THE INFLUENCE OF THE COMMON AGRICULTURAL
POLICY ON DEVELOPING COUNTRIES’ AGRICULTURAL
SELF-SUFICIENCY
Pierre Borst (10000352)
July 2014
BSc Economics
Thesis Supervisor: I. Rozentale
ABSTRACT
The Common Agricultural Policy is the European Union’s most controversial policy. Not only is the system very costly, but numerous studies have also proven that the coherent dumping of surpluses are damaging agricultural sectors in developing countries. This thesis examines the effects that the Common Agricultural Policy has had on agricultural self-sufficiency in developing countries and the possible unendurability of an increasing import dependency. Data from the period 1962-2011 indicates an increasing dependency of developing countries on agricultural import - that grows proportionally with EU export. Increasing food prices make this increasing dependency unendurable.
TABLE OF CONTENTS
1. INTRODUCTION ... 3
2. LITERATURE REVIEW... 4
2.1 The beginning of CAP and the consecutive reforms ... 4
2.2 The external effects of the CAP ... 8
2.2.1 Agricultural overproduction and its external effects ... 8
2.2.2 Import restrictions in the EU and preferential access ... 12
2.3 The struggle for coherence with development objectives ... 13
2.4 Increasing import dependency ... 14
2.5 Literature review conclusions ... 17
3. RESEARCH METHODOLOGY ... 18
3.1 Hypotheses ... 18
3.2 Graphs and regression models ... 18
3.2.2 Regressions of EU export on LDCs’ import/consumption ratios ... 19
3.2.3 Graphs on agricultural real prices. ... 19
3.3 Data description ... 19
4. RESEARCH RESULTS ... 21
4.1 Course of EU agricultural export and LDCs’ import/consumption ratios ... 21
4.2 Relation between EU export and LDCs’ import/consumption ratios ... 23
4.3 LDCs’ increasing import dependency in the long run ... 25
5. SUMMARY AND CONCLUSIONS ... 27
REFERENCES ... 29
APPENDICES ... 30
APPENDIX A: List of EU-27 countries and the 48 Least Developed Countries ... 30
APPENDIX B1: Data on EU export ... 31
APPENDIX B2: Data on LDCs’ import/consumption ratios ... 32
APPENDIX B3: Data on agricultural real prices in $ per kg (computed against the 2010 $ value) .... 33
APPENDIX C1: Bovine meat industry ... 34
APPENDIX C2: Cereal industry ... 35
APPENDIX C3: Maize industry ... 36
APPENDIX C4: Pig meat industry ... 37
APPENDIX C5: Poultry meat industry ... 38
1. INTRODUCTION
With 42%1 of total expenses, the highly criticized Common Agricultural Policy makes up for the biggest part of the European Union’s (EU) budget. Farmers from the EU benefit by receiving support for their agricultural production. Although the CAP was originally created to make the EU self-sufficient, farmers from the EU are now overproducing their products and exporting the surpluses outside the EU, as the production and export subsidies make this a profitable strategy.
A lot of the subsidized products are exported to the least developed countries (LDCs) at “dump prices”: prices lower than production costs. As a result, local farmers are unable to compete and are driven from their own markets. Previous research has already indicated that the CAP hurts employment in the agricultural sector of these countries. It seems evident that cheap EU export has made developing countries more dependent on import, as local
agriculture gets distorted and LDCs therefore lose agricultural self-sufficiency. However, there has been no research to this theory yet.
This thesis elaborates on previous researches’ findings about the CAP, but shifts its focus to the effects that the CAP has had on agricultural self-sufficiency in developing
countries. Not only does this thesis research the relation between an increasing EU export and an increasing import/consumption ratio in LDCs, but it also looks at the endurability of a high import dependency.
In my literature review, I have outlined the history and development of the CAP and the criticism it has faced. In my empirical review, I have researched the course of EU export, LDCs’ import/consumption ratios, agricultural prices and the correlation between EU export and LDCs’ import/consumption ratios, in order to answer the research question: “what is the CAP’s impact on the long-term endurability of LDCs’ agricultural import dependency?”
11 http://ec.europa.eu/agriculture/cap-post-2013/graphs/graph1_en.pdf
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2. LITERATURE REVIEW
In my literature review, I start with the development of the CAP itself. I explain why the CAP was created in the first place and list the reforms that it has been through. I proceed by
reviewing the negative externalities on which the CAP has been criticized so much. The objective of this literature review is to give an overview of the CAP and the criticism it has faced, and to address the fact that there has been no research on the increasing dependency of agricultural import in developing countries yet. In selecting my literature, I started by looking for articles by Alan Matthews and Jacques Berthelot, who know and have written a lot about the CAP and its external effects. After finding these articles, I looked for articles by other authors about CAP’s influence on LDCs, its incoherency with development objectives and its influence on agricultural import dependency in LDCs.
2.1 The beginning of CAP and the consecutive reforms
The CAP is the European Union’s system of agricultural subsidies. The urge for a self-sufficient European Union (EU) agricultural sector arose because of food shortages during and after the Second World War. This led to the introduction of the CAP in 1962 by the six founding Member States: Belgium, France, West Germany, Italy and Luxembourg. The CAP was designed as a price-support system, to provide farmers with stable prices and to
encourage production (Goodison, 2009). “Community-wide prices” were set-up, which determined “import levies” and “export refunds”. This was done by “intervention
mechanisms”. An intervention took place when the market price was too low and the demand was lacking supply. In this case, the EU bought excessive agricultural products from their farmers. This way, prices were artificially held constant, even when the market got distorted by a decline in demand, or by a sudden excess in supply. Interventions took place when the price dropped below the “intervention price” (Figure 1).
Figure 1: Prices under the CAP
Source: (Priks, 2012, p. 11)
In order to protect these prices, a highly protective tariff regime was required to prevent the high-priced European market from being flooded by third-world agricultural import
(Goodison, 2009). Therefore, a “threshold price” was introduced: the minimum price at which products could be imported into the Union (Figure 1). The importer had to pay the difference with the world price. This threshold price was set slightly lower than the target price to take into account the costs of transportation from the land of production to the internal parts of the EU. Products leaving the EU however, enjoyed an export subsidy, paid by the EU to bridge the gap between the high prices in the EU and the lower world prices. The export subsidies do not only provide EU farmers a guaranteed compensation for their production meant to feed the EU, but also for production exported outside the EU when the internal demand is already fulfilled. By guaranteeing a fixed price, the CAP stimulated overproduction. Even the most inefficient farms were able to receive an adequate income because of the high prices. These high prices encouraged the efficient farms to invest and scale up their production.
Although the CAP managed to make the EU agriculture self-sufficient and guaranteed income for European farmers by its employment stimulating character, there has always been a large amount of critique on the policy. Providing only 5,6% of employment and contributing to only 1,8% of GDP in the EU (Priks, 2012), agriculture is not the most important sector in Europe. However, the CAP has always been responsible for the biggest share in EU budget, which accounted for more than 40% in 2012. The increased costs of agricultural
overproduction and its external effects (which will be examined in 2.2) have put the CAP under pressure and led to several reforms since its implementation.
The first reforms were the 1992 MacSharry reforms, named after the European Commissioner for Agriculture, Ray MacSharry. The CAP shifted from a price support policy for agricultural products to an income support policy for EU farmers. The new subsidy consisted of aid per hectare of land to reduce production and protect the environment. The aim of the new CAP was to enhance EU agriculture competiveness, by bringing agricultural prices closer in line with the far lower world market prices. EU producers were now able to respond to market signals, while being protected from extreme price fluctuations, since interventions were only used as a real safety net measure. Agricultural prices in the EU dropped since the high prices were no longer supported. In the case of cereals, prices were allowed to fall by around 50%. EU farmers were isolated from the income effects of price reductions by receiving direct payments, adding up to sometimes 70% of their income (Goodison, 2009).
