Price and market policies in European agriculture

Price and market policies in European agriculture

Conferences/Book from various discussions that donors were uncomfortable about the fact that response to emergencies is often based on ‘what the othe...

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Conferences/Book

from various discussions that donors were uncomfortable about the fact that response to emergencies is often based on ‘what the other donors are giving’, a syndrome which seems inevitable until systematic, objective assessment methods can be set up, especially for donors who, though they may have large food-aid resources, have small personnel resources for making their own on-thespot assessment of emergency situations.

Central database Seminar participants agreed on the need to set up a central database into which could be fed basic information about countries prone to emergencies requiring food aid, information about changing conditions based on the monitoring of specific indicators in the field, and relevant details from the mass of information currently available but spread throughout so many publications that the information is not at hand when donors need it to make decisions. Under the latter category come information from remote satellite sensing and other FAO sources, IMF information about macroeconomic indicators, World Bank and valuable incountry reports, formation available through the United States Department of Agriculture annual report on World Food Aid Needs and Availability (which will in the future be appearing quarterly). Though there is no question about the need for coordination in emergency action, both at field and headquarters level, tensions between various UN agencies, and the tendency for most aid agencies, whether UN, NGO, or governmental aid offices, to operate in ways to preserve their own independence, means that the search for ways for a lead agency to impose order is dependent to a very large degree on the willingness of other agencies to be coordinated. The fact that discussion centred more on the need to coordinate information and assessment, rather than on ways to coordinate the actual response to emergency situations, was an indication that there appear to be no obvious solutions for this problem.

FOOD POLICY May 1985

A very problematic aspect to emergency food aid is that its goal is often meant to be response on a humanitarian basis to situations in which political constraints preclude assistance to foster longer-term development. But even emergency assistance has longer-term consequences. The seminar participants tended to concentrate on the pragmatic problems of administration and on the quantifiable aspects of relief, and did not deal with any of the underlying assumptions or the moral implications of food aid as politics, a reflection, perhaps, of the general focus of the seminar, which was on the need for action, not theory. Nevertheless, there was broad agreement that lessons from experiences must be used to improve policy formulation and management policies. As a way of translating more of the

reviews

ideas discussed during the seminar into action, the last session closed with the suggestion from participants that follow-up workshops might be convened to discuss and make recommendations concerning such things as emergency food rations, methods of assessment of emergency needs, disaster prevention and preparedness measures, and evaluation of emergency operations including methodology, implementation and feedback of results.

Deborah Hicks lnsfitute of Development Studies University of Sussex, Brighton UK

A fuller report on the Seminar will be published shortly as an IDS Discussion Paper.

Book reviews Grasping the nettle PRICE AND MARKET POLICIES EUROPEAN AGRICULTURE edited by K.J. Thomson Warren

and

IN

R.M.

Proceedings of the Sixth Symposium of the European Association of Agricultural Economists, held 14-f 6 September 1983, Newcastle upon Tyne. Copies of the report are available from the Departments of Agricultural Economics and Agriculfural Marketing, University of Newcastle upon Tyne, UK, 1984, 485 pp, f 16.50 (UK), f 17.50 (Europe) Over production, particularly of dairy products, has become a characteristic feature in Western European agricultural sectors, underpinned by the insurance of government support and prices fixed above market-clearing levels. The most noticeable expression of this development has been a sharp increase in public expenditure needed for their disposal, including export subsidies which have soured agricultural trade relations, notably with North

America, Australia and New Zealand. While there may be broad agreement in explaining how policies have contributed to overproduction, there is understandable uncertainty about the effects of alternative policies. By how much further would prices need to fall to restore balance in a market in which production has continued to increase despite a long period of falling prices in real terms? What sort of agricultural sector and trade pattern would emerge from the free play of market forces compared to alternative methods of bringing supply under control? One thing is certain: by the beginning of 1985, budgetary pressures had forced virtually every government with surplus production problems to gingerly grasp the nettle of reform. A bewildering array of control measures are now in place in Europe, but no country has risked the political upheavals that might follow a heavy reliance on price reductions. Against this background, these Symposium Proceedings make a timely contribution to the ongoing debate on alternative policies. Two-thirds of

