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From "Reports on Agriculture", March 2002

The Öko-Prüfzeichen - Why was the implementation not successful?

Silvia Zenner and Bernd Wirthgen, Witzenhausen

The inadequate recognisability of organic products represents a purchase barrier for interested consumers. For this reason a common organic label (ÖPZ) was introduced to the market. However, the label has so far achieved only moderate acceptance. The aim of this research project has been to analyze the reasons for the low use of the ÖPZs in industry and trade. According to the results, a successful introduction of the common organic label is not to be expected under the given circumstances: for example, the overall AGÖL-policy and the amount that has to be paid in royalties. The inadequate degree of familiarity of the organic label to the consumers is another reason. If the new organic label by the state will be much more successful remains to be seen.

The impact of BSE-media coverage on demand for meat and fish

Dr. Susanne Wildner, Kiel

In the last two decades, the consumption of meat was subject to characteristic changes. An increasing popularity of take-away-food, the trend to convenience foods, food scandals, the BSE-crisis etc. influence consumer behaviour. Using a demand analysis, the determinants of demand for meat and fish were investigated. In addition to income and prices, the influence of BSE-media coverage was analysed. Between 1990 and 1998, a significant effect of the BSE-media coverage on the consumption of meat and meat products was observed. The results point out that memory processes are relevant with regard to the BSE crisis.

Evaluating the Success of Generic Promotion for Beef: The Case of "Quality from Bavaria - Guaranteed Origin"

Prof. Dr. Roland Herrmann, Stephanie Krischnick-Bautz and Sven Anders, Gießen

It is the objective of this study to evaluate the success of the program "Quality from Bavaria - Guaranteed Origin". The empirical analysis reveals that this State-financed generic promotion program, which stresses regional origin and quality control, had a clearly positive effect on Bavarian beef demand. The advertising elasticity of demand amounted to 0.04 for the period 1995-98.

An aggregated market model of the Bavarian beef market showed that the program-induced shift of the demand curve raised the price level, id est by 4.8 on average in the period 1995-98. Consumption increased by 1.2 % annually as a consequence of the program. Both effects together led to rising consumer expenditures and producer earnings respectively, by 6.0 %. The program "Quality from Bavaria - Guaranteed Origin" has raised consumer and producer surpluses on the Bavarian beef market. The size of these gains was larger than budgetary costs for the program. The benefit-cost ratio clearly exceeded unity.

A further outcome of the analysis is a different consumer behaviour in Bavaria and the rest of Germany. Bavarian consumers reduced beef demand less than consumers in the rest of Germany under the influence of the BSE crisis. Additionally, they show a higher willingness to pay for beef and a more price-inelastic behaviour compared to other German consumers. This might well mean that "Quality from Bavaria" has strengthened consumer trust in beef, a hypothesis which was not explicitly tested in the model.

Some qualifications are necessary. The analysis is based on a partial analysis of the Bavarian beef market, and markets of substitutive and complementary products were not separately modeled. This could affect the computed welfare effects and benefit-cost ratios. Additionally, the computed effects are related to the period 1995-98. It is a remaining task for future research to analyze whether the more recent event of BSE cases in Germany has generally altered consumption and whether programs like "Quality from Bavaria", which stress regional orientation and quality control, continue to yield positive results.

The American Conservation Reserve Program - he chance to reward farmers for services to the environment?

Inken Mello, Prof. Dr. Alois Heißenhuber, Jochen Kantelhardt, Freising

When implementing agricultural environmental programmes, the main problems frequently revolve round the expense and the rake-off effects. If these programmes are too general in nature, they generate high rake-off effects, if they are too detailed, the costs of control and implementation rise. With the "Conservation Research Program", the USA appears to have succeeded in developing an efficient environmental programme, and in readying it for practical implementation. This article describes the programme, discussing its implementation on a private farm and looking into its ecological consequences for the national economy. In conclusion, the author points to the potential for transferring this programme to Germany.

The Crop and Revenue Insurance System in the USA - a Model for Europe?

Prof. Dr. Ernst Berg, Bonn

Contrary to Europe multiple peril crop insurance has a long tradition in the USA. The Federal Crop Insurance (FCI) Program has been established as early as 1938. Since then the conditions have been changed several times. Particularly during the nineties the crop insurance program has become bigger and much more diverse. The original yield insurance policies were supplemented by comprehensive revenue insurance policies, which combine yield and price risks. This paper investigates the US yield and revenue insurance system in order to evaluate its possibilities and limitations for the farming sectors of Germany and Europe.

After characterising the main developments during the past, the present crop insurance program is delineated and the experiences with FCI are analysed. These experiences are largely negative: The provision of ad hoc disaster assistance despite the existence of a highly subsidised insurance program, the susceptibility of the program to adverse selection and moral hazard and the increase of complexity associated with the expansion of the program have created a policy that is far apart from an efficient market oriented system to support risk management in farming.

The further analysis involves model calculations based on a stochastic optimisation approach. The results of a case study from the Rhine area clarify the farm level welfare gains associated with yield or revenue insurance, respectively, as influenced by the insurance design and the decision maker's attitudes towards risk. The results indicate that from the farmer's point of view there is an incentive to buy multiple peril crop insurance, since it significantly reduces the variability of income. The risk reduction through insurance in turn leads to specialisation of the production program. In regions where the area yield is highly correlated with farm level yields, area yield insurance schemes may be favourable alternatives to individual yield insurance because of low transaction costs and only little susceptibility to adverse selection and moral hazard. The farm level benefit of crop insurance strongly depends on the decision maker's degree of risk aversion. Furthermore, risk free parts of the total income reduce the economic attractiveness of insurance. This applies e.g. to the area payments under the European agricultural policy, which therefore decrease the possible demand for crop insurance.

In summary, the study indicates a possible need for multiple peril crop insurance. In view of the US experience, however, subsidising such insurance schemes generally creates problems, since it turns insurance from a risk management tool into an income support tool. Subsidised insurance schemes are less efficient for income support than other policy measures. Further research is needed with respect to quantifying the extent of farm level risks as well as the farmers' decision-making behaviour. This information provides the basis for model calculations on the level of single farms as well as insurance pools. The model results then provide insights with respect to the potential demand for insurance on one hand and its feasibility on the other.

Product line analysis serving as a method for a region-related assessment of economic activities using the production and sale of bread as an example

Dr. Eva-Maria Schmidtlein, Uwe Glas and Alois Heißenhuber, Freising

Regional production and marketing of food means in common various positive effects on environmental protection although there is no scientific knowledge about. Different methods of analysis about life cycles of products are available. A lot of criterions can be defined in an integral analyses and put into a frame for qualitative and quantitative assessments. In a case study two bakeries (local sales) and an industrial organized bakehouse with supraregional baker´s shops are compared. Regional effects can be shown in a framework of criterions for example in sums of transports and energy input coursed by production an distribution of bread. Qualitative criterions regard to environmental and social effects were also tested. Most energy input is used for bread production. In this case study the industrial organized firm were able to use energy for bread production more efficient than regional bakeries. The industrial bakehouse archives more transports than local bakeries, although the energy inputs per unit bread are lower. Local bakeries need about 40 % more labour than the industrial firm. In local bakeries detailed processes of bread production are transparent for employees and there are more chances of local identification for consumers.

The experiences of this case studies shows that integral analyses are suitable if different criterions in various circumstances can be used. It shows also that fitting a general view take a lot of pains although some criterions are easy to survey.

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