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The redistributional effects of the common agricultural financial system

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  • U. KOESTER

Abstract

The decision procedure of the Common Agricultural Policy is becoming increasingly difficult. The paper examines how national interests diverge with respect to the outcome of the common decisions. Firstly, it is shown that (in the status quo) national costs of the common financial system diverge very much and that the costs are incorrectly calculated in the official statistics due to the book-keeping system. France is the outstanding gainer from product-tied income transfers between the EC-partners due to the common financial system. Secondly, collective price decisions influence individual member countries very unevenly, because they induce marginal intra-EC flows of real income. The situation of countries exporting agricultural products improves at the expense of the importing countries. Consequently, there are ‘expected external costs’ involved in the collective decisions because of institutional arrangements. This is seen as a danger for the survival of the EC. Thirdly, it is shown that the present system makes it possible to supranationalize national costs of national agricultural policy strategies. Unfortunately, the externalization is the highest for the stimulation of products with a high rate of nominal protection. Therefore, from the national point of view, the greatest relative advantage is obtained by increasing the national production of butter and skimmed milk powder.

Suggested Citation

  • U. Koester, 1977. "The redistributional effects of the common agricultural financial system," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 4(4), pages 321-345.
    • Handle: RePEc:oup:erevae:v:4:y:1977:i:4:p:321-345.
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    File URL: http://hdl.handle.net/10.1093/erae/4.4.321
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    Cited by:

    1. Sören Prehn & Bernhard Brümmer & Stanley R. Thompson, 2015. "Payment decoupling and intra-European calf trade," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 42(4), pages 625-650.
    2. Roland Herrmann & Marc Kramb & Christina Mönnich, 2001. "Tariff rate quotas and the economic impact of agricultural trade liberalization in the world trade organization," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 7(1), pages 1-19, February.
    3. Henning, Christian H.C.A. & Glauben, Thomas, 2000. "Dynamik, Dimensionen Und Determinanten Der Gemeinsamen Europäischen Agrarpolitik," Working Paper Series 24406, University of Kiel, Chair of Agricultural Policy.
    4. Runge, C. Ford & von Witzke, Harald, 1985. "Institutional Innovation In The Common Agricultural Policy Of The European Community," Staff Papers 14170, University of Minnesota, Department of Applied Economics.
    5. Elsholz, R., 2010. "Regionale Wohlfahrtseffekte der Gemeinsamen Europäischen Agrarpolitik," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 45, March.
    6. 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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