The new decoupled payments were seen as more WTO compatible, since the EU claimed them to be non-trade disrupting and they could be measured by the WTO Agreement on Agriculture standards (AaA) (Otieo-Odek, 2002). The WTO Agreement on Agriculture uses three boxes to categorize domestic support for the farming sector (Fritz, 2011): a) the so-called amber box, containing all domestic support measures which are believed to disrupt production and trade, including price support and subsidies directly related to production quantities, b) the green box, containing subsidies which are qualified as non-trade or production disrupting, and c) the blue box of conditions, where subsidies are placed that would normally be placed in the amber box, but that also require farmers to limit production2. In contrast to the amber box, the blue and green box have both been exempt from reduction commitments under the AoA. The inclusion of the blue box in the AoA was a deal between the EU and the US in 1992 to break the impasse of the Uruguay Round negotiations3. The EU relied heavily on this blue box, which allowed it to exclude a considerable amount of CAP spending from WTO reduction commitments (Fritz, 2011).
The MacSharry reforms however, did not manage to solve the overproduction problem. Surpluses continued to put pressure on the EU budget and agricultural prices
2 http://www.wto.org/english/tratop_e/agric_e/agboxes_e.htm
3 “The Uruguay Round was the 8th round of multilateral trade negotiations (MTN) conducted within the framework of the General Agreement on Tariffs and Trade (GATT), spanning from 1986 to 1994 and embracing 123 countries as "contracting parties". The Round led to the creation of the World Trade Organization, with GATT remaining as an integral part of the WTO agreements. The main objectives of the Uruguay Round were to reduce agricultural subsidies, lift restrictions on foreign investment and to begin the process of opening trade in services as banking and insurance.”- Wikipedia
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remained above the world market prices. This led to new reforms, known as Agenda 2000, which was built on the MacSharry reforms. Agenda 2000 focused on stabilizing agricultural spending, by further cutting support prices for cereals, beef and milk products. Compensation payments for affected farmers, on the other hand, increased. “Rural development” was the new pillar (Pillar 2), that complemented CAP’s existing pillar covering market management measures and direct payments (Fritz, 2011). This new pillar required member state financing and aimed for improving the quality of the rural environment.
From January 2005, the EU began to allocate farmers payment entitlements based on a reference period in the past, in which they received a certain amount of direct aids. These single farm payments were independent of the type or quantity the farmers produced, thus decoupling the link between subsidy and production. Large parts of the subsidies were shifted from the blue box to the also unconstrained green box (see graph 1).
Graph 1: EU domestic support 1986-2007
source: Globalizing Hunger (Fritz, 2011)
2.2 The external effects of the CAP
The reason why the CAP has been through so many reforms, is the criticism that the policy has attracted since its existence. The CAP costs the EU yearly more than €80 billion, and with an allocation of 42% of EU budget, it contributes for the greatest share of the costs. Not only has there been a debate on the costs for taxpayers, but a lot of critics argue that the CAP has some major negative external effects. These external effects have led a lot of critics to plead for a complete abolishment of the policy. The external will be reviewed in sections 2.2.1 and 2.2.2.
2.2.1 Agricultural overproduction and its external effects
Although most CAP subsidies have been moved to the Green box, many experts doubt the non-distorting character of large parts of CAP payments. Their claim is that the decoupled direct aids would still have a trade-distorting and surplus-stimulating effect by increasing farmers’ incomes and lowering their market risks. By helping the farmers to cover their fixed costs, the EU allows them to produce at lower costs than their competitors. Furthermore, the guaranteed revenue stream of direct payments improves the creditworthiness of EU farmers, which enables them to undertake certain investments that enhance productivity and that stimulate overproduction. Instead of overproducing their products to sell them for a high fixed price, farmers from the EU enjoy a support to sell their products at really competitive prices since the CAP reforms (Goodison, 2009). While the EU has modeled the CAP in a way to fit them in the green and blue boxes, the subsidies remain to have consequences for farmers outside the EU. Agricultural analyst Allan Matthews wrote: “Since its introduction, the CAP
has been criticized to be an outstanding example of policy incoherence with development objectives.” (Matthews A. , The European Union’s Common Agricultural Policy and
Developing Countries: the Struggle for Coherence, 2008).
The biggest farms are the main beneficiaries, since the allocation of support is based on the size of the farm. In 2007, the 25% of smallest farms were allocated only 3 percent of support, while the largest 25% received 74 percent of the funds (Fritz, 2011). As Table 1 shows, 47 percent of the 7.8 million beneficiaries were allocated support of only €500 in 2009. Only privileged minorities received benefits of between €100.000 and more than €500.000 (Fritz, 2011). This skewed Lorenz curve proves that most support is allocated to the biggest firms, thus favoring large input-intensive and export-orientated factory farms. Instead
of overproducing to sell for a fixed price, EU farmers are now encouraged overproduction to be in a higher category and receive higher direct payments. Thus, the problem of
overproduction is still prevalent under this decoupled system (Fritz, 2011). Table 1: Distribution of Direct Payments in the EU-27, 2009 Direct payments per holding Number of beneficiaries (in
thousands)
Relative share of number of beneficiaries (in %) < 0 € 5,65 0,07 ≥ 0 and < 500 € 3.442,10 43,74 ≥ 500 and < 1.250 € 1.468,84 18,67 ≥ 1.250 and < 2.000 € 594,57 7,56 ≥ 2.000 and < 5.000 € 904,05 11,49 ≥ 5.000 and < 10.000 € 551,09 7,00 ≥ 10.000 and < 20.000 € 423,50 5,38 ≥ 20.000 and < 50.000 € 354,06 4,50 ≥ 50.000 and < 100.000 € 93,84 1,19 ≥ 100.000 and < 200.000 € 22,89 0,29 ≥ 200.000 and < 300.000 € 4,21 0,05 ≥ 300.000 and < 500.000 € 2,36 0,03 ≥ 500.000 € 1,41 0,02 Totals 7.868,57 100,00
Source: European Commission, Indicative figures on the distribution of aid, by size class of aid (Financial year 2009)
Because farmers from the EU also receive an export subsidy, overproducing and subsequently exporting the surpluses are encouraged even more. Contribution to global food security has long been presented as an excuse for growing EU export to LDCs, where most of the surpluses ended (Fritz, 2011). However, this food dumping has been a problem for local farmers for the last couple of decades. These farmers are unable to compete with the products that flood their markets, since these products are subsidized to such an extent that they are being sold under the cost price of their own products. In multiple industries, local famers have already been outcompeted by farmers from the EU. The process of farmers losing the ability to sell their products has had a major impact on unemployment in LDCs. While the
agricultural sector accounts for only 5.4% of employment in the EU (Priks, 2012), it provides income for more than 50% of the population in most parts of Africa4. In previous research about the CAP’s externalities, there has been a focus on the effects on African countries. As 4 http://data.worldbank.org/indicator/SL.AGR.EMPL.ZS/countries/all?display=map
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this is where most of the surpluses are dumped, Africa seems to suffer the most from EU overproduction and export. Also, 34 of 48 total LDCs are African countries, making them obvious subject of study when researching the effects of CAP on LDCs.
