UK GOVERNMENT EXPENDITURE—IMPLICATIONS OF CHANGES IN AGRICULTURAL OUTPUT UNDER THE COMMON AGRICULTURAL POLICY

The change in government expenditure which accompanies change in agricultural land use and output is an important parameter in current policy decisions. This change is estimated in this paper using a simple accounting model which recognises the diversity of support schemes in operation and the interaction between them. Use of the model is illustrated by estimating the effects of changes in beef, sheepmeat and cereals output under alternative assumptions about market conditions, yield levels and land classes affected. The paper concludes by discussing other ways in which the model might be used.     

A MODEL OF THE COMMON AGRICULTURAL POLICY

Several efforts have been made since 1980 to estimate the costs and benefits of the European Community's Common Agricultural Policy (CAP). This paper summarises the approach and method adopted in developing one such effort, which aims to provide results at country, commodity and interest group level both for the CAP as a whole, and for changes in it. Economic analysis of the effects of price changes in the CAP is carried out with the use of direct and crossprice elasticities of supply and demand for sixteen major commodities, using base levels of production, consumption, and gross trade flows in each member state, along with rest-of-world data. A number of CAP instruments, such as subsidies, levies, quotas and ‘green’ exchange rates, are built into the calculations and can be varied, along with support prices, to produce new situations in domestic markets and in world price levels. Both financial (budgetary) and welfare (economic surplus) effects of such exogenous price changes can be calculated. Certain policy changes, such as a move to ‘free’ markets, involve endogenous calculation of equilibrium prices. Trend projections subject to a priori constraints are used to produce results for years beyond the extent of data currently available. The types of model run commonly carried out are discussed, along with several strategic judgments that became necessary in carrying out the research. Finally, questions concerning the future development and use of the model are addressed.     

GUARANTEE THRESHOLDS AND THE COMMON AGRICULTURAL POLICY

In recent years an important development in the Common Agricultural Policy of the European Community has been the acceptance of the principle that the price guarantees can no longer be unlimited in nature, and that, if production exceeds a certain level, action should be taken to ensure that producers share in the responsibility for additional production. In 1981 the term ‘guarantee threshold’ was introduced to denote this level of production. Different mechanisms have been introduced in the various market regulations to give effect to the guarantee thresholds, and it is necessary for policy makers to realise that these mechanisms have different economic consequences. The case of milk is particularly instructive, for here the European Community in 1984 made a radical change by switching from the mechanism of reducing price support, if the guarantee threshold is exceeded, to a system of quotas for milk deliveries. Guarantee thresholds also exist for other products (cereals, processed fruit and vegetables, oilseeds) and in other cases there are analogous measures (sugar, wine, fruit in syrup, cotton). In the future development of the CAP, guarantee thresholds will continue to play an important role. How far can the Community expect to succeed in controlling its agricultural production by price or quantitative action, and what accompanying measures will be necessary?     

IMPACTS OF THE COMMON AGRICULTURAL POLICY ON INTERNATIONAL WHEAT PRICES

The emergence of the EC as a major exporter of cereals in the 1980s and the escalation of international agricultural trade confrontations emphasize the importance of understanding the effects of EC policy actions. Several important features of the EC wheat market are incorporated in an analytical and empirical model including imperfect substitutability in demand between imports and domestic supplies, the simultaneous import and export of wheat by the EC, the distinct impact of threshold versus intervention policy prices, MCAs, and the imperfect transmission between market and intervention prices. Results indicate that EC policies have a smaller impact on world price than found in previous studies.     

THE ELASTICITY OF AGGREGATE AUSTRALIAN AGRICULTURAL SUPPLY: ESTIMATES AND POLICY IMPLICATIONS

Annual time series data for the period 1950-51 through 1975-76 are used to estimate the price elasticity of aggregate Australian agricultural supply using two methods. The short-run elasticity is estimated to be highly inelastic but it has been increasing through time. The preferred estimate of the long-run elasticity is in the relatively inelastic range and it has also been increasing through time. Some implications of these results for intersectoral resource flows and compensatory assistance, the cost-price squeeze, the effects of the mineral boom and monetary policy are discussed.     

