Emil Erjavec

Outlook for CEEC Agricultural Markets After EU Accession

This paper describes the development of modeling tools to simulate the effects of agricultural policy changes in new member states (NMSs) of the European Union and presents results of a modeling exercise. Partial equilibrium models simulate policy change scenarios, such as accession to the European Union, as well as other policy developments and external conditions, such as changes in exchange or economic growth rates. Results show the effects of policy change on the main agricultural product markets for a ten-year horizon. In particular, NMSs gain from higher prices and budgetary support. Projections for most sectors show real improvements on recent production levels, but less so when compared with the production of the late 1980s and early 1990s. Accession supports orientation toward crop production, for which Central and East European countries (CEECs) become important net exporters. Livestock production would also benefit from accession, with beef and pork most likely to exhibit appreciable growth, driven by higher, postaccession prices. Production growth in the dairy sector is more limited under the accession scenario than under the baseline, due to milk quota introduction. Scenario results indicate that, in the aggregate, CEEC agriculture has less favorable growth potential if it remains outside the European Union and retains the policy instruments in place before accession.

The European Union enlargement – the case of agriculture in Slovenia

Abstract The costs and benefits of EU-accession for Slovenian agriculture were estimated and discussed by use of comparative and empirical analyses. The structural and natural conditions of Slovenian agricultural production and policies differ a lot from the European ones. The production is small in scale, the support is based on price subsidies. Producer prices are almost at the level of the European prices, and hence they are significantly higher than on the world market. The PSE computed shows that Slovenian agricultural support is at the average level of the OECD member states, which directly implies the highest agrarian protection level amongst all CEEC candidates. By using the static deterministic income model for Slovenian agriculture, the consequences of various scenarios of accession to the Common agricultural policy (CAP) have been estimated, also indicating the potential policy changes. Running the present CAP, the net income in agriculture would increase. Further changes of CAP, and restrictive policy towards new member countries, would abate the attractiveness of EU for the Slovenian agricultural producers. The budget benefits of the EU-accession could be described as slightly positive. Their volume depends on negotiations results as well as on the preparation of domestic policy. The EU-accession and trade liberalisation process by Slovenia calls for a reform of domestic agricultural policy.

The transition from ‘socialist’ agriculture to the common agricultural policy: the case of Slovenia

This article describes the changes in Slovenian agricultural policy in the period 1993–2001 in light of Slovenias anticipated accession to the European Union. Agriculture in Slovenia is characterised by relatively unfavourable natural and structural conditions, which also explains its status as a net food importer and its relatively protectionist agricultural policy. The period of transition was also a period of thorough restructuring of agricultural policy, which was gradually brought into line with the goals and mechanisms of the Common Agricultural Policy (CAP). Even before accession Slovenia started to implement CAP-like measures, including direct payments and rural development policy measures. Slovenia is thus the only candidate country for EU accession with a level of support for agriculture comparable with that in the European Union. In its negotiations for EU membership, Slovenia agreed on the same level of direct payments for Slovenian farmers as received by farmers in the European Union, except that in the first period they will be largely covered from the national budget. As a result of the outcome of negotiations, the economic position of Slovenian farmers after accession is not expected to change markedly on the aggregate level, particularly if all the necessary steps are taken with regard to the building of an efficient system for the transposition of the CAP. Accession to the EU will, however, not solve the problem of relatively poor compeititiveness of the agricultural sector in Slovenia, which still has to undergo comprehensive structural changes and adjustments.

Bulgarian Agriculture and EU Accession

This article analyses markets, income and agricultural policy changes in Bulgaria after its accession to the EU. A country AG-MEMOD model, consisting of 18 commodities organised in four sub-models (crops, livestock, milk & dairy and a link between crops and livestock) is applied. The model is an econometric, dynamic, partial-equilibrium and multi-product one. In order to examine the policy environment in Bulgaria, two scenarios are designed: baseline or non-accession (N-Ac) and accession (Ac). The accession scenario should have a very positive effect on the crop sector in Bulgaria, whereas the effect is the opposite on the livestock sector. The most remarkable results come from the milk sector. The effect on income is also positive, despite the pessimistic macroeconomic projections.