Thomas Fritz (2011) researched the effects the CAP has had on food security in LDCs. One of Fritz’ focusses is the impact of food dumping in developing countries on local
agricultural employment. An example he uses is the poultry industry in West-Africa that has suffered from dumping by farmers from the EU. The EU poultry industry has benefited from CAP support in the form of export refunds, income support, trade promotion and subsidized cereal prices from EU farms, thus lowering feedstuff costs. Since feedstuffs contribute up to 70% of the production costs of cereal farms, the subsidized cereals have helped the EU poultry industry to be even more competitive (Fritz, 2011). In the period 1990-20095, EU poultry exports grew with 130%. Sub-Sahara Africa consists one of the main export
destinations, as it is where between 20% and 25% of EU poultry export ends up (Fritz, 2011). Before the mid-1990’s, chicken imports in Sub-Sahara Africa were almost insignificant, but EU shipments to countries like Benin, Cameroon, Ghana, Ivory Coast and Senegal quadrupled between 1996 and 2006. Poultry markets got disrupted and local farmers were not able to compete with the heavily subsidized production and export from the EU.
Between 1980 and the 1990’s, local production of poultry meat and eggs in Ghana grew rapidly, serving 95 percent of the domestic market. Poultry and egg production have served as a complementary source of income and nutrition for millions of poor households and small-scale poultry farming was very widespread. The EU poultry dumping in Ghana, which increased by 476 percent between 2000 and 2009, devastated the local poultry industry, which was merely able to supply 10 percent of local demand (Fritz, 2011). Chicken meat from the EU was sold at €1.50 against €2.60 for local chicken, driving Ganesh farmers from their own markets. Most small-scale poultry farmers started breeding laying hens for the sale of eggs, or simply gave up.
Cameroon encountered similar consequences, as poultry import from the EU surged from 820 tonnes in 1996 to almost 19.000 tonnes in 2004. Not only breeders, but also other workers in the poultry production chain experienced the consequences of the diminishing demand for local poultry. Cereal farmers and butchers lost their jobs as well, leaving 120.000 workers in Cameroon unemployed because of the poultry dumping from the EU (Fritz, 2011). 5 After the 1992 MacSharry Reforms, cereal prices in the EU fell by around 50 percent, thus drastically lowering the production costs for the EU poultry market.
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In “Post-2013 EU Common Agricultural Policy, Trade and Development”, agricultural analyst Allan Matthews concludes that the degree to which developing countries are affected by changes in food prices and dumping by the EU depends on multiple factors. “The effects depend on the commodity composition of their trade, whether they are net importers or exporters of commodities protected by the CAP, and whether they have preferential access to the EU market and thus are able to share in some of the benefits of CAP protection”
(Matthews, Post-2013 EU Common Agricultural Policy, Trade and Development, 2011). Although the effects of food dumping in developing countries may differ, it seems evident that the greater are the dumping quantities, the greater are the effects on local markets. Inspired by the figures and consequences of our agricultural waste, agricultural analyst
Jacques Berthelot measured the share of CAP subsidies allocated to our exported animal products in the period 2006-2008. His measurements included direct payments, export refunds, subsidized feedstuff and market interventions. According to his findings, the €12.8 billion of average yearly EU exports received €4.3 billion of CAP support, adding up to a dumping rate6 of 33.9 percent (Berthelot, 2011). There are significant differences in dumping rates amongst sectors though (Table 2).
Table 2: EU-15 exports of animal products, average 2006-2008, in € million
Production Exports Export share Subsidies Dumping rate
Dairy Products 40.610 6.249 15,39 % 2.004 32,07 %
Bovine Meat 25.699 591 2,30 % 346 58,55 %
Pig Meat 25.735 4.709 18,30 % 1.430 30,37 %
Poultry Meat 12.279 1.291 10,51 % 571 44,23 %
Total/Average 104.323 12.840 12,31 % 4.351 33,89 %
Source: Solidarité 2011 (Berthelot, 2011)
With Berthelot’s figures, Fritz (2011) has calculated the share of export with relation to production. Over 15 percent of dairy products, 18 percent of pig meat and 10 percent of poultry meat find their way on the world market (Fritz, 2011). These figures illustrate the relative size of subsidized EU production, which is only produced in order to be dumped.
6 The dumping rate is a concept proposed by Jacques Berthelot, measuring the ratio of subsidies to export. This includes direct payments, export refunds, subsidized feedstuff and market interventions. The dumping rate is a measurement of how much EU tax payers subsidize agricultural waste that has to be exported, disrupting developing markets.
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2.2.2 Import restrictions in the EU and preferential access
As discussed in section 2.2.1, EU’s subsidized export distort agricultural markets in
developing countries and prohibit local farmers to compete on their own markets. While EU agricultural exports flood the markets in LDCs, LDCs have a hard time exporting their products to the EU themselves. For a long time, there have been import duties and quota in the EU as part of the CAP, in order to protect the high prices. These measures were among the most criticized subjects of the CAP and have led to statements that the EU was building a “Fortress Europe”. This criticism has led to several exceptions for import duties and quota.
When the CAP was still a price support policy, certain products were exempted from the import duties and were granted “preferential access”, which was a result of the Lomé Convention7. Beef, sugar and bananas are examples of commodities that enjoyed this special access to the EU market (Goodison, 2009). This agreement allowed certain exporters to sell their products duty-free on the high priced EU market (though most volumes were quota restricted). African sugar exporters for example, secured incomes of over € 250 million more than if they would have exported their products to other markets (Goodison, 2009).
The policy shift of price support to income support of in 1992 eroded the high prices in the EU. While the direct payments insulated farmers from the EU from income effects, exporters from developing countries did suffer from the price decline. Now prices in the EU were not supported anymore, preferential access was not as beneficial for these farmers as it has been before the CAP reforms. The process of price reductions has driven African
exporters out of the EU market in some sectors. Therefore, the CAP’s current system of income support has not only failed as a solution for overproduction and unfair competition, but has also hurt certain exporters from developing countries that once benefited from high prices in the EU (Goodison, 2009).
As a response to ongoing criticism about its protective trade policy, the EU created the Everything But Arms (EBA) agreement in 2001. This initiative allowed LDCs duty-free and quota-free access to the EU for their exports, with the exception of arms and armaments. Currently, 49 countries benefit from this arrangement, with duty- and quota-free exports worth of €10.5 billion in 20118. However, these products only account for 0.003% of EU
7 The Lomé Convention was an agreement in 1975 about trade and aid between the EU and 71 African, Caribbean and Pacific (ACP) countries. One of the main aspects was duty free agricultural and mineral export from ACP countries to the EU.
8 http://trade.ec.europa.eu/doclib/docs/2013/april/tradoc_150983.pdf
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imports (Goodison, 2009). Despite the seemingly good intentions, the current form of the EBA is heavily criticized as certain agricultural products are still excluded from this
agreement. Commodities like beef, maize, rice and sugar are still subjected under duty- and quota measures. Most of these excluded commodities have the potential to make farmers from LDCs internationally competitive, if they would have been sold in a free market (Kirkbride, 2000). Also, many other products are not able to benefit from EBA, since most production processes include at least one phase that is not conducted in a LDC, and therefore disqualify the product from the agreement. Hence, EBA’s selective exceptions question the credibility of its goal in encouraging the agricultural development in LDCs
2.3 The struggle for coherence with development objectives
In “Mission Impossible: the European Union and Policy Coherence or development”, Maurizio Carbone9 (2008) debates the “coherence gap” between the CAP and the EU’s development aids.