THE OUTPUT RESPONSE OF THE RISK AVERSE FIRM: SOME COMPARATIVE STATICS FOR AGRICULTURAL POLICY

The policy conclusions which stem from the deterministic theory of the competitive firm are well known and unambiguous. However, once product price is regarded as stochastic, there exist several theories upon which to base an analysis of the impact of agricultural policy on the output response of the firm. The paper considers four models from the safety-first and expected utility frameworks. These models produce a diverse set of comparative statics results which in many instances conflict with those of the deterministic model. Hence, the paper concludes that it is important in agricultural policy analysis that greater consideration by given to the links between risk aversion, policy-induced uncertainty and output response than is conventionally the case.     

THE RELATIONSHIP BETWEEN FOOD PRODUCTION AND CONSUMPTION VARIABILITY: POLICY IMPLICATIONS FOR DEVELOPING COUNTRIES

This paper examines whether there is increased inter-year instability in food consumption at the national level, and to what extent this is attributable to increased instability of food production in the wake of adoption of modern agricultural technology. The data analysed indicates that increased production instability does translate into increased fluctuations in consumption. Nevertheless, year-to-year consumption variability among the sample of 38 countries has declined during the past 25 years. This is attributed to improved stocking operations and trade practices which accompany economic growth. Nevertheless, food insecurity, as measured in terms of fluctuations around trend levels of consumption, does remain a problem, especially among the poor. Therefore, policy options to reduce consumption instability are outlined.     

RESEARCH ORIENTATIONS AND THEIR IMPLICATIONS FOR AGRICULTURAL ECONOMISTS

Division of agricultural economics research into behavioural vs. policy alternatives is proposed to reduce ambiguities implied by a positive vs normative division. The thesis is argued with reference to growth of the farm firm. A specific model is proposed. Brief comparisons are provided with alternatives in behavioural and policy applications.     

THE NORTHFIELD REPORT: STRUCTURAL POLICY AND AGRICULTURAL EFFICIENCY

A brief review of the Northfield Report on the Acquisition and Occupancy of Agricultural Land emphasises its general acceptance of the existing situation. An opportunity has been missed to develop more far reaching conclusions in respect of a policy area where scope for national initiative within the EEC remains. Although the Committee took an efficient agriculture as a principal objective its definition is not discussed and the only factual evidence quoted is the analysis by Britton and Hill based on the Farm Management Survey. The appropriateness of this is questioned and some alternatives are suggested. The Britton/Hill analysis does not give particular support for the Committee's advocacy of a family-based farm structure. The Committee sees value in a let sector but expects its decline to continue. Nationalisation of agricultural land as the most direct route back to tenancy is rejected. Yet there is a need for the continuity of ownership to avoid leakages through capital taxes and family transfers. Nationalisation may be infeasible and in its absence, an alternative would be to positively discourage continuing owner occupation and over time to develop an effective land tax to recover support costs.     

THE IAC'S APPROACH TO AGRICULTURAL POLICY*

The main recommendations contained in the IAC's reports on rural references are outlined. The Commission's reasoning on four issues that are widely viewed as important to the formulation of rural policy is examined. The four issues are: assistance to industry; terms of trade; uncertainty and instability; and adjustment policy. Criticisms are made of the IAC's argument on these issues, and some inconsistencies between reports are indicated. It is concluded that the IAC has made a valuable contribution to the discussion of rural policy in Australia even though its recommendations are sometimes sounder than the argument offered to support them.     

PROBLEMS OF AGRICULTURAL EXTERNALITIES: A CONCEPTUAL MODEL WITH IMPLICATIONS FOR RESEARCH

Using a bargaining model the interaction between agriculture and the environment is explored. Application of the model to nitrogen pollution and management agreements directs attention to the research needs for achieving more rational environmental management     

政策性农业保险渔业先行的探讨

本文在介绍在我国发展政策性农业保险必要性的基础上,提出了探索建立政策性农业保险制度渔业应该成为优先发展领域的观点,并从十个方面阐述提出这一观点的理由.