The Luxembourg Common Agricultural Policy reform and the European food industries: what's at stake?

Alexandre Gohin () and Laure Latruffe
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Alexandre Gohin: Économie et Sociologie Rurales - INRA - Institut National de la Recherche Agronomique

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Abstract: On June 26, 2003, the European Union (EU) adopted a new reform of its Common Agricultural Policy (CAP). Its boldest measure is the creation of a Single Farm Payment that will replace most of the present direct payments. We address quantitatively three issues raised by this new reform, using a computable general equilibrium model that allows us to measure the impacts on the food industries as well as their role in the transmission of impacts along the food chain. The first issue examined is whether this reform helps the EU15 to remove the controversial export subsidies. Our numerical results show that this reform effectively reduces the amount of export subsidies but without removing them. Our second concern lies with the production and trade distortion impacts of CAP direct payments. We investigate this issue in the case of full decoupling, as well as partial decoupling as chosen by EU15 member states. We find that they have rather similar effects on production and trade. Finally, we explore the employment effects, and findings indicate that this reform leads to a significant decline of farm labor and, by contrast, to a very modest impact on the employment level by food processors. Generally, food industries are only marginally affected by this CAP reform.

Keywords: INDUSTRIE AGROALIMENTAIRE; POLITIQUE AGRICOLE COMMUNE; decoupling of agricultural support; union européenne; modèle d'équilibre général; decouplage (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (7)

Published in Canadian Journal of Agricultural Economics / Revue canadienne d'agroeconomie, 2006, 54 (1), pp.175-194. ⟨10.1111/j.1744-7976.2006.00044.x⟩

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Journal Article: The Luxembourg Common Agricultural Policy Reform and the European Food Industries: What's at Stake? (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01931641

DOI: 10.1111/j.1744-7976.2006.00044.x

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