“The principle of policy coherence has been the object of a contentious debate in the European Union’s external relations, though discussions have been limited mainly to its foreign policy and its ability to speak with one voice in the international arena.” (Carbone,
2008)
The Maastricht Treaty10 established that: “The Union shall in particular ensure the
consistency of its external activities as a whole in the context of its external relations, security, economic, and development policies” (Article C)”. While the emphasis was previously given to the relationship between the member states and the Union, the Maastricht Treaty
emphasized the consistency across different policies. Policy coherence for development (PCD), which means “taking account of the needs and interests of developing countries in the evolution of the global economy”11, was introduced in the Maastricht Treaty and further strengthened in the Treaty of Lisbon. However, PCD has largely been absent from the debate of policy coherence.
9 Maurizio Carbone is an Italian researcher, working for the university of Glasgow. His main interests of research are the external relations of the EU, politics of international development, as well as European and Italian politics.
10 The Maastricht Treaty was undertaken in 1992 to integrate the members of the European Community. It created the EU and led to the creation of the euro. Also, the three pillars of the EU were established. 11 OECD. 2003. Policy coherence: Vital for global development. Policy Briefs, July
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The type of policy coherence Carbone discusses is horizontal coherence: the coherence of various policy areas and the potential problems that are raised by their interaction. Here, it refers to the consistency between aid and non-aid policies and their combined contribution to development. As discussed earlier, the EU’s subsidized overproduction and export disrupt markets in developing countries. This is incoherent with development assistance from the EU to support agricultural industries in these countries. The European Commission has been very cautious about linking development with trade and agriculture and in responding to
accusations about “negative effects on development policy as arising from unintended incoherence of policies”. Only in 1999, a “non-paper” from the European Commission was released that categorized various types of incoherence, but failed to come up with innovative proposals (Carbone, 2008). Despite its institutionalization with the Treaty of Maastricht, PCD has been neglected. This is partly because the EU places the interests of its own farmers before those of developing countries, but also because of the assumption that development assistance alone would take care of the needs of developing countries. The negative impact of the CAP makes the development assistance futile. In ‘Declaration by the Heads’, the second paragraph clearly states:
“Ambitions for Cancún must be commensurate with these objectives. We need a decisive break with trade policies that hurt economic development. Donors cannot provide aid to create development opportunities with one hand and then use trade restrictions to take these opportunities away with the other – and expect that their development dollars will be
effective”12
2.4 Increasing import dependency
Most of the criticism on CAP focusses on the effects that subsidized export has on agricultural employment in LDCs and EU’s import policy. There has not been any research on the effects that the CAP may have had on import dependency, though this issue might be just as
important as CAP’s influence on agricultural employment. Figures indicate a possible correlation, but I will get back on this in the empirical part. Section 2.4 will focus on the implications of an increased import dependency and why this should not be overlooked when discussing the possible abolishment of the CAP.
12 The Declaration by the Heads was conducted by the IMF, OECD an World bank on the Eve of Cancún Ministerial Meeting of the WTO in 2004.
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Since the 1980’s, LDCs have been increasingly importing food from the EU (Panagariy, 2005). As a result of LDCs’ increased import and the subsequent distortion of their own agricultural sectors, most of these countries have become increasingly dependent of food import. Developing countries’ surpluses that added up to more than $10 billion until 1985 have been eroded and turned into a large deficit of almost $30 billion in 2005 (see graph 2).
Graph 2: Net agricultural trade balance: developing countries, 1961-200413
Source: Globalising Hunger (Fritz, 2011)
The cereal industry illustrates how food dependency can bring problems other than the loss of employment in a certain industry (Fritz, 2011). Providing 54% of daily calories, cereals account for the largest part of the diet of most people in LDCs. The import/consumption ratio of cereals in more than 20 LDCs surpasses 50%14. These countries continue to have a fast growing population, while their agricultural productivity has not significantly increased to accommodate for this growth. Cheap food prices have been a convenient excuse for LDCs’ governments to restrict from making expensive investments in their own agriculture. For exporters from industrialised countries, dumping agricultural excesses in developing countries was justified for their contribution to global food security. Since the mid-1970’s, LDCs have become more dependent of cereal imports, while cereal prices remained stable for a period of 25 years. However, global cereal prices have started to increase since 2005 (see graph 3),
13 In the green line of the graph, Brazil is excluded since it is the exception of a big developing country with excellent trade statistics. Therefore, it has a significant impact on the average net agricultural trade balance of developing countries and disrupts the picture of most developing countries that actually suffer trade deficits. 14 http://www.fao.org/docrep/014/al979e/al979e00.pdf
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making the import dependent counties increasingly vulnerable. Consumers in these countries are starting to pay the price, now the once so cheap cereals have become so expensive.
Graph 3: Deflated Cereals Price Index
Source: FAO (2014)
Although most economists and agricultural analysts who have researched the effects of the CAP plead for an abolishment of the policy, for the reasons mentioned in sections 2.2.1 and 2.2.2, the Indian-American economist Panagariya (2008) states that this would do more harm than good. Panagariya (2008) explains his argument in “Agricultural Liberalization and the Least Developed Countries: Six Fallacies”. Panagariya (2008) stresses the fact that most LDCs are import dependent countries. Suddenly abolishing the CAP would not fix the fact that these countries lack a competitive agricultural sector. In the current situation, LDCs have artificially cheap import to feed their populations. These countries would face substantial losses as a result of the rise in world prices, once the subsidies would be eliminated.
According to Panagariya, the effects of a rise in world prices would hurt developing countries as a whole more than it would benefit farmers, since most of these countries are net-importers.
Panagariya (2008) also discusses the consequences that abolishing the CAP would have on individual households in LDCs, who earn their living from agriculture. Contradicting the CAP critics, he states that researchers should focus on these households’ purchasing power instead of on their income. Abolishing the CAP would not simply increase the
purchasing power of developing countries’ farmers just by enabling them to sell their products at higher prices. It will hurt their purchasing power as well by increasing their costs of living,
0,0 20,0 40,0 60,0 80,0 100,0 120,0 140,0 160,0 180,0 200,0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 16
since most of their expenses are basic costs, as the cost of food. These two-way effects lower CAP’s effect on the real income of farmers from developing countries.
2.5 Literature review conclusions
The CAP was designed to make the EU agriculture self-sufficient. Since its existence, the policy has been criticized for being harmful to developing countries because of its negative externalities. The CAP stimulates agricultural overproduction and subsidizes export of these products. As a result, the markets in developing countries get flooded and the farmers from the EU outcompete the local farmers on their own markets. EU’s own import policy makes it difficult for farmers from developing countries to set foot on ground, despite the EBA
agreement. The CAP has had devastating effects on agricultural employment in LDCs. Carbone (2008) argues that the current form of the CAP with its external effects is incoherent with EU’s development objectives, as it conflicts with the EU development programs for agriculture in these countries.
However, the issue of an increasing import dependency in LDCs seems to be absent in the discussion about the problems caused by the CAP. The influence that the CAP may have had on this import dependency has not been researched yet, although figures at first sight indicate a certain relation. Therefore, in my empirical part, I have researched if the CAP has had a significant impact on the increased import dependency of LDCs myself and what the implications of a high import dependency in the future might be. In order to answer my research question “what is the CAP’s impact on the long-term endurability of LDCs’ agricultural import dependency?”, I came up with two hypotheses: “LDCs have become increasingly import dependent as a result of increased EU food dumping in the period 1962-2011” and “LDCs’ increasing dependency on EU agricultural export is unendurable in the long run”.
