability companies suffer from debts inherited from the reform process. Future restructuring is likely to occur in all clusters rather than affecting just corporate farms.     

The Growing Heterogeneity in the Farm Sector and Its Implications*

The farm sector has moved from one that was very homogeneous to one with significant differences in size and/or orientation. The decline in the number of “average‐sized” farm and the growth in the number of large farms are due primarily to technological innovations that push operations producing commodities to grow as a means of capturing economies of size. The increase in the relative number of small farms is also due partially to technical advances that allow for the production of food goods with the desired quality attributes to be delivered to the appropriate market. This market is continually being differentiated due to demographic and income shifts. The growing heterogeneity in farm structure complicates the assessment and design of farm policy. The social policy objective of improving the livelihood of farmers and their families could be achieved through farm support and extension programs when the sector was homogeneous. The policy objective has shifted toward improving the competitiveness of the sector, but for which of its components? The trend toward greater heterogeneity is likely to continue and thus so will the internal and external support for any policies targeted toward the farm sector.     

国有林场改革成效评价——职工获得感的统计分析

利用国有林场职工监测数据,基于物质维度和精神维度,从改革后职工自身的收益情况、职工对林场的整体评价、职工对林场管理方式的评价等方面,采用比较分析法和主成分分析法对国有林场改革职工获得感进行分析。研究结果表明:国有林场改革后职工获得感有所提升,改革进程与职工获得感呈强正相关性,改革促进了林场的可持续发展。但林场整体基础设施环境一般,场部相对较好,管护站点则较差。同时,在领导班子建设方面应注重自主、公平,仍需提高领导水平。     

Farm Size,Technology Adoption and Agricultural Trade Reform: Evidence from Canada

Using detailed census data covering over 30,000 farms in Alberta, Saskatchewan and Manitoba, Canada, we document the vast and increasing farm size heterogeneity, and analyse the role of farm size in adapting to the removal of an export subsidy in 1995. Consistent with the Alchian-Allen hypothesis, the increase in per-unit trade costs due to the reform was associated with farms of all sizes shifting their production of crops from low value wheat to higher value canola. We find that switching to new labour-saving tillage technologies and away from summerfallow in response to the large negative shock to grain prices caused by the reform varied across the farm size distribution. We develop a theory of heterogenous farms and technology adoption that can explain our findings.     

Land reform and land fragmentation in Central and Eastern Europe

It has often been stated that land fragmentation and farm structures characterized by small agricultural holdings and farms divided in a large number of parcels have been the side-effect of land reform in Central and Eastern Europe. This article reports the findings of a study of land reform in 25 countries in the region from 1989 and onwards and provides an overview of applied land reform approaches. With a basis in theory on land fragmentation, the linkage between land reform approaches and land fragmentation is explored. It is discussed in which situations land fragmentation is a barrier for the development of the agricultural and rural sector. The main finding is that land fragmentation is often hampering agricultural and rural development when both land ownership and land use is highly fragmented.     

Dairy Tariff-Quota Liberalization: Contrasting Bilateral and Most Favored Nation Reform Options

A highly disaggregated, "tariff line," source-differentiated, partial equilibrium model of U.S. specialty cheese imports is developed to investigate reform options for tariff-rate quotas (TRQs). A mixed-complementarity framework is used to represent bilateral and most favored nation (MFN) tariff quotas. The impacts of liberalizing U.S. specialty cheese imports via bilateral and MFN quota expansions, out-of-quota tariff cuts, and simultaneous liberalization scenarios are evaluated. We find that the path of liberalization is quite different, depending on the reform approach undertaken, particularly if the United States adopted an MFN quota administration mechanism for specialty cheese imports.     

European Sugar Policy Reform and Agricultural Innovation

In July 2006, the European Union's (EU) Common Market Organization (CMO) for sugar underwent the first radical reform since its establishment in 1968. In this article, we study the incentives for adoption of new technologies before and after the policy reform. We build a stochastic partial equilibrium model and use it to analyze the effect of the policy reform on the adoption incentives of genetically modified herbicide tolerant sugar beet. Our findings show that the adoption incentives of high‐cost sugar beet farmers are significantly reduced under the new CMO. Medium‐cost producers, in contrast, have greater incentives to adopt new technologies, while low‐cost producers are largely left unaffected. The reduced adoption incentives of high‐cost farmers lead to lower flexibility and competitiveness of these farmers and therefore coincides with the goals of the reform to crowd out high‐cost producers and increase competitiveness of the European sugar market. En juillet 2006, l'Organisation commune du marché (OCM) du sucre a subi sa première réforme radicale depuis sa mise en place par l'UE en 1968. Dans la présente étude, nous avons examiné les incitatifs offerts pour l'adoption de nouvelles technologies, avant et après la réforme. Nous avons élaboré un modèle stochastique d'équilibre partiel et l'avons utilisé pour analyser les répercussions de la réforme sur les incitatifs offerts pour l'adoption de variétés de betteraves sucrières génétiquement modifiées résistantes aux herbicides. Selon nos résultats, les incitatifs offerts aux producteurs de betterave sucrière ayant des coûts marginaux élevés ont significativement diminué depuis la réforme de l'OCM du sucre. Par contre, les incitatifs offerts aux producteurs ayant des coûts marginaux moyens se sont accrus, tandis que ceux offerts aux producteurs ayant de faibles coûts marginaux n'ont pas changé. La diminution des incitatifs offerts aux producteurs ayant des coûts marginaux élevés entraîne une diminution de la souplesse et de la capacité concurrentielle de ces producteurs et, par conséquent, coïncide avec les objectifs de la réforme qui visent àévincer les producteurs ayant des coûts marginaux élevés et à accroître la capacité concurrentielle du marché européen du sucre.     

