THE REFORM OF THE COMMON AGRICULTURAL POLICY

Transcription

1 THE REFORM OF THE COMMON AGRICULTURAL POLICY

2 Also by K. A. lngersent AGRICULTURE AND ECONOMIC DEVELOPMENT (with S. Ghatak) AGRICULTURE AND THE URUGUAY ROUND (with A. J. Rayner and R. C. Hine) ECONOMIC ANALYSIS OF AGRICULTURE (with B. E. Hill) Also by A. J. Rayner AGRICULTURE AND THE URUGUAY ROUND (with K. A. lngersent and R. C. Hine) CURRENT ISSUES IN AGRICULTURAL ECONOMICS (with D. Colman) RESOURCE STRUCTURE OF AGRICULTURE (with K. Cowling and D. Metcalf) Also by R. C. Hine AGRICULTURE AND THE URUGUAY ROUND (with A. J. Rayner and K. A. lngersent) GLOBAL PROTECTIONISM THE POLITICAL ECONOMY OF EUROPEAN TRADE

3 The Reform of the Common Agricultural Policy Edited by K. A. Ingersent Senior Research Fellow Centre fo r Research in Economic Development and International Trade University ofnottingham A. J. Rayner Prof essor ofagricultural Economics University ofnotti ngham and R. C. Hine Senior Lecturer in Economics University ofnottingham

4 First published in Great Britain 1998 by MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 6XS and London Companies and representatives throughout the world A catalogue record for this book is available from the British Library. ISBN DOI / ISBN (ebook) First published in the United States of America 1998 by ST. MARTIN'S PRESS, INC., Scholarly and Reference Division, 175 Fifth Avenue, New York, N.Y ISBN Library of Congress Cataloging-in-Publication Data The reform of the common agricultural policy I edited by K. A. lngersent, A. J. Rayner, and R. C. Hine. p. em. Based on a one-day conference held in March 1996 at the University of Nottingham, under the auspices of the Centre for Research in Economic Development and International Trade (CREDIT). Includes biblio~raphical references and indexes. ISBN (cloth) 1. Agriculture and state-european Union countries-congresses. I. lngersent, K. A. II. Rayner, A. J. Ill. Hine, R. C. HDI918.R '84-dc CIP Selection, editorial matter and Chapters I and I 0 K. A. lngersent, A. J. Rayner and R. C. Hine 1998 Chapter 6 R. W. Ackrill, R. C. Hine and A. J. Rayner 1998 Chapters 2-5 and 7-9 Macmillan Press Ltd 1998 Softcover reprint of the hardcover 1st edition All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London WIP 9HE. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources

5 Contents List of Tables List offigures Preface Notes on the Contributors List ofabbreviations Vll ix x Xl xiii 1 Introduction and Overview K. A. Ingersent, A. J. Rayner and R. C. Hine 2 An Ex-post Review of the 1992 MacSharry Reform 12 Stefan Tangermann 3 Agricultural Policy Reform in the USA and the EU: A Comparison of CAP Reform and the 1996 US Farm Bill 36 Tim Josling 4 Implications of the EU East Enlargement for the CAP 54 Monika Hartmann 5 Modelling the Outcomes of CAP Reform 76 William H. Meyers, Michael D. Helmar and Chad E. Hart 6 CAP Reform and Implications for Member States: Budget and Trade Effects 104 R. W Ackrill, R. C. Hine and A. J. Rayner 7 The CAP and the Environment 132 Michael Winter 8 The Reform of the CAP and its Impact on Consumers 156 S. M ccorriston and C. W Morgan 9 The CAP and the WTO after the Uruguay Round Agriculture Agreement 175 Kenneth J. Thomson v

6 VI Contents 10 Postscript K. A. Ingersent, A. J. Rayner and R. C. Hine Notes and References Bibliography Author Index Subject Index

7 List of Tables 1.1 The CAP: agricultural budget expenditure and import levy receipts FAIR timeline Agricultural market transition programme (FAIR, Title 1) Trade provisions ofthe Farm Bill (FAIR, Title II) Conservation provisions of the Farm Bill (FAIR, Title III) Comparison of MacSharry reform (1992) with US FAIR Act (1996) Importance ofagriculture in the CEECs and the EU-15 (1993) Comparison ofagriculture in the CEECs and the EU Agricultural producer prices in selected countries of Central and Eastern Europe relative to equivalent prices in the EU-15 (1994) Comparison of agricultural protection in the EU-12 and selected CEECs (1994) Agricultural prices and wages in the CEECs relative to EU prices and output/input price structure in the CEECs relative to the EU (1994) Gross agricultural productivities in the CEECs and the EU Absolute and relative labour productivity and intensity of labour use in agriculture (1993) Determinants offood demand in the CEECs and the EU-15 (1993) Budgetary effects ofeu East enlargement Assumptions of the baseline and CAP reform scenarios Set-aside rates for EU crops under the CAP reform scenario Selected EU grains and oilseeds under the baseline and CAP reform scenarios EU livestock, dairy and poultry meat sectors under the baseline and CAP reform scenarios WorId agricultural commodity prices under the CAP reform scenario Classification ofstudies, models and base periods 95 vii

8 viii List oftables 5.7 Results for EU cereals production, consumption and net exports Results for EU oilseeds production, consumption and net imports Results for EU meat production, consumption and net exports Results for EU dairy production, consumption and net exports I Results for world price changes Transfers in a 2-country, net-exporting union - summary of effects 1I2 6.2 Commodity support policies - a summary 1I4 6.3 The preferential trade effect 1I6 6.4 The budget effect 1I7 6.5 The total budget and trade effect (BTE) 1I8 6.6 BTE (ECU per capita and percentage ofgdp) 1I9 6.7 Key changes under the 1992 reforms Overall impact of the reforms (1992) Member state gains and losses Number of farmers claiming HLCA in Britain asked to de-stock Four-firm seller concentration ratios, European food processing industries Market shares ofleading 2/3 firms in the UK food processing sector Market shares in the UK and German food retailing sectors (1994) Price transmission and change to consumer surplus with alternative vertical market structures Price incidence following EU banana market reforms 173