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Book reviews

the 30 contributions are concerned with EEC policies; outside the Community the only countries explicitly considered are Sweden, Finland and Yugoslavia. While the cereals and dairy sectors receive substantial coverage, there are papers on the fruit and vegetables, sugar and beef and veal sectors. Around a quarter of the papers specifically deal with alternative policies. As is to be expected in such a volume, the quality, substance and methods vary enormously in contributions that range from the broad overview of policies, through detailed descriptive and analytical studies to the reporting of research results on very specific topics. A quarter of the papers are wholly or partly mathematical. The tenor of the Proceedings is very much on policy reform, and the analysis of supply control especially of quota-type measures. This topicality is to be welcomed, even if the political and administrative problems are not given the attention that subsequent events in the EEC have shown to be fundamental. The introductory paper by Tim Josling explores the possible lessons for the EEC of the experience of production control and price reductions in the USA. The concluding sentence, ‘with the correct price, all policy instruments are feasible: with the wrong price no policy seems to work’ should be a motto for all policy makers. A long paper by Second0 Tarditi proposes a policy for the EEC based on direct-income payments to labour. It has the merit of exploring in some detail the numerous consequences of this alternative policy. Experience has shown how difficult it is to devise policies that support poorer farmers without at the same time incurring excessive welfare costs through across the board price increases. The importance of US policy in determining world grain prices (Beard, Rayner and Reed), the crucial role of the EEC in the world dairy trade (Meester and Oskam) and the generally stabilizing effects on world prices of a lowering of EEC border protection (Schmitz) underline the significance of reform of the Community’s agricultural policy, the provisions

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of the forthcoming 1985 US Farm Bill and progress on agricultural trade liberalization within the framework of GATT. One of the best contributions is on saleable quotas by David Harvey. Although short, it is a tightly argued piece from an author who has benefitted from studying the Canadian experience of dairy quotas. The paper is complemented by a brief paper by Hubbard who has estimated the value of an EEC dairy quota assuming that it is set at the level of demand at the existing support price. Depending on the elasticity of supply and the discount rate employed, the value of quota per average farm varies between $10 000 and $30 000, not inconsiderable values considering that the average dairy farmer kept only 14 cows in the survey period. As 10% of farmers had herds larger than 40 cows in 1983, the value of quota to them is substantially more.

Succinctly

examined

shows how, in Europe, agricultural price ratios less and less reflect the underlying technological and market conditions due to government intervention; Hassinen demonstrates the failure of Finnish production ceilings to achieve their objectives as a result of prices set too high and penalties set too low; Ivanovic frankly points out how Yugoslavian prices at well above world levels reflect inefficiency and high production costs. Overproduction has equally generated protests from the ecologicalenvironmental lobby. One of their ‘low input-low ouput’ objectives, farming systems is in fact one suggested response to current supply control measures. A paper by Johansson explores the effects of a tax on fertilizers in Sweden, one of a number of countries that give the environmental issue a relatively high priority. We may expect to hear a lot more about the environmental issue as we might on the effects on agriculture of changing nutritional preferences. Here, a study by Matthews on the simulated effects in Ireland is a useful contribution. While these Proceedings are valuable to those with a fair grasp of the economics of agricultural policies, they are not suited to the general reader. One minor, but irritating complaint: I would have welcomed closer editing of some of the papers which include graphs and tables for which neither title, units of measurement, definitions nor sources are given and in which figures do not always add up.

There are very useful analyses of the Community’s fruit and vegetable policy (Ritson and Swinbank), its sociostructural policy (Shepherd and Peeler) and problems of supply control in Finland (Hassinen) and Yugoslavia (Tomic and Ivanovic), all of which tend to be relatively little known to a wider audience. The experience of quotas in the sugar sector and the prospects for reform are succinctly examined by Sturgess, although a new Sugar Agreement, International which he was cautiously optimistic would include the Community, has Wilfrid Legg not yet materialized. OECD, Paris Despite the ingenuity of policy makNote ers and others in devising new supply control measures, time and again one This review does not necessarily reflect is brought back to Josling’s dictum on the views of the OECD or its member the importance of prices. Littmann 1 countries.

Conferences FOOD POLICY welcomes contributions to the journal’s Conference section. Reports should be between 800 and 1000 words and contain an analysis of the subject areas covered.

FOOD POLICY May 1985