Economics of Food Markets

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Economics of Food Markets

• Course revision

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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

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• 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

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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

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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

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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

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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

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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

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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

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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)

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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

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Structure of examination

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