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Agricultural economics
1.
2. Agriculture is a small share of GDP in developed countries,
but food is one of the largest businesses in the world, it is
not only farm production, but also the food industry.
EU size: €1 tn turnover, 10% of maufacturing GVA
Largest manufacturing sector in EU
It relates to all aspects of live:
Live and death – food security
Food Safety and Health (obesity, nutrition, etc.)
Controversial (Trade, subsidies, biotechnology, biofuels…)
Very diverse
…. and one gets to be invited to good food….
Is Agricultural Economics
interesting?
3.
One of the markets with the most distorted,
subsidised, taxed and politically affected markets…
with high externalities
Why special economics?
5. Infant industry argument
Protect sectors of the economy
Reduce income inequalities
Food security
Act against ‘dumping’
Phytosanitary (we will look at this – SPS)
Environmental and public goods
Governement Intervention
6.
Poor countries tax agriculture.
The richer the country the less it is taxed until it is
subsidised.
Mainly tariff barriers
Small rich countries have even higher protection
than EU and US
Exception: Australia and New Zeeland
Main focus US and EU as big traders
Rich countries support
agriculture
8.
to increase agricultural productivity by promoting
technical progress and by ensuring the rational
development of agricultural production and the optimum
utilisation of the factors of production, in particular
labour;
thus to ensure a fair standard of living for the agricultural
community, in particular by increasing the individual
earnings of persons engaged in agriculture;
to stabilize markets;
to assure the availably of supplies;
to ensure that supplies reach consumers at reasonable
prices.
The objectives of the common
agricultural policy shall be:
9.
Support the sustainable management
of natural resources and climate
action; support balanced territorial
development throughout Europe.
Europe 2020 strategy
10.
Despite all of the objectives of the CAP only one
policy instrument was introduced: Price support
The Commissioner of Agriculture at the time Sicco
Mansholt proposed a stronger farm restructuring
policy instead, which was weakened by the EC
leaders.
The consequences of the price support policy are still
affecting the EU today and its relationships with
third countries.
The First… disastrous decisions
13.
For all purposes of life we are taxed, get social
security etc based on our total income, not income
from one activity. Part time farming is in many
countries the norm and farm household incomes….
But, this is income from
agricultural activity…
15.
Property rights need to be clear – otherwise:
Land degradation
No borrowing possible, as there is no collateral
-> poverty
Training (extension services)
Creating credits systems for small farmers – microcredit
systems (see Grameen Bank)
Increase in research and development in agriculture
Infrastructure improvement – water access
Reduction in trade barriers, tariff escalation and
reasonable non-tariff barriers
Steps needed in agriculture