Policy harmonized approach for the EU agricultural sector modelling

Policy harmonized (PH) approach allows for the quantitative assessment of the impact of various elements of EU CAP direct support schemes, where the production effects of direct payments are accounted through reaction prices formed by producer price and policy price add-ons. Using the AGMEMOD model the impacts of two possible EU agricultural policy scenarios upon beef production have been analysed – full decoupling with a switch from historical to regional Single Payment scheme or alternatively with re-distribution of country direct payment envelopes via introduction of EU-wide flat area payment. The PH approach, by systematizing and harmonizing the management and use of policy data, ensures that projected differential policy impacts arising from changes in common EU policies reflect the likely actual differential impact as opposed to differences in how “common” policies are implemented within analytical models. In the second section of the paper the AGMEMOD model’s structure is explained. The policy harmonized evaluation method is presented in the third section. Results from an application of the PH approach are presented and discussed in the paper’s penultimate section, while section 5 concludes.

Multi-step beef ration optimisation: application of linear and weighted goal programming with a penalty function

The aim of this paper is to present the method and tool for optimisation of beef-fattening diets. Changes in policy environment and changes in costs of feed pose challenges for farm efficiency. We construct a spreadsheet from two modules based on mathematical deterministic programming techniques. In order to obtain an estimate of the magnitude of costs that may be incurred, the first module utilizes a linear program for least-cost ration formulation. The resulting value is then targeted as a cost goal in the second module. This is supported by weighted goal programming with a penalty function system. The approach presented here is an example of how a combination of mathematical programming techniques might be applied to prepare a user-friendly tool for ‘optimal’ ration formulations. We report results that confirm this approach as useful, since one is able to formulate a least-cost ration without risking a decrease in the ration’s nutritive value or affecting the balance between nutrients.

Western Balkans agriculture and European integration: unused potential and policy failures?

The objective of this article is to provide an analysis of the development and current situation in agriculture and agricultural policy in Western Balkan countries (WBs) in relation to the EU accession process. Most WBs have quite high but unused potential for agriculture. The small-scale and fragmented nature of private farming remains a general characteristic of agriculture in all WBs. After a decline in the volume of agricultural production due to transition and armed conflicts an increase seems to have set in for WBs since 2000. However, yields still lag behind the EU average in all WBs, particularly in the livestock sector. In general, agricultural producer prices are rather high, mostly above the EU average, indicating weak price competitiveness for most WB products. Serbia is the only net exporter of agricultural and food products. Budgetary transfers to agriculture have been at a low level, except in Croatia, but mostly are increasing rapidly. The WBs lack a stable agricultural policy and a true strategy of reforms and adjustment to EU requirements.

Market Analysis of Direct Payment Options for New EU Member States Using the AGMEMOD Partial Equilibrium Modelling Tool

This paper presents an analysis of the impact of different direct payment policy scenarios on agricultural markets for 10 new EU member states (NMS). The study is based on the AGMEMOD EU-27 dynamic econometric partial equilibrium models. The baseline scenario assumes the preservation of current policy, which would lead to further growth in production for most agricultural markets, resulting from accelerated technological development and the opportunities provided by the EU common market. The only exceptions are the dairy and beef sectors, in which NMS would face a reduction in competitiveness. According to model simulations, reducing the level of payments or abolishing them entirely would not result in any dramatic medium-term changes to agricultural markets in NMS by 2020, which could serve as an argument for supporting future CAP reform.

Firm Level Restructuring in the Slovenian Food Industry

During the 1990s Slovenia has moved toward a more market-based economy with a greater role for the private sector in asset ownership, production and price determination. The Slovenian food industry comprises a small number of producers operating in a comparatively modest market. Primary and secondary data analysis indicates that firms are largely oriented to a domestic market that is significantly protected. This has augmented profitability in the sector, albeit with substantial variations between branches. Profit levels (measured as cash flow as a percentage of turnover) are relatively high. If Slovenia joins the EU, food manufacturers operating in an enlarged European Single Market will not be afforded the degree of protection they currently receive and this heralds a substantial challenge to enterprise managers.

Supply Trends in Slovenian Agriculture under Transition to the Market

The production and economic characteristics of Slovenian agriculture differ substantially from those prevailing in other Central and East European countries (CEECs). The share of agricultural production in aggregate economic activity is low, and Slovenia is a net food importer with a dual farm structure. Small part-time farming dominates the farm structure, but about a quarter of agricultural production comes from the former state-run farms, which, after the transition in the 1980s and 1990s, were transformed into various types of business companies. Agricultural producer prices approach the corresponding price levels in the EU and markedly exceed the existing farm product prices in the CEECs. The producer subsidy equivalent (PSE) coefficient is 40