Agric. Econ. - Czech, 2012, 58(3):101-118 | DOI: 10.17221/57/2011-AGRICECON

How does general economy and agriculture sector performance influence farm producer support in the OECD countries?

Tomasz Siudek, Aldona Zawojska
Warsaw University of Life Sciences, Warsaw, Poland

This paper assesses the effects of the performance of the OECD national economies and agricultural sectors on the farm producer support for the years 1986 to 2009. The study is complementary to the large amount of microeconomic research that highlights the importance of support to agricultural industry. Data for the analysis are taken from the OECD Producer and Consumer Support Estimates database and the World Bank World Development Indicators 2010 database. The Producer Support Estimate - PSE (expressed in absolute value, in percent of the total farm revenues and per 1 hectare of agricultural land) was taken as the dependent variable, whereas the selected indicators describing the performance of the economies (e.g. GDP per capita, unemployment, fiscal balance, government debt, government expense and tax revenue, exchange rate, agriculture share in GDP and employment, agricultural raw materials exports and imports) were the independent variables. Utilizing these variables, a simple linear regression analysis was conducted and resulted in many significant associations. In the period analyzed, there was a wide gap between the most and least farm supporting countries in terms of the annual average percentage PSE and the PSE per hectare. Substantial differences between the countries in the variability of the PSE over the time occurred. The empirical results obtained from the regression models reveal, among other, that when the countries were becoming richer, the percentage PSE was generally decreasing. Mixed results were obtained for the relationship between the percentage PSE and unemployment, as in some countries it was negative, while in the others positive. Expansionary fiscal policy exerted opposite effects on the PSE in different countries. Labour productivity in agriculture was inversely correlated with the percentage PSE.

Keywords: agricultural policy, producer support estimate, developed countries, macroeconomics

Published: March 31, 2012  Show citation

ACS AIP APA ASA Harvard Chicago Chicago Notes IEEE ISO690 MLA NLM Turabian Vancouver
Siudek T, Zawojska A. How does general economy and agriculture sector performance influence farm producer support in the OECD countries? Agric. Econ. - Czech. 2012;58(3):101-118. doi: 10.17221/57/2011-AGRICECON.
Share...
Download citation
  • BibTeX (.bib)
  • Bookends (.ris)
  • EasyBib (.ris)
  • EndNote (.enw)
  • EndNote 8 (.xml)
  • ISI WoS (.isi)
  • Medlars (.medlars)
  • Mendeley (.ris)
  • MODS (.xml)
  • Papers (.ris)
  • RefWorks (.txt)
  • RefManager (.ris)
  • RIS (.ris)
  • MS Word (.xml)
  • Zotero (.ris)
    • Open full article

