Содержание
- 2. Background ◦The overproduction ◦Over intensification of agriculture …because the EU price floor is higher than the
- 3. Target
- 4. Method and theory ① ⊡We assume that all the surplus food was dumped on the world
- 5. Method and theory ② ⊡Every farmer in the world market wants to sell at the EU
- 6. Method and theory ③ ⊡As the result of reforms, the consumers’ surplus: a+b ⊡EU farmers lose:
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Background
◦The overproduction
◦Over intensification of agriculture
…because the EU price floor is
Background
◦The overproduction
◦Over intensification of agriculture
…because the EU price floor is
Serious reforms started from 1990s
For examples,
⊡EU farmers---less than 5 percent of all the population in the 1970s (almost same as today’s)
⊡Most of money goes to the largest farm owners
…because the direct payment was linked to the amount of money each farm got.
These issues apparently appeared from 1970s
⊡The farm sector‘s political strength
⊡The conflicts between the members
⊡The historical background
⇒These factors made it difficult to implement the reforms.
Thus, CAP had to find the different approach from the just eliminating the price floors
Target
Target
Method and theory ①
⊡We assume that all the surplus food was
Method and theory ①
⊡We assume that all the surplus food was
⊡the EU buys the excess food and sell them on the world market.
⊡the surplus area: b+c+d
Method and theory ②
⊡Every farmer in the world market wants to
Method and theory ②
⊡Every farmer in the world market wants to
⊡To reserve the higher price for EU producers, the world price+T must exceed the floor.
⇒the decoupling reform decreases the price floor to the world price. As the result, production also falls and consumption rises.
Method and theory ③
⊡As the result of reforms, the consumers’ surplus:
a+b
⊡EU
Method and theory ③
⊡As the result of reforms, the consumers’ surplus:
a+b
⊡EU
⊡EU budget saves: b+c+d
⇒the net gain: b+d
However, the EU has to compensate for the farmers with direct payments.
If the compensation is fully done, the cost will be higher than before.
(a+b+c>b+c+d)