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Environment

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The linkage between agriculture and the environment is important, not least because agriculture is a major user of the world’s land and water resources. Agriculture can exert a positive effect on the environment by providing habitat for wild plants and animals, through water management, by helping to prevent floods and other natural hazards, and as a sink for atmospheric carbon. Conversely, agriculture may increase soil loss, and the use of agri-chemicals or production of animal waste may impair water quality.

The linkage between international agricultural trade and the environment is complex. Trade may promote changes in agricultural practices that enhance or reduce environmental quality in individual countries. There is also the issue of whether trade may undermine or help foster domestic policies aimed at improving environmental quality.

Agricultural Policy

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Global trade in agricultural products is shaped by the policies of major world trading powers, such as the United States, European Union, and Japan, and by international agreements. The formation of the World Trade Organization in January 1995 represented a broadening of the process of the multilateral approach to trade issues that had been conducted under the General Agreement on Tariffs and Trade (GATT) since 1947.

A major objective of agricultural policies in most developed countries is to support agricultural prices and incomes. In many developing countries, ensuring an adequate supply of food at reasonable prices to consumers is a major policy objective.

U.S. Peanut Markets Adjust to Policy Reform

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By Erik Dohlman, Linwood Hoffman, and Edwin Young, Economic Research Service, USDA

With the recent (2002) elimination of the longstanding “marketing quota” system that supported domestic peanut prices at well above world levels, the U.S. peanut sector is in the initial stages of adjusting to a more uncertain, market-oriented environment. At the aggregate level, some early indications are that the adjustment process for U.S. peanut farmers has been difficult, resulting in deep losses of revenue and a rapid exit from peanut production by some producers.

In 2003, the value of U.S. peanut production was down 30 percent and prices fell by nearly 25 percent compared with 2001. U.S. peanut-planted acreage is at its lowest since 1915, and planted acreage has declined sharply in several important peanut producing states–55 percent in Virginia and nearly 40 percent in Texas since 2001.

Peanut production is concentrated geographically, with a relatively small subset of counties in just seven states accounting for a great deal of the output. As a result, changes to the peanut program have potentially important economic implications not just for the individual farm households that produce peanuts, but perhaps for some rural communities as well.

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Between Transition, WTO and EU Accession, Agriculture and Agricultural Policies in Formerly Centrally Planned Countries

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By Johan F. M. Swinnen

Fifteen years after the Berlin Wall fell and signaled the beginning of a vast set of changes throughout the countries of the former Soviet Bloc, eight Central and Eastern European countries (CEEGs) will become members of the European Union (EU). They affected society in a multitude of ways. They affected the way the political and economic system operated but also the social organization of society, the psychology of the people living in the countries, and the culture of day to day life.

This paper reviews the state of agriculture and of agricultural policies in the formerly centrally planned economies of Central and Eastern Europe and the former Soviet Union. All countries went through profound economic and institutional transitions, with important consequences for the organization of their agri-food systems, output, and productivity, as well as government policies. However, after ten years of transition the economies and policies differ significantly among countries. In addition, the international institutional environment which they face differs.

Eight countries in central and Eastern Europe have made significant progress in economic and institutional reforms and will join the EU in 2004. This will have profound implications for their agriculture, as they will be integrated in the Common Agricultural Policy (CAP) of the EU.

This paper summarizes key developments in the agri-food sector as wells in agricultural policies. The paper focuses on how opening up to global forces and changes in trading regimes and integration in international institutions has affected the economies and policies, and which are key policy issues for the future. A key argument of the paper is that, in order to understand the political effects of access to international markets and integration in regional and multi lateral agreements, it is crucial to understand the structural characteristics of the transition economies, and how they have been affected by the transition process. For this reason the author begins with key aspects of the transition process, before turning to more specific international issues. Attention is given to such topics decline and growth during transition, subsidies and farm support, structural reforms and productivity growth in this initial section. The focus of the paper then centers on international aspects of transition. Such economic topics detailed are migration, capital flows, and foreign direct investment.
The remaining sections of the paper summarize recent International agreements and conclude with a discussion of the economic role and impact of member states upon EU enlargement.

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