    References

    1. Alston J.M., Sumner D.A. Vosti S.A. (2008): Farm subsidies and obesity in the United States: National evidence and international comparisons. Food Policy, 33: 470-479. Go to original source...
    2. Anders S., Harsche J., Herrmann R., Salhofer K. (2004): Regional income effects of producer support under the CAP. Cahiers d'Economie et Sociologie Rurales, 73, 103-121. Go to original source...
    3. Anders S., Harsche J., Herrmann R., Salhofer K., Teuber R. (2007): The interregional and intertemporal allocation of EU producer support: Magnitude and determinants. Jahrbuch für Regionalwissenschaft, 27: 171-193. Go to original source...
    4. Anderson K., Hayami Y., George A., Schultz T.W. (1986): The Political Economy of Agricultural Protection: East Asia in International Perspective. Allen and Unwin, Boston, London and Sydney.
    5. Antón J. (2008): Agricultural Policies and Risk Management: A Holistic Approach. In: 108 th European Association of Agricultural Economist Seminar "Income stabilisation in a changing agricultural world: policy and tools", Warsaw, 8-9 February.
    6. Bielik P., Juríček P., Kunová D. (2007): The comparison of agricultural support policies in the OECD and the EU countries from the perspective of economic globalization processes. Agricultural Economics - Czech, 53: 339-348. Go to original source...
    7. Bilal S. (2000): The political economy of agricultural policies and negotiations. In: Bilal S., Pezaros P. (eds.): Negotiating the Future of Agricultural Policies: Agricultural Trade and the 'Millennium' WTO Round. Kluwer Law International, Hague, pp. 81-93.
    8. Bojnec S., Swinnen J.F.M. (1997): The pattern of agricultural price distortions in Central and Eastern Europe. Food Policy, 22: 289-306. Go to original source...
    9. Brunstad R.J., Vardal E., Gaasland I. (2007): Optimal provision of public goods: Implications for support to agriculture. Discussion Paper 6, Department of Economics, NHH. Go to original source...
    10. Butault J. (2011): Evolution of agricultural support in real terms in OECD countries and emerging economies. OECD Food, Agriculture and Fisheries, Working Papers 37. OECD Publishing.
    11. Dobosz M. (2001): Wspomagana komputerowo statystyczna analiza wyników badań. (Computer-aided statistical analysis of test results.) EXIT Academic Publishing House, Warsaw.
    12. Drake L. (1992): The non-market value of Swedish agricultural landscape. European Review of Agricultural Economics, 19: 351-364. Go to original source...
    13. Dutt P., Mitra D. (2009): Explaining agricultural distortion patterns: The roles of ideology, inequality, lobbying and public finance. Agricultural Distortions Working Paper, 84: 833-850. Go to original source...
    14. Elsholz R., Harsche J. (2008): Common Agricultural Policy Impacts on Farm Revenues. In: XII European Association of Agricultural Economists Congress, Ghent, Belgium, 26-29 August.
    15. ESPON (2004). Espon Project 2.1.3. The Territorial Impact of CAP and Rural Development Policy. Available at http://www.espon.eu (accessed 2011 Feb 04).
    16. Furtom H., Sauer J., Jensen M. (2009): Free-riding on rent seeking - an empirical analysis. Journal of Public Choice, 140: 479-500. Go to original source...
    17. Hardaker J.B., Lien G. (2010): Stochastic efficiency analysis with risk aversion bounds: A comment. Australian Journal of Agricultural and Resource Economics, 54: 379-383. Go to original source...
    18. Hardaker J.B., Richardson J.W., Lien G., Schumann K.D. (2004): Stochastic efficiency analysis with risk aversion bounds: A simplified approach. The Australian Journal of Agricultural and Resource Economics, 48: 253-270. Go to original source...
    19. Hartigan J.A. (1975): Clustering Algorithms. Wiley, New York.
    20. Henning C.H.C.A., Struve C. (2007): Electoral systems, postelection bargaining and special interest politics in parliamentary systems: The case of agricultural protection. In: Hinich M.J., Barnett W.A. (eds.): Topics in Analytical Political Economy. International Symposia in Economic Theory and Econometrics, Volume 17. Elsevier, Amsterdam, pp. 43-82. Go to original source...
    21. Inomata N. (1986): Price Supports and Exchange Rate Adjustments; Implications for Japanese Wheat and Beef Markets, 1960-83. Graduate Research Masters Degree Plan B Papers 11205, Michigan State University, Department of Agricultural, Food, and Resource Economics.
    22. Jonsson T. (2007): Collective action and Common Agricultural Policy lobbying: Evidence of Euro-Group influence, 1986-2003. Umeå Economic Studies, 713, Umeå University, Umeå.
    23. Josling T., Valdes A. (2004): Agricultural policy indicators. ESA Working Paper, 04-04, FAO.
