This document discusses agriculture economics and policy. It notes that while agriculture makes up a small share of GDP in developed countries, food is a large global business sector. Government intervention in agriculture is common through policies aimed at protecting domestic farmers, ensuring food security and availability, and stabilizing markets. However, wealthier countries tend to subsidize agriculture more while poorer countries tax it more. The document then examines the objectives and early failures of the European Union's Common Agricultural Policy to support prices. It raises issues around agricultural income statistics and the need for clear property rights and support for small farmers.

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?

4. 

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

7. 

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

11. 
Data manipulation?
Agricultural income statistics

12. 

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…

14. 

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

16. 

17. 
Europe is intersting

18. 

19. 

20. THANK YOU
FOR YOUR ATTENTION
Prepared by Akkaya