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Do EU direct payments to beef producers belong in the 'blue box'?

McErlean, S., Wu, Z. P., Moss, J., Ijpelaar, J. and Doherty, A. (2003) Do EU direct payments to beef producers belong in the 'blue box'? Australian Journal of Agricultural and Resource Economics, 47 (1). pp. 55-73. ISSN 1364-985X

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To link to this item DOI: 10.1111/1467-8489.00203

Abstract/Summary

In the Uruguay Round Agreement on Agriculture, so-called 'blue box' support measures were exempted from reduction commitments, provided they were delivered under 'production-limiting' programs. Although classified as 'blue box', the EU system of direct payments (DP) to beef farmers imposes 'claim-limiting' restrictions rather than 'production-limiting' restrictions, allowing farmers to keep additional animals over and above the number upon which they are eligible to claim DP. The present paper provides empirical evidence that EU direct payments capitalise into the market prices of male calves and young steers in Ireland. It is also likely that DP capitalises into the prices of beef cows and heifers. Given this capitalisation process, some farmers can obtain 'capitalised' DP on animals produced over and above the 'claim-limiting' restrictions, by selling these animals through auction markets. Thus, 'capitalised' DP probably encourages production over and above the limiting measures.

Item Type:Article
Refereed:Yes
Divisions:Faculty of Life Sciences > School of Agriculture, Policy and Development
ID Code:8902
Uncontrolled Keywords:TIME-SERIES, UNIT ROOTS, COINTEGRATION, PRICES, TESTS, MONEY

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