3. RESEARCH METHODOLOGY
According to most critics of the CAP, EU’s subsidized exports have had an eroding effect on agricultural sectors in LDCs. As a result, most critics propagate a complete abolishment of the CAP in the near future. Panagariya however, claims that this is not the solution, as most LDCs are currently net-imports of agricultural products and they will actually be hurt by the
increased food prices. Therefore, I have researched if LDCs have indeed become more dependent on import, if this is a result growing EU export, and whether this development is still endurable.
3.1 Hypotheses
Panagariya and Fritz have already discussed the fact that the majority of LDCs are currently net-importers of food. By looking at their import/consumption ratios of different
commodities, I have researched to what extent LDCs are actually depending on import, and whether increased import dependency is a result of increased food dumping by the EU. I graphed and regressed the data of the bovine meat, cereal, maize, pig meat and poultry meat of EU export and LDCs import and consumption in order to test my first hypothesis: “LDCs have become increasingly import dependent as a result of increased EU food dumping in the period 1962-2011.”
My second hypothesis elaborates on the first hypothesis: “LDCs’ increasing dependency on EU agricultural export is unendurable in the long run.”
3.2 Graphs and regression models
For the empirical analysis, I have modeled graphs and regressions. The graphs show the development of EU’s agricultural export, the income/consumption ratios of LDCs, and the development of agricultural world prices. The regression models test for correlation between EU export and LDCs’ import/consumption ratios of different commodities. The regressions are tested against the usual significance level of 5 percent.
3.2.1 Graphs of EU export and LDCs import/consumption ratio
First, I graphed the development of EU export (in tons) and the import/consumption ratios in LDCs in the bovine meat, cereal, maize, pig meat and poultry meat sectors. These sectors are amongst the biggest agricultural sectors in the EU and account for the greatest share of our agricultural export: more than 10 per cent in quantity of total EU export, which constitutes of 123 different agricultural export products15. I looked at the import/consumption ratios because ratios shows whether import habits have changed, while data on absolute import could reflect changes as a result of demographic growth. The graphs are presented in section 4.1.
3.2.2 Regressions of EU export on LDCs’ import/consumption ratios
After I graphed the data mentioned above, I looked for a correlation between EU export and LDCs import/consumption ratio of each commodity. By regressing EU export on the LDCs’ import/consumption ratio in the corresponding sector, I analyzed if the increase in
import/consumption ratios in developing countries is the result of an increase of EU export. The model summaries of the regressions are presented in section 4.2 and the complete results of each regression are presented in Appendices C1-C5. Also, a scatter plot for every
commodity is included in their appendix, to give a visual representation of each commodities’ correlation between EU export and LDCs’ import/consumption ratio.
3.2.3 Graphs on agricultural real prices.
After finding evidence that LDCs have become more dependent on EU subsidized export, I graphed the course of agricultural real prices. The results show whether there are stable agricultural prices, that keep an increasing EU export dependency endurable in the future, or whether the opposite is true. The graphs are presented in section 4.3.
3.3 Data description
The data I used in my empirical research on the EU export and LDCs’ import and
consumption of bovine meat, cereal, maize, pig meat and poultry meat, are statistics from the 50-year period 1962-2011. The data consists of the accumulated data of export from all 27 EU countries and the import and consumption data from 48 LDCs, which are all listed in an 15 http://faostat3.fao.org/faostat-gateway/go/to/download/P/CP/E
19
overview in Appendix A. I extracted the data from the databank of the Food and Agriculture
Organization of the United Nations. By dividing import data of the sectors mentioned above
by the consumption data in corresponding years, I generated my own import/consumption ratios. The data of EU export and LDCs’ import consumption ratios are presented respectively in Appendices B1 and B2.
The data I used to graph and regress the agricultural prices in the period 1993-2003 was extracted from the World Data Bank and is presented in Appendix B3. Of the
commodities I research in parts 4.1 and 4.2, there was only data available on bovine meat, maize and poultry meat. The prices of these commodities are real prices. Since they are computed against the same $ value from 2010, it possible to compare the prices across different years.
4. RESEARCH RESULTS
In this section, the graphs and the results of the regression analyses are presented. The graphs show a visual representation of the increase in EU export, LDCs’ import dependency and agricultural prices in different agricultural sectors. The regressions of these sectors prove if there is a correlation between export from the EU and import dependency in LDCs, in order to confirm the first hypothesis: LDCs have become increasingly import dependent as a result of increased EU food dumping in the period 1962-2011.
The data on agricultural prices shows if food prices have increased during the period 1993-2013, and whether it is likely that this is a continuous trend. The results answer the second hypothesis: LDCs’ increasing dependency on EU agricultural export is unendurable in the long run. The results are provided with an analysis.
4.1 Course of EU agricultural export and LDCs’ import/consumption ratios
Graph 4: EU agricultural export (in tons)
Graph 5: LDCs’ import/consumption ratio
0 5000000 10000000 15000000 20000000 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010
Bovine meat Cereal Maize
Pig meat Poultry meat
0,0000 0,1000 0,2000 0,3000 0,4000 0,5000 0,6000 1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010
Bovine meat Cereal Maize
Pig meat Poultry meat
As one can see in the graph above, EU export in the researched agricultural sectors has grown in absolute values in the period 1962-2011. This increase in export is in line with the
literature, as reviewed in section 2. It seems that the MacSharry reforms however, did not have the desired effect of ceasing the dumping of surpluses, as EU export continued to grow after 1992.
Meanwhile, I graphed the import/consumption ratios of these agricultural sectors in LDCs in the period 1962-2011. Based on this graph, all sectors except for cereal have experienced an increase in their respective import/consumption ratio. Now the
import/consumption ratios in the other four industries have increased, we can conclude that LDCs have become more dependent on agricultural import. This loss of agricultural self-sufficiency in LDCs could either be the result of a growing demand (for example because of demographic growth) and subsequently the lack of the local agricultural sector to provide for this increasing demand, or it may also have something to do with the increased food dumping by EU farmers. Section 4.2 will elaborate on this question.
The trend of an increasing share of import in relation to consumption is worrying, as some industries could end up like the West-African poultry industry, as examined in the literature section. LDCs face the dangers of becoming more vulnerable to the costs of increasing world market prices and decreasing domestic currencies if they have to import an increasing share of their products.
Chances are that my data does not even reflect the actual problems some countries are facing in certain industries, as it consists of averages of all 48 LDCs (which are listed in Appendix A) and does not address certain countries or regions specifically. For example, the figures of a 90% import dependency of West-African poultry consumption, that come from Fritz’ (2011) research, show that the problem in this certain region is worse than my data suggests, which shows an average LDCs import dependency of only 25%. This means that some LDCs may experience serious problems in certain industries, like West-African countries do in the poultry industry, that remain concealed in my data because other LDCs have low import/consumption ratios. The countries with low import/consumption ratios bring down the average and conceal possible problems that other countries are experiencing, as their high import/consumption ratios don’t come to surface in my data that averages the data from all 48 LDCs. Since “only” two-third of LDCs are net food-importers, one might expect their individual import/consumption ratios to be significantly higher than average and that possible problems arising from this situation are worse than one would presume according to
the average figures.
4.2 Relation between EU export and LDCs’ import/consumption ratios
The graphs from section 4.1 already showed that both EU export and LDCs’
import/consumption ratios have increased for most researched agricultural sectors in the period 1962-2011. I have regressed the data of EU export on LDCs’ import/consumption ratios to look for a relation that indicates that the increased EU agricultural dumping has influenced LDCs’ agricultural import dependency. The model summaries are presented in this section and the complete regression results are presented in Appendices C1-C5. In the
Appendices, I included a scatter plot with the value of EU export on the x-axis and the value of LDCs’ import/consumption ratio of the corresponding year on the y-axis, to visualize each commodity’s correlation.
