From "Reports on Agriculture", June 2004

Statement about the decisions taken by the Council of the European Union concerning the reform of the common agricultural policy of 26 June 2003

Scientific Advisory Board Agricultural policy, sustainable farming and rural development at the Federal Ministry of Consumer Protection, Food and Agriculture, Berlin

The Scientific Advisory Board welcomes the Luxembourg Agreement on the reform of the European Union (EU) agricultural policy, in principle. The agreement takes the new framework conditions (the World Trade Organisation (WTO) negotiations, inter alia) as well as the changed social requirements for the agri-food sector into account. The decoupling of direct payments from production enables welfare gains and increasing incomes, but it will also trigger intensified structural changes. The Advisory Board recommends to the Federal Government to refrain from the use of the partial decoupling option and to press for an EU-wide abolition of these options. The decision to tie the direct payments to the compliance with minimum standards, for example in the environment and animal welfare (Cross-compliance), is questionable in regulatory policy terms and involves risks for the future competitive capacity at a global level. The Advisory Board considers a further development of technical legislation, adaptations in terms of contents. as well as a financial top-up of the second pillar of the EU agricultural policy to be the better solution.

Evaluation and avoidance of detrimental soil compaction

Dietmar Schröder and Raimund Schneider, Trier

Modern heavy agricultural equipment may cause soil compaction but also gives the chance for avoidance. Because of the international trade rivalry within both the producers of agricultural machinery and the farmers, the risk for detrimental soil compaction is omnipresent.

The german soil protection law impede this risk since critical values for mechanical loading capacities are not defined and thresholds are not fixed by the law. Machinery producers and farmers can accept these restrictions if international equality of competition is given.

As a restricting, protecting and controlable indicator for protecting soils against compaction the "ground contact pressure controlled wheel load" is proposed by the authors. Equipment that is conform with the thresholds should be awarded with a special badge. Farmers only using this equipment work in accordance with the guidelines of the "good agricultural practice" (§17, german soil protection law).

To reach the proposed standards weights, wheel loads and storage capacities of the machinery have to be reduced. This restrictions also promote ecological field shapes, biodiversity and a network of non-fragmented landscapes.

Ex post evaluation of LEADER II - Germany

Manfred Geißendörfer and Otmar Seibert, Triesdorf

The Community Initiative LEADER II was one of EU-structure policy instruments that aimed at the promotion of innovative development projects on the basis of local partnerships. In Europe, more than 1.000 Local Action Groups (LAG) and Collective Bodies (CB) with most different organisational and thematic concepts participated in the Initiative. In Germany, 14 federal states with own programmes and more than 180 LEADER groups (LAG, CB) implemented this "novel type" of structures policy. The Initiative aimed at the initialisation of social, cultural as well as ecological development progresses at local level by the promotion of impulse-providing, innovative measures. The area-based, participative and multi-sectoral approach which was for the first time tested in the LEADER I-Programme, was generalised in LEADER II and at the same time more emphasis was laid on the innovative character of the projects. The function of LEADER as a "laboratory" for the evolution and testing of novel integrative and sustainable development approaches was particularly stressed. On the one hand the LEADER programmes contained a rather flexible section that deals with the selection of eligible projects; on the other hand an inflexible part with comparatively complex regulations obviously existed, too. In the long run the interaction between the application and understanding of the LEADER-method within the administration and their effectiveness on the level of the beneficiaries was finally decisive. In this regard the officers in charge of commitment and funding should be equipped both with distinct "LEADER-qualifications" and the readiness to integrate themselves into the decision making processes on LAG-level in order to make relevant and appropriate decisions. LEADER co-ordinators, who facilitated the programme management between the different divisions involved proved to be helpful. The capacity building ability of local actors (competencies, empowerment) was particularly strengthened in those LEADER-areas which disposed of both a well working and competent regional management and an appropriate support within the most important regional interest groups. The new established organisation and communication structures of the LAG mostly facilitated the participation of interest groups and (partly) the regional population. In case that LAG succeeded in the establishment of long-term partnerships, productive and sustainable forms of networking oftentimes evolved. They continued their cooperation also after the end of the funding phase and can be regarded as "promotion engines" that drive an innovative and endogenous development as well as the growth of regional competencies. The network management of such partnerships was a typical extra benefit of the LAG activities. It resulted in competition advantages for the regions which were affected. Furthermore, unexpectedly high quantifiable effects were generated which emphasize the success of LEADER from the German point of view. They frequently arose in combination with other structure-measures or labour market policy. Future rural development policies could be developed and widened on the basis of the LEADER II experiences - which actually appears within the revised version of the German Joint Task for the improvement of agrarian structures and coast protection (GAK).

