Norman R. Collins

Changing Role of Price in Agricultural Marketing

AGRICULTURAL marketing may be defined in terms of a chain of activities performed to bring farm products to their ultimate consumers. Included are such functions as processing and distribution whereby the raw product is transformed into one desired by consumers and then moved to the point of consumer purchase. The responsibilities for deciding how these are to be performed and for carrying out the tasks involved are divided among many different firms. One group of firms, for example, processes fruits and vegetables which were grown by another group of firms, and still others provide transportation and wholesale or retail services. Although these businesses are organized as separate enterprises, their input-output functions are technologically interrelated. That is to say, the level of output that can be achieved at one stage of production may depend, for instance, on the quality of a certain input, which was itself determined by the way resources were used at a previous stage. Consider the situation faced by a fruit canner. The type of product he packs and the speed of the processing operation are both affected by certain quality characteristics of the raw product. To the extent that these features are controllable at all, they are so largely at the farm level. After the farmer has made his production plans and then has grown the crop, the canners ability to control quality is limited.

Trade and Welfare Effects of EEC Tariff Policy: A Case Study of Oranges

The price, trade, and welfare consequences of shifts to alternative EEC policies regarding winter oranges are presented. The EEC policy changes considered are (1) a shift from continuance of pre-EEC tariffs on oranges to prospective EEC tariffs, (2) elimination of the EEC tariff on oranges, and (3) entry of winter oranges from selected non-EEC countries into the EEC market with zero tariffs. Spatial equilibrium models are used to quantify the changes in prices, consumption, trade, and welfare which are expected to result from the alternative policies. Welfare effects are evaluated in terms of economic surplus. A shift to the prospective EEC tariff policy on winter oranges is expected to result in a sharp increase in orange prices in the EEC by 1970 (except in France). A net welfare gain to the EEC bloc will occur, with the gains for Italian producers and French consumers more than offsetting the losses suffered by consumers in the other EEC countries because of higher prices. If the EEC were to take unilateral action and remove the tariffs on winter oranges, it would be expected to suffer a substantial welfare loss. Permitting tariff-free imports of winter oranges from selected producing countries would also be expected to cause a welfare loss to the EEC bloc. There appears to be little incentive for the EEC to reduce its tariff unilaterally or to permit special access to non-EEC producers.