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Prices, common agricultural price policy and personal distribution of income in West German agriculture

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  • HARALD VON WITZKE

Abstract

The objective of this study is to analyse the effect of agricultural prices on the personal income distribution within agriculture. After a theoretical analysis the results of an empirical analysis of the shortrun effects of changes in agricultural prices on the income distribution of farms in the southeast of Lower Saxony are presented and the long-run effects are analysed. Under the assumption that changes in agricultural prices do not affect input or output, the effect on income distribution depends on the income ratio, i.e., the ratio of farmers' income to total receipts. It is generally assumed that, because larger farms have higher incomes and a lower income ratio, an increase of prices will lead to an increase of income disparity in agriculture in the short run. In the empirical analysis this is shown not to be true. In the long run, however, due to several factors, a price increase (decrease) will result in an increase (decrease) of the concentration of income. It is, therefore, concluded that, not only because of its social costs but also because of its adverse effect on incomedistribution, price policy as the main instrument for income policy should be replaced by other measures of income policy.

Suggested Citation

  • Harald Von Witzke, 1979. "Prices, common agricultural price policy and personal distribution of income in West German agriculture," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 6(1), pages 61-80.
    • Handle: RePEc:oup:erevae:v:6:y:1979:i:1:p:61-80.
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    File URL: http://hdl.handle.net/10.1093/erae/6.1.61
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    Cited by:

    1. Severini, Simone & Tantari, Antonella, 2013. "The effect of the EU farm payments policy and its recent reform on farm income inequality," Journal of Policy Modeling, Elsevier, vol. 35(2), pages 212-227.
    2. Schmitz, P. Michael, 1991. "Do Developed Exporting Countries Contribute To Food Security? The Case Of The Ec," Staff Papers 13351, University of Minnesota, Department of Applied Economics.
    3. Mishra, Ashok & El-Osta, Hisham & Gillespie, Jeffrey M., 2009. "Effect of agricultural policy on regional income inequality among farm households," Journal of Policy Modeling, Elsevier, vol. 31(3), pages 325-340, May.
    4. Ruttan, Vernon W. & von Witzke, Harald, 1988. "Toward A Global Agricultural System," Staff Papers 14186, University of Minnesota, Department of Applied Economics.
    5. Josling, Timothy E. & Pearson, Scott R., 1982. "Developments in the Common Agricultural Policy of the European Community," Foreign Agricultural Economic Report (FAER) 147189, United States Department of Agriculture, Economic Research Service.
    6. Sahrbacher, Amanda, 2012. "Impacts of CAP reforms on farm structures and performance disparities: An agent-based approach," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 65, number 65.
    7. Severini, Simone & Tantari, A., 2012. "How direct payments and their reform have affected farm income inequality in Italy?," 2012 First Congress, June 4-5, 2012, Trento, Italy 124099, Italian Association of Agricultural and Applied Economics (AIEAA).
    8. Nitta, Atomu & Yamamoto, Yasutaka & Kondo, Katsunobu & Sawauchi, Daisuke, 2020. "Direct payments to Japanese farmers: Do they reduce rice income inequality? Lessons for other Asian countries," Journal of Policy Modeling, Elsevier, vol. 42(5), pages 968-981.
    9. Friedrich Schneider & Klaus Salhofer & Erwin Schmid & Gerhard Streicher, 2001. "Was the Austrian agricultural policy least cost efficient?," Economics working papers 2001-03, Department of Economics, Johannes Kepler University Linz, Austria.
    10. Atici, Cemal & Kennedy, P. Lynn, 2005. "Tradeoffs between income distribution and welfare: The case of Turkey's integration into the European Union," Journal of Policy Modeling, Elsevier, vol. 27(5), pages 553-563, July.
    11. Harald Witzke, 1986. "Endogenous supranational policy decisions: The Common Agricultural Policy of the European Community," Public Choice, Springer, vol. 48(2), pages 157-174, January.

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