Essays on the inefficiency of Norwegian agricultural policy
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Paper I: Efficiency losses in milk marketing boards – the importance of exports.Co-authored with Rolf Jens Brunstad and Erling Vårdal. Published in Nordic Journal of Political Economy: A milk marketing board (MMB) is a well known instrument for regulating the markets for dairy products. MMBs are based on price discrimination, and receipts from sales are pooled so that the farmers receive a single price adjusted for composition and quality. Using a numerical model, we find that the economic welfare cost of the Norwegian MMB, is as much as 26.3% of the milk production value. This computed cost is far larger than for the other countries with MMBs. The main reasons are that exports are a major ingredient of the Norwegian system, and that production costs are very high.Paper II: Multifunctionality of agriculture: An inquiry into the complementarity between landscape preservation and food security. Co-authored with Rolf Jens Brunstad and Erling Vårdal. Published in European Review of Agricultural Economics: Without support, the levels of agricultural public goods like food security and landscape preservation would fall short of demand in high-cost countries. However, as demonstrated by Norway as a case study, the current level of support is disproportionate from a public goods perspective, and the policy instruments are badly targeted at the public goods in question. Because agricultural land is a major component of both food security and landscape preservation, giving rise to a high degree of cost complementarity between the public goods,it would be more efficient to support land-extensive production techniques than production per se.Paper III: A better targeted policy on environmental services may lead to a larger relative PSE: a paradox illustrated by the case of Norway. Co-authored with David Blandford, Rolf Jens Brunstad and Erling Vårdal. Revise and resubmit in European Review of Agricultural Economics: The producer support estimate calculated by the OECD is widely used as an indicator of distortions created by agricultural policies. When considering conventional agricultural policy grounded on production subsidies, the relative (percentage) PSE and inefficiencies are highly correlated. However, we demonstrate that this is not necessarily the case if policy is targeted to correcting externalities associated with agricultural activity. In particular, a welfare enhancing reform involving a shift from production subsidies to payments for the supply of public goods may result in a lower absolute PSE and lower trade distortions but a higher relative PSE.Paper IV: Agriculture versus fish – Norway in WTO. Published in Food Policy: The Norwegian agriculture is highly protected and subsidised. The opposite is the case for fisheries and fish farming which suffer from foreign market restrictions. Using a computational general equilibrium model, the gain for Norway of a complete elimination of food subsidies and tariffs is estimated to be in the range of 1.2 - 2.7 per cent of GDP. Most of this gain stems from domestic farm sector liberalisation. The gain from free market access for seafood is estimated to 4.4 per cent of the seafood export value. Consequently, Norway has much to gain from offering other countries market access for agricultural products. By pursuing such a policy, Norway may also strengthen the case for fisheries and fish farming in trade talks.Paper V: Modelling farmers’ labour supply in agricultural models: Micro-based research on farm households’ allocation of time suggests that farm labour is partially sector-specific, i.e., that reallocation of farm labour as a response to change in the relative wage between on-farm and off-farm work is sluggish. This evidence is rarely reflected in numerical models aimed at policy evaluation which most commonly assume either perfectly mobile or totally sector-specific farm labour. To overcome these restrictive model assumptions, a constant elasticity of transformation (CET) function can be adopted. The CET approach to represent farm household preferences for on-farm work, or specific taste for farming, is in this paper demonstrated and interpreted. Using the Norwegian agricultural sector as an example, the paper clearly shows that farmers’ preferences for onfarm work are of vital importance as to how a liberalisation of farm policy affects farm output and farmers’ income. The results depend on technology, i.e., to what degree costs can be reduced by replacing hired labour, capital and other factors with cheaper family labour.
Paper I: Nordic Journal of Political Economy 31, Brunstad, Rolf Jens; Gaasland, Ivar and Erling Vårdal, Efficiency losses in milk marketing boards - the importance of exports. Essays on the inefficiency of Norwegian agricultural policy, 77-97. Published version. Copyright 2005 Nordic Journal of Political Economy.Paper II: European Review of Agricultural Economics 32 (4), Multifunctionality of agriculture: an inquiry into the complementarity between landscape preservation and food security, pp. 469–488. Copyright 2005 Oxford University Press and the Foundation of the European Review of Agricultural Economics. Full text not available in BORA due to publisher's restrictions. The published version is available at: http://dx.doi.org/10.1093/erae/jbi028Paper III: Blandford, David; Brunstad, Rolf Jens; Gaasland, Ivar and Erling Vårdal, A better targeted policy on environmental services may lead to a larger relative PSE: a paradox illustrated by the case of Norway. Essays on the inefficiency of Norwegian agricultural policy. Accepted for publication with the title "Optimal agricultural policy and PSE measurement: an assessment and application to Norway", in Journal of International Agricultural Trade and Development. Copyright Nova Science Publishers. Full-text not available in BORA.Paper IV: Food Policy 34(4), Gaasland, Ivar, Agriculture versus fish - Norway in WTO, pp. 393–397. Copyright 2009 Elsevier Ltd. Full text not available in BORA due to publisher’s restrictions. The published version is available at: http://dx.doi.org/10.1016/j.foodpol.2009.02.005Paper V: Gaasland, Ivar, Modelling farmers' labour supply in agricultural models. Essays on the inefficiency of Norwegian agricultural policy. Draft version. Full-text not available in BORA.
PublisherThe University of Bergen
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