Grain marketing and National Competition Policy: Reform or Reaction?

Grain marketing arrangements in Australia have been controversial for many years. Following an account of the historical background to grain marketing, this article concentrates on more recent debates. The most interesting technical economic argument concerns the validity of claims that statutory marketing authorities with export monopoly powers can obtain higher prices. The article also discusses how marketing in Australia has been affected by Commonwealth and State Government policies with respect to microeconomic reform and privatization. Although major changes appear to have been made in grain marketing and its institutions, there are inherent economic problems with the current approach to deregulation.     

US farm support under a Biden administration: Plus ça change,plus c'est la même chose?

During the Trump administration, there has been an unprecedented increase in the level of domestic support provided to US agricultural producers. Direct farm supports, including price and income support payments, federal crop insurance, and supplemental assistance to compensate losses due to the trade war with China and the pandemic, have accounted for more than one‐third of net farm income. Those payments have threatened to push the United States over its World Trade Organization (WTO) domestic support obligations and increased its vulnerability to potential dispute settlement challenges in the WTO. The incoming Biden administration will likely bring a new focus to repurpose farm subsidies to provide environmental benefits, such as reduced greenhouse gas emissions, but to achieve those reforms they will need to convince a US Congress that has historically been prone to maintaining the status quo.     

“Effectively organic”: Environmental gains on conventional farms through the market?

Qualitative field research in England identified a cohort of farmers practicing what they self-defined as ‘effectively organic’ or ‘semi-organic’ farming. Utilising Ajzen's theory of planned behaviour as a framework for analysis, reducing inputs was found to be primarily a response to financial pressures, also reflected in changing substantive norms towards balancing risks and potential returns against investment, rather than optimising production. However, despite the apparent ease of converting to organic farming from low input practice, formal conversion to organic farming was not found to be the automatic outcome of this trajectory: instead, organic farming was identified as only one of a number of options for increasing the financial viability of the farming operation, which included other niche markets, pluriactivity and contracting land to and from other farmers. The affiliation of low input farmers with organic production denotes positive attitudes towards both organic farming and environmental practices, but a lack of understanding about organic farming techniques. The author argues that due to declining returns/input ratios, future conversion to organic farming may reflect the value placed on other aspects of organic production, such as increased labour, risk reduction and environmental ideals, and highlights the environmental implications of the ongoing ‘cost price squeeze’ on farming households.     

Point de vue:Will Enlargement Gridlock CAP Reforms? a Political Economy Perspective