Farm succession,occupational choice and farm adaptation at the rural-urban interface: The case of Italian horticultural farms

The survival of family farming in Europe is a crucial issue, as it assures landscape maintenance in marginal areas and provides transmission and accumulation of site-specific knowledge in agricultural activity. Using data from a sample of Italian horticultural farms, we explored the multiple forces driving farm succession in a high value added sector. In addition to the traditional factors examined in the literature (farm, farmer and family features), we treated the farm transfer choice as the complement of the decision to migrate out of the agricultural sector, testing the effects of local labour market conditions (employment, income gap between farm and non-farm sector) and population density around the farm, as a proxy of rural-urban interface relationships. It has been shown that both traditional factors and territorial and labour market conditions influence the probability of farm succession. Interestingly labour market conditions exerted an effect in line with occupational choice theory only in less inhabited areas; in more densely populated regions a rural-urban linkage effect seems to prevail, creating an environment that fosters succession of young horticultural farmers. Peri-urban areas may thus be a favourable location for professional and specialised horticultural farms, as well as multifunctional and de-specialised ones, if their assets are properly protected against farmland subtraction. More generally, these findings confirm the validity of a more comprehensive approach toward farm succession, which takes occupational choice theory and rural-urban farm adaptation strategies into account.     

What Drives Marginal Abatement Costs of Greenhouse Gases on Dairy Farms? A Meta‐modelling Approach

This paper examines the relationships between the marginal abatement costs (MAC) of greenhouse gas (GHG) emissions on dairy farms and factors such as herd size, milk yield and available farm labour, on the one hand, and prices, GHG indicators and GHG reduction levels, on the other. A two‐stage Heckman procedure is used to estimate these relationships from a systematically designed set of simulations with a highly detailed mixed integer bio‐economic farm‐level model. The resulting meta‐models are then used to analyse how MAC vary across farm‐level conditions and GHG measures. We find that simpler GHG indicators lead to significantly higher MAC, and that MAC strongly increase beyond a 1–5% emission reduction, depending on farm attributes and the chosen indicator. MAC decrease rapidly with increasing farm size, but the effect levels off beyond a herd size of 40 cows. As expected, the main factors driving gross margins per dairy cow also significantly influence mitigation costs. Our results indicate high variability of MAC on real life farms. In contrast to time consuming simulations with the complex mixed integer bio‐economic programming model, the meta‐models allow the distribution of MAC in a farm population to be efficiently derived and thus could be used to upscale to regional or sector level.     

Agricultural Policies and Structural Change in French Dairy Farms: A Nonstationary Markov Model

The aim of this paper is to gain an understanding into how agricultural policies have affected structural change in the French dairy sector. A nonstationary Markov model is estimated using a Generalized Cross Entropy approach. Results show that while the price of cow's milk encourages farm growth, direct payments and quota restriction favor small farms. The price signal is a key factor of structural change. As a result, higher milk prices may accelerate the trend toward the further growth of dairy farms. Settlement policy and technical change seem not to slow this trend.     

Vertical coordination and farm performance: evidence from the catfish sector in Vietnam

Using an original dataset from the Vietnamese catfish sector, I analyze the impact of vertical coordination options, namely, contract farming and vertical integration, on farm performance, which is measured in terms of yields and revenue per hectare. The effects of vertical coordination are estimated using a maximum simulated likelihood estimator and a two‐stage least square regression with instrumental variables to account for endogenous farm and household characteristics and selection on unobservable characteristics. The results show that vertically integrated farms have substantially higher yields and revenue per hectare than nonintegrated farms. The levels of gains that can be attributed to integration are large and consistent under different estimation procedures, and there is no difference between nonintegrated and contract farms in terms of farm performance.     

Do family farms really converge to a uniform size? The role of unobserved farm efficiency*

We analyse the growth of family farms in Israeli cooperative villages during a period of economic turmoil. We use instrumental variables to account for the endogeneity of initial farm size, and correct for selectivity as a result of farm survival. We also include a technical efficiency index, derived from the estimation of a stochastic frontier production model, as an explanatory variable. Our aim is to check whether ignoring efficiency could have been the reason for convergence results obtained elsewhere in the literature. We found that technical efficiency is an important determinant of farm growth, and that not controlling for technical efficiency could seriously bias the results. In particular, larger farms are found to grow faster over time, while without controlling for technical efficiency the farm growth process seemed to be independent of initial farm size. The increasing polarisation of farm sizes in Israel has ramifications for the inefficiencies induced by the historical quota system, for the political power of the farm sector and for the social stability of farm communities.