Model Summary: Bovine meat EU export regression on LDC import/consumption ratio
Model R R Square Adjusted R Square Std. Error of the
Estimate
1 .566a .320 .306 .006229
a. Predictors: (Constant), Bovine_meat_EU_export
Model Summary: Maize EU export regression on LDC import/consumption ratio
Model R R Square Adjusted R Square Std. Error of the
Estimate
1 .917a .841 .838 .063060
a. Predictors: (Constant), Maize_EU_export
Model Summary: Pig meat EU export regression on LDC import/consumption ratio
Model R R Square Adjusted R Square Std. Error of the
Estimate
1 .823a .678 .671 .008867
a. Predictors: (Constant), Pig_meat_EU_export
Model Summary: Poultry meat EU export regression on LDC import/consumption ratio
Model R R Square Adjusted R Square Std. Error of the
Estimate
1 .927a .859 .856 .027950
a. Predictors: (Constant), Poultry_meat_EU_export
The regressions of EU export on LDCs’ import/consumption ratios of the maize, pig meat and poultry meat industries show the correlations, with respective R Square values of 0,841 ; 0,678 and 0,859. With an R Square of 0,320, the bovine meat industry also reacts to food dumping from the EU, although its correlation is not as strong as the ones from the three industries mentioned above. The cereal industry seems to be the only industry without a significant relation between EU export and LDCs’ import consumption ratio, with an R Square of only 0,002.
Tested against the usual significance level of 0,05, all industries except for cereal show a significant correlation between EU export and the LDCs’ import consumption ratio. Cereal shows a significance level as high as 0,766, but all four other industries have a correlation with significance levels of less than 0.01. Looking at the F-values, which can be found in the regressions in Appendices C1-C5, the results of these industries are highly significant: Bovine meat, maize, pig meat and poultry meat have F-values of respectively 22,628 ; 254,726 ; 100,890 ; 291,884.
Based on this statistical evidence, we can conclude that EU export in these four industries has changed the composition of domestic and foreign shares on LDCs’ food markets. Local LDCs have become increasingly dependent on import, as EU export has become more important in feeding LDCs’ populations. Therefore, I have found enough evidence to accept the first hypothesis: LDC’s have become increasingly dependent on import, as a result of food dumping by the EU. This implies that as long as the EU keeps increasing its export to developing countries, these countries will become even more dependent.
The data of maize, pig meat and poultry is not only the most significant, but also has the highest betas. With betas of respectively 0,917, 0,823 and 0,927: an increase in EU export
of maize, pig meat and poultry meat has a high impact on the LDCs’ import/consumption ratio of the respective commodity.
In the current situation, a high import dependency does not directly impose problems other than distorting local agriculture, as most products from the EU are still dumped below local production price. However, as Fritz’ (2011) example (mentioned in section 2.4) of 20 LDCs with a cereal dependency of over 50% already showed, a rise of prices can impose many problems for countries that have grown dependent of importing products after prices have been low for a long period of time. Local agricultural industries in LDCs have either been outcompeted, or at least not developed sufficiently to provide for the demand of the growing population, as a result of cheap import. This lack of agricultural development is going to be a problem once LDCs have become even more dependent of importing certain products while facing increasing agricultural prices, which I research in section 4.3.
4.3 LDCs’ increasing import dependency in the long run
Graph 6: Deflated Bovine Meat Price Index
Graph 7: Deflated Maize Price Index
0,00 1,00 2,00 3,00 4,00 5,00 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
Bovine meat
0,00 0,05 0,10 0,15 0,20 0,25 0,30 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013Maize
25Graph 8: Deflated Poultry Meat Price Index
After finding enough evidence to accept the first hypothesis, I looked to the implications of a high import dependency for LDCs on the long run. As data shows that EU export and LDCs’ import/consumption ratios both have been increasing, it is likely that this will continue in the coming years. By graphing the course of agricultural prices, I looked how an even further increase of import/consumption ratios could be an unendurable development for LDCs.
Data on bovine meat, maize and poultry meat prices shows that world prices in these agricultural industries have been increasing in the 1993-2013 period. Since these are real prices (computed against the 2010 $ value), we should bear in mind that nominal prices have increased even more as they include inflation as well. The high import dependency of LDCs on some agricultural products imposes a problem, as there seems to be a trend that their most important life necessities are becoming increasingly expensive.
The rising agricultural prices form evidence to accept the second hypothesis: “LDCs’ increasing dependency on EU agricultural export is unendurable in the long run”. As both agricultural world prices and LDCs’ import dependency are increasing, it is becoming
increasingly costly for developing countries to provide their population with a sufficient food supply. 0,00 0,50 1,00 1,50 2,00 2,50 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013
Poultry meat
265. SUMMARY AND CONCLUSIONS
By finding enough evidence to accept both my hypotheses: “LDCs have become increasingly import dependent as a result of increased EU food dumping in the period 1962-2011” and “LDCs’ increasing dependency on EU agricultural export is unendurable in the long run”, I am able to answer my research question: “what is the CAP’s impact on the long-term endurability of LDCs’ agricultural import dependency?”.
Farmers from LDCs have experienced many difficulties in competing with dumped agricultural products from the EU. As a result of cheap import, local agriculture in LDCs has not been able to develop sufficiently to provide the growing population with their products, while certain farmers in some countries have even been outcompeted by products from the EU.
As products from the EU have been increasingly complementing or even replacing local production, LDCs have become increasingly dependent on import. My regressions show that of the five commodities I have studied, the bovine meat, maize, pig meat and poultry meat export from the EU have influenced the respective import/consumption ratios in LDCs.
Not only EU export and LDCs agricultural import dependency have been increasing, but real prices of bovine meat, maize and poultry meat show a trend of increasing agricultural world prices as well. On the long run, the combination of an increasing import dependency as a consequence of the CAP and increasing world prices can bring LDCs to financial
difficulties in providing their population with the most important life necessities, which answers my research question.
Although the CAP could be held responsible for increased import dependencies in LDCs; suddenly abolishing the policy would do more harm than good. The problem of a high import dependency will not suddenly be fixed, as LDCs currently lack a self-sufficient agricultural sector and their import will be more expensive than the subsidized products from the EU. However, continuing the process of increasing EU export, thus increasing LDCs’ import dependency, is not desirable either, as this exposes LDCs to greater risks of increasing agricultural world prices.
Policymakers who are involved in helping the development of LDCs should focus on developing local agriculture as a means of providing employment and making the country
self-sufficient. The root of the problem is that LDCs do not have a self-sufficient agricultural sector to rely on when import is becoming too expensive. Only when LDCs can provide most of their agricultural consumption themselves, a possible abolishment of the CAP, and the corresponding sudden rise in agricultural prices, could be in their interest.
As the data I used consists of averages of 48 LDCs, it does not show what countries have the highest import/consumption ratios and how high these ratios are. In conducting further research, elaborating on this thesis, I would suggest to use data of individual countries and to look for agricultural industries in certain countries that show import/consumption ratios as high as 50%. This way, it becomes clearer what countries in specific are highly import dependent and of which commodity this is the case. Then, one could research the history and development of the agricultural sector in these countries and the share of import that comes from the EU.
Also, I would suggest to look at those countries’ currencies. If countries are becoming more import dependent while agricultural prices are increasing, their problem could only be worse if they also suffer from a deflating currency. As it is often a characteristic of developing countries to have a deflating currency, it is interesting to include the course of the currency in future research on the endurability of an increasing import dependency in developing
countries.
