Read the summary and the most important questions on Agriculture, Food and Policy

• 1 Week 1 Economic backgrounder

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• In AGRIPOL (partial equilibrium game) there were 7 policy instrument each government could use to improve their national welfare. Name them

  1. Price support/subsidies
  2. Direct payments
  3. Input subsidy 
  4. Intervention storage
  5. Production quotas
  6. Set aside
  7. Structural policies

• The policy instrument price support/subsidy could be used to improve national welfare, what does this instrument entail? And what are possible effects when used?

  See picture, also check the economic backgrounder for practical examples and a more detailed explanation.

• The policy instrument Direct payments could be used to improve national welfare, what does this instrument entail? And what are possible effects when used?

  Direct payments are also a subsidy that is paid to the producers in a country. They have similar effects for producers and government spending as price subsidy. However, unlike the latter, they are not related to the supply of the product in the current year, but to the volume of their supply in a historical base year.

• When using production quotas one speaks of shadow price and quote rent, what do they mean and what is their relation?

  'shadow price' - the minimum price for which farmers would in fact have been willing to supply the quota volume.
  
  Quota rent - the price that farmers are willing to pay for additional quota if a market for quota would exist. (A production quota is usually implemented by allocating individual quotas to farmers)
  
  therefore, the quota rent = domestic price - shadow price.

• 2 Boek Oskam et al. (2011):

• 2.1 pp. 23- 27

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• What successes of the CAP did the book mention?

  • It was a major achievement to develop and implement a common policy for agriculture and (later) food policy and rural policy in order to contribute to the Single European Market in a diverse European Union.
    
  • The success of the EU market economy in terms of efficiency and food supply contrasts positively with the result of socialized agriculture.
  • In recent years, the basic rules of the European Union have guided potential new Member States in their adjustment of policies. This was much more efficient than switching between different - often unsustainable - policy positions.

• What were the driving forces, the book mentioned, that forced the policies of the EU to evolve?

  • The original objectives of agricultural policies, as formulated in the Treaty of Rome 
    
  • expansion of agricultural production beyond consumption, leading to intervention stocks of farm products, international trade conflicts, and rapidly increasing budget expenditures in the 1970s and 1980s
  • subsequent enlargements of the EU
  • budgetary limits
  • WTO constraints (which refer to market access, export support and domestic support, as agreed in the Uruguay Round Agreement on Agriculture (1994)
  • the need and ambitious to address environmental and ethical concerns
  • the objectives of sectors and Member States to maintain the level of support
  • the changing role of governments in European society

• What two justifications for policy were given in the book?

  Policies are economically justified when they address market failures. One justification is the provision of public goods and services; another is the need to address external effects such as environmental pollution and the spread of infectious diseases. Action of governments may also be required for the functioning of markets: defining and protecting property rights, and competition policy, are well know examples.

• What is the importance of a treaty when talking about competences (bevoegdheden) of the EU?

  These Treaties define the competences of the EU. For legislative actions in a certain area, there has to be a basis in a Treaty.

• Several viewpoints one could take to describe, analyse and discuss public policies were mentioned in the book. Name some

  • Descriptive: what are the objectives and instruments of the policies?
    
  • Historical: how did the policies arise?
  • Juridical: what are the formal rules, and how do authorities interpret those rules?
  • Theoretical: why are the policies what they are, what are their causes and what their effects?
  • Normative: what should be the objectives and instruments of the policies?

• 2.2 chapter 1

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• What stages of European economic integration are distinguished in the book?

  In the process of economic integration, the following stages are usually identified (market and policy integration):
  

  • A free trade area (FTA)
  • A customs union (CU)
  • A common market (CM)
  • An economic union (EU)
  • An economic and monetary union (EMU)

  
  
  Two further stages of integration are (political integration):
  

  • A political union in which the economic and monetary union is extended to a common foreign and security  policy and a common anti-crime policy.
  • A full union (FU) which means one country, a federation or a confederation.