Will Enlargement Gridlock CAP Reforms? a Political Economy Perspective This article highlights the role of political institutions in predicting further reforms of the CAP We argue that the institutional setup of the political decision-making process has given rise to levels of farm support that neither represent the political will of the majority of national governments nor of the Commission. We further argue that, in theory, this gap will widen due to the need to accommodate the diverse preferences of the New Member States. In practice, however, the institutional structure of CAP decision-making will give rise to a gridlock in the Council, impeding further reforms. We argue that one possible route to further reform is via a coalition of national governments and the Commission, harnessing future WTO negotiations to break the gridlock and force the Agricultural Council to accept further reforms. Decoupling will become an internal driver of further reform because it makes transfers transparent and politically visible, thus casting doubt on the legitimacy of payments to large farms and wealthy farmers. We thus expect the CAP's rationale to shift further in the direction of multifunctionality and public-good type benefits. Enlargement at most poses a further obstacle to reform but will not halt the process of making the CAP more effective, efficient and more equitable. Se peut-il que l'éiarqissement paralyse la réforme de fa PAC ? Un point de vue d'économie politique Le projecteur est mis sur Je rôle des institutions politiques pour l'avenir des nouvelles réformes de la PAC. L'idée est que le cadre institutionnel dans tequel se prennent les décisions a produit un niveau de soutien aux agriculteurs qui ne correspond ni aux vceux de la majorité des gouvernements, ni à celui de la Commission. Enthéorie, cet écart devrait s'accroître, à cause de la nécessité de satisfaire la variété des préférences des nouveaux membres. En pratique, cependant, les structures institutionnelles au sein desquelles sont prises les décisions relatives à la PAC devraient conduire à la paralysie du Conseil, empêchant ainsi toute réforme future. Une solution possible serait la constitution d'une coalition entre la Commission et certains gouvernements nationaux, qui se serviraient des négotiations à venir à l'OMC pour faire éclater le blocage, et forcer l'adoption de nouvelles réformes par le Conseil des ministres de l'Agriculture, Le découplage deviendra alors le moteur des réformes à venir, en faisant apparaître les transferts et en les rendant politiquement visibles, ce qui jettera le doute sur la légitimité des paiements à de gros agriculteurs riches. On peut done s'attendre à ce que la logique de la PAC glisse toujours plus vers la multifonctionalité et la recherche dela production de biens publics. Ainsi, l' élargissement constitue au plus un nouvel obstacle, mais qui ne devrait pas arrêter le processus par lequel la PAC évolue vers plus d'efficacité, de rationalité et d' équité. Wird die Erweiterung die Reformen der GAP blockieren? Eine politökonomische Perspektive Dieser Beitrag hebt die Rolle politischer Institutionen für die Vorhersage weiterer Reformen der GAP hervor. Wir argumentieren, dass der institutionelle Aufbau des Prozesses der politischen Entscheidungsfindung zu einem solchen Ausmaß der Stützung von landwirtschaftlichen Betrieben geführt hat, welches weder von der Mehrheit der nationalen Regierungen noch von der Kommission gewollt ist. Weiterhta argumentieren wir, dass sich diese Kluft in der Theorie vergrößern wird, da den unterschiedlichen Präferenzen der neuen Mitgliedstaaten Rechnung getragen werden muss. In der Praxis jedoch wird die institutionelle Struktur der Entscheidungsfindung in der GAP für eine Blockade im Ministerrat sorgen und somit weitere Reformen behindern. Wir argumentieren, dass ein gangbarer Weg zu weiteren Reformen über eine Koalition nationaler Regierungen mit der Kommission fiihrt, welche die Blockade mit Hilfe der zukünftigen WTO-Verhandiungen bricht und den Agrarministerrat zwingt, weitere Reformen zu akzeptieren. Die Entkopplung wird sich als wichtige Triebfeder für weitere Reformen erweisen, da sie Transferleistungen transparent und politisch sichtbar macht und so die Legitimität von Zahlungen an großs“e landwirtschaftliche Betriebe und wohlhabende Landwirte in Frage stellt, Somit erwarten wir, dass sich die Begründung der GAP mehr in die Richtung von Multifunktionalität und Bereitstellung öffentlicher Güter entwickeln wird. Die Erweiterung stellt höchstens ein weiteres Hindernis für die Reformen dar, kann die Entwicklung, die GAP effektiver, effizienter und fairer zu gestalten, jedoch nicht aufhalten.     

India's post‐green‐revolution agricultural performance: what is driving growth?

Following a period of poor performance in the 1990s, India's agricultural growth rate has reaccelerated in the 2000s. Some believe the reacceleration has been a product of intensified investment, which in turn has spurred yield growth. Others suggest it is because India's newly wealthy citizens have demanded greater product diversification. To examine these hypotheses, we use growth accounting techniques in conjunction with more complete agricultural production data than in past studies to construct state, regional, and national output, input, and total factor productivity quantity indexes, which can be decomposed into their underlying sources. Sectoral performance evaluation suggests that, since 1980, output growth has diffused away from the northern “grain belt” and toward high‐value agriculture in traditionally less‐productive regions. Productivity growth, rather than resource use, has accounted for these geographical and intensity shifts. The growth burst has not, as the literature has primarily argued, been uniquely explainable by yield growth or product diversification but by a variety of factors, including area expansion. For example, the contributions of irrigation technologies permitting double‐cropping have until now been largely ignored.     

