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Economics of Food Markets

Economics of Food Markets. Course revision. Resources. Course outline (revised Jan 2007) Course website Lecture summaries on the web Powerpoint slides Lecture – key questions Tutorial class questions Essay and project titles Readings. Motivation Agricultural policy objectives

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Economics of Food Markets

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  1. Economics of Food Markets Course revision

  2. Resources • Course outline (revised Jan 2007) • Course website • Lecture summaries on the web • Powerpoint slides • Lecture – key questions • Tutorial class questions • Essay and project titles • Readings

  3. Motivation • Agricultural policy objectives • EU agricultural policy • Agriculture and environment • Economics of price support policies • World market effects of ag policies • Doha Round negotiations on ag liberalisation • Market power in the food chain • Economics of food safety

  4. 1. Agricultural policy objectives • The farm problem • Definition/measurement of farm incomes • Explanations for the farm problem • Multifunctionality • Redefinition of EU farm policy objectives • Conditions for multifunctionality • Jointness, public goods • Is it a justification for supporting agriculture? • Measurement of agricultural support • Producer Support Estimate

  5. 2. EU agricultural policy • Features of the CAP • Pillar 1, Pillar 2 • The milestones of reform • MacSharry, Agenda 2000, Mid Term Review • ‘health check’ • Pressures for reform • budget, objectives, external • Decoupling – single farm payment • Rural development policy reform

  6. 3. Agriculture and environment • The market failure arguments for intervention • Economic approaches to controlling negative externalities (pollution) • Market-based approaches vs regulation • Nitrates, greenhouse gas emissions • Economic approaches to promoting positive externalities • Operation of the REPS scheme

  7. 4. Economics of price control policies • Graphical analysis • Closed, small open and large open economy situations • Price and quantity effects, welfare effects • Instruments • Subsidies, tariffs, quotas, export subsidies etc. • Measurement of transfer efficiency • Assessing cost of EU agricultural policy

  8. 5. World market effects of ag support • Graphical analysis • Impacts on level and stability of world market prices • Uruguay Round Agreement • Disciplines imposed (the three pillars) • Impact on protection and trade

  9. 6. Doha Round and agricultural trade liberalisation • Progress and issues in the Doha Round • Market access, domestic support, export competition • Positions of the main players • Measuring trade liberalisation effects • Review findings of major studies, account for differences • Developing country perspectives • Heterogeneous impacts due to differences in trade status, access to preferences, competitiveness • Special and differential treatment in WTO rules

  10. 7. Market power in the food chain • Evidence on structural change • Measurement and existence of market power • Marketing margins, SCP studies, NIEO studies, price transmission studies • Abuse and control of market power • Supermarkets, suppliers and customers • UK investigations, Groceries Order • Processing plants and farmers (Sheehy)

  11. 8. Economics of food safety • The market failure rationale for intervention • Efficient regulation • Public and private regulatory approaches • Measuring costs and benefits • SPS measures as a non-tariff barrier to trade • Structure of the SPS Agreement • Operation of the SPS Agreement • Developing country concerns

  12. Structure of examination • Eight multi-part questions, with marks allocated. • Answer four • Answers marked on understanding, breadth, depth, analysis

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