REFERENCES
Berthelot, J. (2011, February). The EU-15 dumping of animal products on average from 2006
to 2008. Collected from Solidarité: http://www.solidarite.asso.fr/Papers-2011
Carbone, M. (2008). Mission Impossible: the European Union and Policy Coherence for Development. Journal of European Integration, 323-342.
Fritz, T. (2011, December 19). Globalising Hunger. Collected from TNI: http://www.tni.org/paper/globalising-hunger
Goodison, P. (2009). The Impact of CAP Reform on Africa-EU Trade. Opgehaald van ISN: http://www.isn.ethz.ch/Digital-Library/Publications/Detail/?ots591=0c54e3b3-1e9c-be1e-2c24-a6a8c7060233&lng=en&id=106140
Halderman, M., & Nelson, M. (2004). The EU’s CAP, the Doha Round and Developing
Countries. Berkeley: Institute of European Studies UC Berkeley.
Kirkbride, M. (2000, December 14). Everything But Arms and Sugar? Collected from Policy Practice Oxfam: http://policy-practice.oxfam.org.uk/publications/everything-but-arms-and-sugar-114030
Matthews, A. (2008). The European Union’s Common Agricultural Policy and Developing Countries: the Struggle for Coherence. Journal of European Integration, 381-399. Matthews, A. (2011, October 5). Post-2013 EU Common Agricultural Policy, Trade and
Development. Collected from ICTSD:
http://www.ictsd.org/downloads/2011/12/post-2013-eu-common-agricultural-policy-trade-and-development.pdf
Matthews, A., & Bureau, J.-C. (2005, October). EU Agricultural Policy: What Developing
Countries. Trinity College Dublin. Collected from TCD:
http://www.tcd.ie/iiis/documents/discussion/pdfs/iiisdp91.pdf
Otieo-Odek. (2002). Impact of EU-CAP Reforms in East Africa. Collected from Library-FES: http://library.fes.de/pdf-files/bueros/kenia/01611content.pdf
Panagariy, A. (2005). Agricultural Liberalisation and the Least Developed Countries: Six Fallacies. The World Economy, 1277-1299. Collected from Columbia EDU.
Priks, A. (2012). The rise and decline of price support based European Common Agricultural
Policy. Collected from Dare UvA: http://dare.uva.nl/document/451847
van Tongeren, F., van Meijl, H., & Surry, Y. (2001). Global models applied to agricultural and trade policies:. Elsevier, pp. 149-172.
APPENDICES
APPENDIX A: List of EU-27 countries and the 48 Least Developed Countries
EU-2716 Least Developed Countries17
Austria Belgium Bulgaria Croatia Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Luxembourg Malta Netherlands Poland Portugal Romania Slovakia Slovenia Spain Sweden United Kingdom Afghanistan Angola Bangladesh Benin Bhutan Burkina Faso Burundi Cambodia
Central African Republic Chad
Comoros
Congo, Democratic Republic of the Djibouti Equatorial Guinea Eritrea Ethiopia Gambia Guinea Guinea-Bissau Haiti Kiribati
Lao People’s Democratic Republic Lesotho Liberia Madagascar Malawi Mali Mauritania Mozambique Myanmar Nepal Niger Rwanda
Sao Tome and Principe Senegal Sierra Leone Solomon Islands Somalia South-Sudan Sudan Timor-Leste Togo Tuvalu Uganda
United Republic of Tanzania Vanuatu Yemen Zambia 16 http://www.eucountrylist.com/ 17 http://www.un.org/en/development/desa/policy/cdp/ldc/ldc_list.pdf 30
APPENDIX B1: Data on EU export
Year Bovine meat Cereal Maize Pig meat Poultry
meat 1962 530966 74409 1682825 929076 193792 1963 529578 83955 2205579 959644 203270 1964 447703 77390 3229226 1042841 229876 1965 466599 53667 3091549 1234427 273477 1966 534987 49817 2839220 1211852 279269 1967 738231 46033 3901725 1242711 310158 1968 796050 119198 3243896 1359411 350507 1969 790459 62669 4764752 1303047 362572 1970 786979 75315 4977154 1453865 431526 1971 843085 122745 6561853 1697137 499263 1972 806135 188417 5887605 1707817 499449 1973 963668 128990 7122038 1696500 507304 1974 1281189 165665 7231038 1784995 550590 1975 1539022 432566 7091509 1729935 564521 1976 1347534 49311 7569478 1790930 600505 1977 1493319 49690 6049262 1896120 708325 1978 1537943 41598 6846522 1934172 690302 1979 1803375 120036 6241442 2155194 778574 1980 2066137 94185 7267202 2259406 858365 1981 2038536 108834 6219275 2338643 1019788 1982 1848158 72734 7043803 2312997 1030545 1983 1962534 93163 8087993 2561306 1066165 1984 2264740 131556 8524418 2699821 985950 1985 2381205 122326 8149682 2933540 975751 1986 2909436 128520 9276800 3004030 1059995 1987 2663083 137000 10184541 3104422 1129369 1988 2501098 97298 9821813 3232682 1286955 1989 2769762 95196 11044064 3297092 1282645 1990 2570420 147799 9702153 3411871 1343959 1991 3181273 123796 7980405 3554944 1447363 1992 3263067 145932 13160625 3501123 1617823 1993 3060416 187987 11027205 3855370 1782308 1994 3034593 200840 11377525 4650686 1924611 1995 2764498 264408 9868014 4453738 2175648 1996 2504578 309779 9371267 4871016 2388158 1997 2637573 424379 11063759 5173822 2586256 1998 2355448 587613 13507892 5432662 2745117 1999 2732511 412646 13031838 6256407 2815711 2000 2344912 360081 12161152 5855252 2806105 2001 2024973 474448 11614214 5618087 2859259 2002 2341988 555431 13966326 5894294 3042243 2003 2455054 486615 12114340 6427185 3082585 2004 2473133 556182 11578063 7019565 3080275 2005 2473335 754097 14248956 7234003 3225951 2006 2642014 661606 13313654 7589286 3270596 2007 2791669 617647 14202120 8351252 3544246 2008 2951173 749298 14640119 9088784 3671111 2009 2992998 1163648 18371962 9053566 3928868 2010 3218273 993027 17341725 9757086 4504363 2011 3332998 808155 18270392 10444094 4913476 31
APPENDIX B2: Data on LDCs’ import/consumption ratios
Year Bovine meat Cereal Maize Pig meat Poultry meat