    24. Knetter M., Prusa T. (2003): Macroeconomic factors and antidumping filings: Evidence from four countries. Journal of International Economics, 61: 1-17. Go to original source...
    25. Latruffe L., Doucha T., Le Mouël1 Ch., Medonos T., Voltr, V. (2008): Capitalisation of the government support in agricultural land prices in the Czech Republic. Agricultural Economics - Czech, 54: 451-460. Go to original source...
    26. Liefert W.M. (2011): Decomposing changes in agricultural producer prices. Journal of Agricultural Economics, 62: 119-136. Go to original source...
    27. Mishra A.K., Goodwin B.K. (1998): Income risk and allocation of labour time: An empirical investigation. Applied Economics, 30: 1549-1555. Go to original source...
    28. OECD (2004): Risk Effects of Crop Support Measures. OECD, Paris.
    29. OECD (2005): Modelling the impact of agricultural policies on farm investments under uncertainty: The case of the CAP Arable Crop Regime: No. 425. OECD Papers, 5: 396-430.
    30. OECD (2006): Decoupling agricultural support from production. Policy Brief, November. Available at http://www.oecd.org/dataoecd/5/54/37726496.pdf (accessed 2011 Feb 01).
    31. OECD (2009): Risk Management in Agriculture: A Holistic Approach. OECD, Paris.
    32. OECD (2010): OECD's Producer Support Estimate and Related Indicators of Agricultural Support. Concepts, Calculations, Interpretation and Use (The PSE Manual). Available at http://www.oecd.org/dataoecd/52/5/46193164.pdf (accessed 2011 Jan 14).
    33. Olson M. (1965): The Logic of Collective Action. Harvard University Press, Cambridge. Go to original source...
    34. Park J.H., Jensen N. (2007): Electoral competition and agricultural support in OECD countries. American Journal of Political Science, 51: 314-329. Go to original source...
    35. Peterson Zwane A., McMillan M. (2006): OECD support for agriculture: Has it historically harmed poor countries? Agricultural and Resource Economics Update (Giannini Foundation of Agricultural Economics, University of California), 10: 9-11.
    36. Rao R. (1982). Modele liniowe statystyki matematycznej. (Linear models of mathematical statistics.) Polish Scientific Publisher, Warsaw.
    37. Salhofer K., Schmid E. (2004): Distributive leakages of agricultural support: some empirical evidence. Agricultural Economics, 30: 51-62. Go to original source...
    38. Schuh G.E. (1974): The exchange rate and U.S. agriculture. American Journal of Agricultural Economics, 56: 1-13. Go to original source...
    39. Segers R. (2004): Modelling Twentieth Century Economic Growth in Industrialized Nations: Exploiting CrossCountry Similarities. Erasmus University Rotterdam. Available at http://people.few.eur.nl/rsegers/papers/rs-mt-chap.pdf> (accessed 2011 Jan 15).
    40. Serra T., Goodwin B.K., Featherstone A.M. (2005): Agricultural policy reform and off-farm labour decisions. Journal of Agricultural Economics, 56: 271-285. Go to original source...
    41. Shucksmith M., Thomson K.J., Roberts D. (eds.) (2005): The CAP and the Regions: The Territorial Impact of the Common Agricultural Policy. CABI Publishing, Wallingford. Go to original source...
    42. Špicka J. (2010): Global trends in risk management support of agriculture. Agris on-line Papers in Economics and Informatics, 4: 73-80. Available at http://online.agris.cz/files/2010/agris_on-line_2010_4_special_spicka.pdf (accessed 2011 Jan 04).
    43. Swinnen J.F.M. (2009): Political economy of agricultural distortions: The literature to date. Agricultural Distortions Working Paper 77, World Bank. Go to original source...
    44. Swinnen J.F.M., Banerjee A.N., de Gorter H. (2001): Economic development, institutional change, and the political economy of agricultural protection: An econometric study of Belgium since the 19 th century. Agricultural Economics, 26: 25-43. Go to original source...
    45. Tangermann S. (2006): Response to the article on "How useful is the PSE in determining agricultural support?" by Arie Oskam and Gerrit Meester. Food Policy, 31: 142-147. Go to original source...
    46. UNDP (2009): Human Development Report 2009. Overcoming barriers: Human mobility and development. UNDP, New York.
    47. Whitaker J.Q. (2009): The varying impacts of agricultural support programs on U.S. farm household consumption. American Journal of Agricultural Economics, 91: 569-580. Go to original source...
    48. World Bank (2010): World Development Indicators. Available at http://data.worldbank.org/data-catalog (accessed 2010 Dec 10).

    This is an open access article distributed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International (CC BY NC 4.0), which permits non-comercial use, distribution, and reproduction in any medium, provided the original publication is properly cited. No use, distribution or reproduction is permitted which does not comply with these terms.


    Return to the content