Organic‐ and Animal Welfare‐labelled Eggs: Competing for the Same Consumers?

To understand the market for sustainable foods, it is important to allow for heterogeneous preferences. However, most studies of consumer preferences for sustainable foods only investigate average consumer preferences. They do not take into account that some consumer segments attempt to purchase as much sustainable food as possible, others are almost indifferent to the notion of sustainable food, and still others consider sustainable food a complete hoax. The aim of this study is to explore the preferences for various types of premium eggs across three consumer segments. We conduct a choice experiment including 900 Norwegian consumers and perform a behavioural segmentation based on the frequency of organic food purchase. We find that the segment purchasing the most organic food is, as expected, willing to pay a significant premium for organic eggs over eggs displaying only enhanced animal welfare. However, most consumers, who only occasionally purchase organic products, are unwilling to pay more for organic eggs than for enhanced animal welfare eggs, suggesting diminishing marginal utility for additional attributes. We find that a third consumer segment attempts to avoid organic eggs, even when they cost the same as other eggs. Our findings suggest that organic products will be unsuccessful in acquiring a larger share of the market as long as most consumers are unwilling to pay a premium for organic products with all their cost increasing sustainable attributes over products that have only a single sustainable attribute, in our case enhanced animal welfare.     

Consumers’ Preferences for Bread: Transgenic,Cisgenic, Organic or Pesticide‐free?

Consumers are apprehensive about transgenic technologies, so cisgenics, which limit gene transfers to sexually compatible organisms, have been suggested to address consumer concerns. We study consumer preferences for rye bread alternatives based on transgenic or cisgenic rye, grown conventionally or without the use of pesticides, relative to traditionally bred rye, grown with conventional or organic farming methods. Stated preference (SP) data from a choice experiment are combined with revealed preference (RP) data from market purchases from the same respondents. Results show that respondents prefer pesticide‐free production methods, and that while cisgenics is preferred over transgenics, the majority of respondents favour traditional breeding methods. The distribution in preferences suggests that some respondents prefer bread from cisgenic crops produced without pesticides over traditional crops produced using pesticides. Preferences for organic bread are stronger than for pesticide‐free products. From a policy perspective results suggest that excluding cisgenics from mandatory labeling in the EU, or including it in the voluntary non‐GM labelling in the US, would cause welfare losses for consumers.     

Adopting bioenergy crops: Does farmers’ attitude toward loss matter?

We apply prospect theory to examining farmers’ economic incentives to divert a share of their land to bioenergy crops (miscanthus and switchgrass in this study). Numerical simulation is conducted for 1,919 rain‐fed U.S. counties to identify the impact of loss aversion on bioenergy crop adoption, and how this impact is influenced by biomass price, discount rate, credit constraint status, and policy instruments. Results show that ignoring farmer's loss aversion causes overestimation of miscanthus production but underestimation of switchgrass production, particularly when farmers are credit constrained and have a high discount rate. We find that establishment cost subsidy induces more miscanthus production whereas subsidized energy crop insurance induces more switchgrass production. The efficacy of these two policy instruments, measured by biomass production increased by per dollar of government outlay, depends on the magnitude of farmers’ loss aversion and discount rate.     

Cereal price shocks and volatility in sub‐Saharan Africa: what really matters for farmers’ welfare?

The lack of information as well as some misperceptions about the distinction between the welfare consequences of higher versus more volatile cereal prices has limited the effectiveness of policy interventions during the recent food crises in many developing countries. This article proposes an integrated empirical strategy to investigate and compare the different effects of these two phenomena and tests it using nationally representative household survey data from four sub‐Saharan countries. Results show that the negative impacts of a cereal price increase substantially outweigh the effects of price volatility on household welfare across the entire income distribution. The amplitude and the distribution of those effects depend heavily on specific factors, such as: the weight of food consumption over total expenditure; the budget share devoted to cereals; the substitution effect among food groups; and the relative number of net sellers versus net buyers accessing the market. We also show that volatility mainly harms the poorest quintile of the population.