1962 0,0106 0,0302 0,0088 0,0325 0,0152 1963 0,0100 0,0145 0,0083 0,0302 0,0117 1964 0,0083 0,0202 0,0057 0,0281 0,0122 1965 0,0070 0,0242 0,0071 0,0259 0,0109 1966 0,0081 0,0352 0,0062 0,0286 0,0104 1967 0,0096 0,0233 0,0048 0,0226 0,0092 1968 0,0116 0,0188 0,0041 0,0216 0,0084 1969 0,0130 0,0118 0,0153 0,0224 0,0080 1970 0,0118 0,0253 0,0176 0,0225 0,0082 1971 0,0151 0,0245 0,0297 0,0179 0,0087 1972 0,0168 0,0219 0,0222 0,0167 0,0094 1973 0,0105 0,0356 0,0184 0,0154 0,0095 1974 0,0079 0,0414 0,0427 0,0136 0,0095 1975 0,0061 0,0219 0,0419 0,0107 0,0085 1976 0,0068 0,0182 0,0231 0,0082 0,0101 1977 0,0171 0,0212 0,0246 0,0152 0,0434 1978 0,0203 0,0266 0,0379 0,0157 0,0848 1979 0,0186 0,0262 0,0518 0,0171 0,1129 1980 0,0195 0,0244 0,0984 0,0310 0,0898 1981 0,0175 0,0342 0,0815 0,0258 0,1323 1982 0,0231 0,0332 0,0753 0,0215 0,1121 1983 0,0153 0,0348 0,0705 0,0277 0,0913 1984 0,0214 0,0759 0,0901 0,0391 0,1108 1985 0,0217 0,0848 0,1401 0,0428 0,0743 1986 0,0189 0,1333 0,0648 0,0322 0,0737 1987 0,0280 0,0258 0,0746 0,0312 0,0665 1988 0,0270 0,0387 0,1185 0,0309 0,0642 1989 0,0267 0,0394 0,1023 0,0331 0,0626 1990 0,0195 0,0561 0,1100 0,0313 0,0639 1991 0,0166 0,0454 0,1394 0,0260 0,0640 1992 0,0181 0,0339 0,3136 0,0247 0,0763 1993 0,0179 0,0636 0,2638 0,0202 0,1000 1994 0,0141 0,1261 0,2304 0,0202 0,0829 1995 0,0122 0,0741 0,2043 0,0180 0,0840 1996 0,0096 0,0551 0,1596 0,0241 0,0869 1997 0,0102 0,0671 0,1523 0,0227 0,1167 1998 0,0084 0,0465 0,3218 0,0300 0,1329 1999 0,0080 0,0394 0,1881 0,0261 0,1577 2000 0,0144 0,0930 0,2547 0,0301 0,1794 2001 0,0151 0,0809 0,3026 0,0409 0,1596 2002 0,0187 0,0617 0,4465 0,0435 0,2152 2003 0,0247 0,1497 0,3595 0,0484 0,2174 2004 0,0267 0,0306 0,3467 0,0458 0,1892 2005 0,0306 0,0192 0,3243 0,0495 0,1963 2006 0,0345 0,0433 0,4271 0,0501 0,1755 2007 0,0355 0,0244 0,3051 0,0606 0,1838 2008 0,0273 0,0235 0,3587 0,0681 0,2020 2009 0,0202 0,0288 0,5320 0,0644 0,2056 2010 0,0238 0,0342 0,5158 0,0612 0,2286 2011 0,0232 0,0206 0,5022 0,0770 0,2511 32
APPENDIX B3: Data on agricultural real prices in $ per kg (computed against the 2010 $ value)
Year Bovine meat Maize Poultry meat
1993 3,03 0,12 1,40 1994 2,79 0,13 1,46 1995 2,07 0,13 1,33 1996 1,98 0,18 1,52 1997 2,16 0,14 1,56 1998 2,10 0,12 1,69 1999 2,29 0,11 1,64 2000 2,43 0,11 1,65 2001 2,78 0,12 1,83 2002 2,78 0,13 1,84 2003 2,49 0,13 1,83 2004 2,96 0,13 1,96 2005 2,98 0,11 1,86 2006 2,83 0,14 1,70 2007 2,73 0,17 1,81 2008 3,05 0,22 1,81 2009 2,73 0,17 1,96 2010 3,35 0,19 1,89 2011 3,71 0,27 1,77 2012 3,85 0,28 1,93 2013 3,84 0,24 2,16 33
APPENDIX C1: Bovine meat industry
Model Summary
Model R R Square Adjusted R Square
Std. Error of the Estimate
1 .566a .320 .306 .006229
a. Predictors: (Constant), Bovine_meat_EU_export
ANOVAa
Model Sum of
Squares
df Mean Square F Sig.
1
Regression .001 1 .001 22.628 .000b
Residual .002 48 .000
Total .003 49
a. Dependent Variable: Bovine_meat_importconsumption_ratio_LDCs b. Predictors: (Constant), Bovine_meat_EU_export
Coefficientsa Model Unstandardized Coefficients Standardized Coefficients t Sig. B Std. Error Beta 1 (Constant) .008 .002 3.507 .001 Bovine_meat_EU_exp ort 4.712E-005 .000 .566 4.757 .000
a. Dependent Variable: Bovine_meat_importconsumption_ratio_LDCs
APPENDIX C2: Cereal industry
Model Summary
Model R R Square Adjusted R Square
Std. Error of the Estimate
1 .043a .002 -.019 .030999
a. Predictors: (Constant), Cereal_EU_export
ANOVAa
Model Sum of
Squares
df Mean Square F Sig.
1
Regression .000 1 .000 .089 .766b
Residual .046 48 .001
Total .046 49
a. Dependent Variable: Cereal_importconsumption_ratio_LDCs b. Predictors: (Constant), Cereal_EU_export
Coefficientsa
Model Unstandardized Coefficients Standardized Coefficients t Sig. B Std. Error Beta 1 (Constant) .042 .006 6.721 .000 Cereal_EU_export 4.818E-005 .000 .043 .299 .766
a. Dependent Variable: Cereal_importconsumption_ratio_LDCs
APPENDIX C3: Maize industry
Model Summary
Model R R Square Adjusted R Square
Std. Error of the Estimate
1 .917a .841 .838 .063060
a. Predictors: (Constant), Maize_EU_export
ANOVAa
Model Sum of
Squares
df Mean Square F Sig.
1
Regression 1.013 1 1.013 254.726 .000b
Residual .191 48 .004
Total 1.204 49
a. Dependent Variable: Maize_importconsumption_ratio_LDCs b. Predictors: (Constant), Maize_EU_export
Coefficientsa
Model Unstandardized Coefficients Standardized Coefficients t Sig. B Std. Error Beta 1 (Constant) -.156 .022 -7.170 .000 Maize_EU_export .000 .000 .917 15.960 .000
a. Dependent Variable: Maize_importconsumption_ratio_LDCs
APPENDIX C4: Pig meat industry
Model Summary
Model R R Square Adjusted R Square
Std. Error of the Estimate
1 .823a .678 .671 .008867
a. Predictors: (Constant), Pig_meat_EU_export
ANOVAa
Model Sum of
Squares
df Mean Square F Sig.
1
Regression .008 1 .008 100.890 .000b
Residual .004 48 .000
Total .012 49
a. Dependent Variable: Pig_meat_importconsumption_ratio_LDCs b. Predictors: (Constant), Pig_meat_EU_export
Coefficientsa
Model Unstandardized Coefficients Standardized Coefficients t Sig. B Std. Error Beta 1 (Constant) .012 .002 5.544 .000 Pig_meat_EU_expor t 4.880E-005 .000 .823 10.044 .000
a. Dependent Variable: Pig_meat_importconsumption_ratio_LDCs
APPENDIX C5: Poultry meat industry
Model Summary
Model R R Square Adjusted R Square
Std. Error of the Estimate
1 .927a .859 .856 .027950
a. Predictors: (Constant), Poultry_meat_EU_export
ANOVAa
Model Sum of
Squares
df Mean Square F Sig.
1
Regression .228 1 .228 291.884 .000b
Residual .037 48 .001
Total .266 49
a. Dependent Variable: Poultry_meat_importconsumption_ratio_LDCs b. Predictors: (Constant), Poultry_meat_EU_export
Coefficientsa Model Unstandardized Coefficients Standardized Coefficients t Sig. B Std. Error Beta 1 (Constant) .006 .006 .912 .366 Poultry_meat_EU_expo rt .001 .000 .927 17.085 .000
a. Dependent Variable: Poultry_meat_importconsumption_ratio_LDCs