9 List of Figures 2.1 AMS for cereals in the EU FEOGA guarantee expenditure FEOGA guarantee expenditure on cereals and set-aside Transfers in a 2-country, net-exporting union Gains and losses pre-macsharry reform Impact of MacSharry Social value ofland by intensity of production UK agriculture output, current prices UK agriculture, key input indicators at current prices Fertiliser inputs in England on an average farm Arable fertiliser usage in Great Britain Grassland fertiliser usage in Great Britain Land prices in England and Wales Area ofset-aside in England, Scotland and Wales Set-aside in Great Britain in 1992/ Set-aside in Great Britain, 1993/ Set-aside in Great Britain, 1994/ Percentage of eligible ESA land under agreement or with applications pending The food chain 160 1X

10 Preface The original inspiration for this book came from a one-day conference, 'Common Agricultural Policy Reform: What Next?', held in March 1996 at the University of Nottingham, under the auspices of the Centre for Research in Economic Development and International Trade (CREDIT). Four chapters of this book are based upon papers presented at that conference. A further four are by authors who were subsequently invited to make contributions. It has been a pleasure working with our contributors and we are extremely grateful to all of them, not only for their hard work but also for their patience with us in bringing this enterprise to a successful conclusion.

11 Notes on the Contributors R. W. Ackrill is Lecturer in European Economics, University of Leicester. Chad E. Hart is a Research Assistant, Centre for Agricultural and Rural Development (CARD), Iowa State University, USA. Monika Hartmann is a Research Fellow in the Institute ofagricultural Development in Central and Eastern Europe, University of Halle, Germany. Michael D. Helmar is a Senior Research Analyst, Centre for Agricultural and Rural Development (CARD), Iowa State University, USA. R. C. Hine is Senior Lecturer in Economics and Research Fellow in CREDIT, University of Nottingham. K. A. Ingersent is a Research Fellow in CREDIT, University of Nottingham. Tim Josling is Professor and Senior Fellow, Food Research Institute, Stanford University, USA. S. McConiston is Reader in Agricultural Economics, University of Exeter. William H. Meyers is Professor of Agricultural Economics, Centre for Agricultural and Rural Development (CARD), Iowa State University, USA. C. W. Morgan is Lecturer in Economics and Research Fellow in CREDIT, University of Nottingham. A. J. Rayner is Professor of Agricultural Economics and Research Fellow in CREDIT, University of Nottingham. Stefan Tangermann is Professor ofagricultural Economics, Institute of Agricultural Economics, University of Gottingen, Germany. xi

12 xii Notes on the Contributors Kenneth J. Thomson is Professor of Agricultural Economics, University ofaberdeen. Michael Winter is Professor of Rural Economy. Cheltenham and Gloucester College.

13 List of Abbreviations AAPS ACP ADAS AMS AMTA ARP BE BSP BSE BTE CAP CARD CARICOM CCC CEECs CEFTA CLA CRP DEIP EC ECU EEP EMS EMU EQIP ESA EU FACTA FAIR FAPRI FEOGA FFA GATT Arable Area Payment Scheme African, Caribbean and Pacific developing countries that are signatories with the EC to the Lome Convention Agricultural Development Advisory Service Aggregate Measure of Support Agricultural Market Transition Act Acreage Reduction Programme Budget Effect Beef Special Premium Bovine Spongiform Encephalopathy Budget and Trade Effect Common Agricultural Policy Centre for Agricultural and Rural Development Caribbean Community Customs Union Commodity Credit Corporation Central and Eastern European Countries Central European Free Trade Agreement Country Landowners Association Conservation Reserve Programme Dairy Export Incentive Programme European Commun ity European Currency Unit Export Enhancement Programme European Monetary System European Monetary Union Environmental Quality Incentive Programme Environmentally Sensitive Area European Union Food, Agriculture, Conservation and Trade Act Federal Agricultural Improvement and Reform Act Food and Agricultural Policy Research Institute European Agricultural Guidance and Guarantee Fund Freedom to Farm Act General Agreement on Tariffs and Trade xiii

14 XIV GDP GNP HLCA lacs LFA LU MAAF MCA MERCOSUR MGA MGQ MISS NAFTA NEIO NFU OECD PHARE PSE PTE RC RSPB SAPS SCP SMU SSSI SWOPSIM TASS URAA USDA WTO List ofabbreviations Gross Domestic Product Gross National Product Hill Livestock Compensatory Allowances Integrated Administration and Control System Less Favoured Area Livestock Unit Ministry of Agriculture, Fisheries and Food Monetary Compensatory Amount The Common Market agreement between Argentina, Brazil, Paraguay and Uruguay Maximum Guaranteed Acreage Maximum Guaranteed Quantity Modele International Simplifie de Simulation North American Free Trade Agreement New Empirical Industrial Organisation National Farmers Union Organisation for Economic Co-operation and Development Poland and Hungary Action for Restructuring of the Economy Producer Subsidy Equivalent Preferential Trade Effect Non-Agricultural Resource Contribution Royal Society for the Protection of Birds Sheep Annual Premium Scheme Suckler Cow Premium Support Measurement Unit Special Site of Scientific Interest Static World Policy Simulation Model Trade Analysis Simulation System Uruguay Round Agreement on Agriculture United States Department of Agriculture World Trade Organisation