WHAT PRICE PROTECTION:

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WHAT PRICE PROTECTION An economic assessment of
the impact of proposed restrictions
Séan Rickard Cranfield School of
Management s.h.rickard_at_cranfield.ac.uk
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Introduction

• I have worked as an economist in agriculture for
  more than 30 years

• Most of my work has been focused on the direct
  and indirect effects of policies

• The impact of any significant change in policy
  should be assessed and understood.

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My study was
Based on two earlier studies a PSD
interpretation of the loss of substances under
four scenarios
And a study by ADAS the UKs science based
consultancy
estimating the associated loss
of yields
My study translated this work into the effect on
farm and retail prices
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Percent loss (PSD)
Herbicide Fungicide Insecticide Herbicide Fungicid
e Insecticide Herbicide Fungicide Insecticide
Wheat Potatoes Brassicas
13 49 26 29 11 0 8 44 17
37 65 47 36 22 38 38 50 44
37 62 92 36 33 77 50 55 83
84 97 100 79 72 100 75 83 100
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Wheat margins
Yield (t/ha) Price (/t) Revenue Op. Costs
(/ha) Margin (/ha) rise in price
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Potato margins
Yield (t/ha) Price (/t) Revenue V. Costs
(/ha) Margin (/ha) rise in price
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Calabrese margins
Yield (t/ha) Price (/t) Revenue V. Costs
(/ha) Margin (/ha) rise in price
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Retail food prices
A 100 increase in cereal prices without any
mark-up would raise a standard loaf by 9p, a
litre of milk by 3p a kilo of pork 40p
The knock on effects from the recent 100 cereals
price rise raised retail food
inflation in the UK to 13 but for
low income families the
increase was higher
The potential impact on vegetables very severe so
less healthy eating
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Wider considerations

• The increase in prices could be lower if the
  lost output was made up with imports

• But in this situation many farm businesses would
  be unviable with widespread hardship
• Reduced domestic production puts at risk many
  food processing-manufacturing jobs
• The effects for EU countries trade in food
  would be adverse
• Recent events point to the need for higher not
  lower productivity from EUs farms.

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Concluding thoughts

• Food inflation returned in 2008 and food prices
  are predicted to be higher in future

• The over-riding lesson is that the world needs
  to increase the productivity of farming

• Restrictions on protection substances are not
  appropriate at this time and are not substitutes
  for training and education.

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WHAT PRICE PROTECTION ANY QUESTIONS?
Séan Rickard Cranfield School of
Management s.h.rickard_at_cranfield.ac.uk