THE AGRICULTURAL ECONOMICS SOCIETY
Letter from the President
Farming without Subsidies
It would be remiss if the President of the Agricultural Economics Society, based in New Zealand, did not address the issue of Farming without Subsidies in at least one of her letters. Interest in this topic from UK members UK is obviously heightened by Brexit and/or the ongoing fall in the real value of subsides from the CAP.
New Zealand famously removed all subsidies to agricultural producers as part of its post-1984 reforms. Prior to those reforms, New Zealand (NZ) had a relatively high degree of regulation throughout its economy. With a change in government in 1984 accompanied by an exchange rate crisis and a looming fiscal crisis, NZ undertook widespread liberalisation. The pace and extent of the reform programme was impressive (Paul Dalziel, New Zealand’s economic reforms: an assessment. Review of Political Economy, 2002). In summary, NZ removed all financial controls, floated its exchange rate, undertook major privatisation of state enterprises, relaxed labour market controls, and removed most import tariffs and regulations.
The agriculture subsidies were relatively short lived. Until the mid-1970s, support levels were relatively low. However, the introduction of Supplementary Minimum Payments (SMPs) in 1978 – a form of deficiency payment that favoured the sheep breeding flock – followed swiftly by a raft of other measures, marked a rapid escalation in support levels. These measures included: incentives for land development; concessionary livestock valuation schemes; preferential credit for farm purchase; tax concessions; and fertiliser subsidies. Most were phased out in 1984, with some transitional arrangements persisting until 1986.
The main impacts were a drop in sheep production and increases in beef and dairy. Farm incomes for beef and sheep farms fluctuated from NZ$23,000 in 1983 to NZ$18,000 in 1984, NZ$34,000 in 1985 and $15,000 in 1986 before rising again to around $25,000 from 1987 to 1990. The impact of the reforms on fertiliser use was significant, since fertiliser subsidies had been in existence since 1963. Between 1986 and 1991, fertiliser use fell considerably, from around 2 million tonnes per annum, to around 1.2 million tonnes. The real value of farmland doubled from 1972 to 1982, then falling from 1982 to 1988 by 58 per cent.
The New Zealand experience of liberalisation of agriculture offers some useful insights. There were clear changes in land prices and production decisions in response to the changes in incentives. However, some caveats also need to be observed, notably that New Zealand had a relatively simple and short-lived support system and the removal of subsidies was accompanied by liberalisation throughout the wider economy. The impact was felt by those who had changed or bought farms during the period with subsidies, and subsequently had debt that was not sustainable after the prices fell. The changes also happened within a generation, which certainly would not be the case in the UK.
Caroline Saunders AES President 2019-20 (firstname.lastname@example.org)
Defra-AES One-Day Conference: Tuesday 10 December, Defra, Nobel House, London, Reducing Greenhouse Gas Emissions from Agriculture. Updates and registration in due course on the AES website.
Michael Bourne, Defra (Michael.Bourne@defra.gov.uk)
AES Annual Conference: from 15-17 April 2020 the 94th annual conference will be held in KU Leuven, in cooperation with the Belgian Agricultural Economics Association (BVLE), which promises to be a great event, taking place in an historic building in a wonderful city. Discussions of topical issues, research findings - and more social events - will all feature at next year’s Conference! The first call for papers and presentations will be in September, so follow updates on the AES website.
Frederic Ang, Programme Secretary (email@example.com)
XV1 EAAE Congress Prague 2020
The next Congress will be held in Prague from 25-28 August 2020 with the theme Raising the Impact of Agricultural Economics: Multidisciplinarity, Stakeholder Engagement and Novel Approaches.
Information can be found at: http://www.eaae.org/Congress.aspx
AES members may be eligible for a grant to support participation (https://www.aes.ac.uk/travel-awards). The next call for travel awards will be in September 2019.
Tim Lloyd, AES-IAAE/EAAE Liaison Officer (firstname.lastname@example.org)
EAAE Seminars and Events
EAAE Seminars (www.eaae.org)
5-6 September, Measuring and evaluating farm income and well-being of farm families in Europe, Tänikon, Switzerland
26-27 September, Sustainable and resilient farming systems in the European Union, Bucharest, Romania
10-12 October, Economics of culture and food in evolving agri-food systems and rural areas, Matera, Italy
AES Journals and other publications
The Journal of Agricultural Economics Impact Factor score for 2018 has hit the 2.5 mark, following the previous year’s 2.0, and just about managed to keep pace with the main competitors. The JAE score has risen steadily since 2013, when it was below 1.
David Harvey, Editor-in-Chief (email@example.com)
The summer issue of EuroChoices, due for publication in the first half of August, contains a further special Brexit section. Articles explore a range of potential Brexit impacts: on the UK's governance of rural land; the ability of the UK government to deliver a 'Green Brexit'; impacts of Brexit on social capital in rural areas of the UK; options for Ireland in the event of a disorderly no-deal exit by the UK; and impacts on UK-EU agri-food of a no-deal scenario. The Editor encourages submissions to the journal on topical agri-food and rural issues and strongly advises potential authors to consult the author guidelines:
John Davis, Chief Editor (firstname.lastname@example.org)
The OECD-FAO Agricultural Outlook 2019-2028, a collaborative effort of the Organisation for Economic Co-operation and Development (OECD) and the Food and Agriculture Organization (FAO) of the United Nations, brings together the commodity, policy and country expertise of both organisations as well as input from collaborating member countries to provide an annual assessment of the prospects for the coming decade of national, regional and global agricultural commodity markets. This year's Special Feature focuses on agricultural development in Latin America.
The OECD Agricultural Policy Monitoring and Evaluation 2019 report monitors and evaluates agricultural policies spanning all 6 continents, including the 36 OECD countries, the 5 non-OECD EU Member States, and 12 emerging economies. It is a unique source of up-to date estimates of support to agriculture. It acknowledges the contribution of the late Tim Josling, AES President 2006-7, in developing the concept of the PSE, which is the foundation for the OECD’s measurement of support to agriculture.
Recently Published: Rural Policies and Employment: TransAtlantic Experiences
This new book, edited by Sophia Davidova, Ken Thomson and Ashok Mishra (of Arizona State University), uses a "paired" chapter structure to compare rural employment and policies in two of the most developed parts of the world — the EU and USA. While both are concerned for their vast rural areas, each adopts a strikingly different approach to creating and maintaining employment there, and to making rural space attractive to economic development. Chapter authors include a number of well-known AES members, as well as respected EU and US names in fields such as policy, farmer entry and exit, the agri-food chain, diversification and rural recreation.
Available from World Scientific Publishing. 307pp: 23 chapters plus index. https://doi.org/10.1142/q0210. ISBN 978-1-78634-708-4 (hardcover)
Wilfrid Legg, AES Newsletter Editor (email@example.com)
…to Brendan Bayley, Head of Policy Analysis, Climate, Energy and Agriculture Branch, HM Treasury, and a member of the AES Executive, on being awarded the OBE in the Queen's Birthday Honours, for public service.
It is with deep regret that the AES has learned of the death of Jim Burns, 1946-2019 (Lecturer in Agricultural Economics, Reading University). Jim was a member of the AES until his retirement and participated frequently in its annual conferences.
A short version of this Newsletter is circulated with the JAE. The deadline for the receipt of material for the next issue is 16 December 2019, to firstname.lastname@example.org