Reaping What Others Have Sown: Measuring the Impact of the Global Financial Crisis on Spanish Agriculture

Michael Bourne, Jack Childs and George Philippidis

No 332166, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: Employing a dynamic computable general equilibrium (CGE) model of the Spanish economy, this study explicitly aims to characterise in detail the impact of the crisis on Spanish agrofood activities. In particular, we focus on the extent to which primary agricultural sectors are insulated from the broader macroeconomic effects of the crisis and consequently the limit of the agrofood sectors’ stabilising role within the wider economy. The results have broad implications for neighbouring Mediterranean EU economies given similarities in the relative size and structure of primary agriculture, and in the macroeconomic difficulties they face. Comparing with a status quo (i.e., no crisis) baseline, we estimate that the conditions of the crisis lead to a cumulative contraction of 10 per cent in Spanish agricultural activity by 2015, with concomitant reductions in real farming incomes of 17%. Notwithstanding, in accordance with previous studies and a priori expectations, this contraction is notably smaller than in non-food sectors. Comparing between agricultural activities, those with smaller land cost shares exhibit greater supply responsiveness, particularly rice, raw sugar and intensive livestock sectors. Finally, the crisis induces greater income inequality across Spanish households, with utility from food consumption falling 11% in the poorest segment, compared with only 1% in the wealthiest.

Keywords: Financial Economics; Agricultural and Food Policy (search for similar items in EconPapers)
Pages: 33
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:ags:pugtwp:332166

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