Costs of nature conservation in open arable landscapes of north-eastern Germany - Evaluation of a research project "EASE" funded by the Federal Ministry for Education and Research

Ulrich Hampicke, Greifswald, Jens Holzhausen, Netzeband, Birgit Litterski and Wendelin Wichtmann, Greifswald

A three-year experiment in north-eastern Germany is evaluated where extensive rye cropping is carried out on a low-yielding site to foster the associate vegetation of arable land that is worthy of preservation for a re-establishment of former levels of biodiversity.

The sand poppy community (Papaveretum argemones), specific to the region and site, develops successfully over the first three years of the experiment.

By means of farm-specific data and own measurements of labour input, the costs of running the nature conservation variants are compared with those of integrated farming. The process costs (full costs minus non-assignable overheads and rents) exceed market revenues by around

150 per hectare and per year. The economic performance falls short of site-adapted conventional cropping by around 200 to 250 per hectare and per year.

These process cost surpluses are compared with the figures for established grassland use methods funded by the EU because of their high nature conservation value. Extensive cropping outside highly-productive arable areas proves to be a very cost-effective measure of nature conservation. Once extensive cropping is carried out on a larger scale, further cost benefits can be expected.

Surveys among recreationists and other persons confirm that the re-establishment of aesthetically more attractive arable areas meets to a certain extent with considerable approval and willingness-to-pay so that the measure involves a societal welfare gain.

Reflections on the opening up of markets and on increasing the value-added of agriculture in the light of the development of consumer markets and consumer habits

Peter Wagner, Halle

The contribution of agriculture as primary sector to the value-added chain is decreasing. To get an idea why this happens the paper highlights some major changes in consumer markets and consumer habits. Three examples serve to suggest possible ways out of the dilemma.

One of the most characteristic changes in consumer markets is the increasingly dominating role of discounters selling food for dumping prices. On the other hand, special shopping places (for example weekly markets, mobile market stalls, direct sales from producers to consumers) are playing an important role with respect to some fresh produce. In these areas, the dictation of prices is not predominant.

On the consumers´ side, we can observe decreasing household sizes and a clear trend towards convenience products. In addition to a consumer typology as a starting point for market segmentation, the expenditures for food, classified into different household types, are presented. On this basis, the paper describes various possibilities how these facts can be used to the benefit of agriculture.

It outlines the chances and risks of brand policies vs. anonymous mass customisation. Based on the example of the "Austrian Country Market", the role of the internet and its possibilities for marketing consumer-oriented food products is discussed.

As a third possibility, the paper describes how the contribution of agriculture to the value-added chain could be increased, taking the "New Generation Cooperatives" which are particularly successful in the USA as an example. In this respect, it is always of central importance that the products (brand policy) or producers can be identified. A strong market orientation towards the consumer and absolute quality production are the prerequisites for successful strategies.

The analysis of all these examples shows that they can only serve as a model for a successful initiative of one´s own if the entrepreneurial activity of farmers and their advisors becomes more market-oriented and commercially organised.

Location Decisions of the Food Industry in Eastern-Germany

Klaus Drescher und Susanne Halm, Kiel

The collapse of the German Democratic Republic (GDR) in fall 1989 ushered in a period of political and economical restructuring for the states in the former GDR. While the political change had its highlight with the re-unification at October 3, 1990, restructuring to a market economy was more protracted.

This restructuring led to a series of investments by firms from former West Germany entering the eastern market through acquisition of firms and establishment of new facilities. The food industry was one of the first to under go a transformation. Most food industry investments in the five new states were made within a formal location decision process, regardless of the ownership/management structure and product line of the firms.

Consequently, questions arise about the motives of the expansion / investment, the determinants of the location decision, and the strategic implications of the investment decision. This paper reports on research undertaken to identify what motivated investment decision as well as location choices for firms entering the eastern German market. The paper highlights differences in strategies within the food industry sector and evaluates what influenced operative and strategic decisions related to market entrance through takeovers or new construction. Even though it is had to envision new establishments being made at such a high rate in a short time period again, understanding the decision process provides valuable information for government officials, and efficient public policy.

Of farmers and butchers - A comparison of exit patterns in shrinking sectors

Stefan Mann, Ettenhausen and Juliane Mante, München

Farmers and butchers in Switzerland both operate in shrinking sectors. The number of businesses has decreased by about 40 per cent over the last twenty years for both sectors. It is, however, an interesting question whether the determinants of exit are the same for the primary sector and the secondary and tertiary sector. A regression analysis reveals that, for farmers, a larger part of exits can be attributed to economic factors. For butchers, the profit of the business is the key determinant of structural change, whereas for farms, the level of prices is an important signal factor. Interest rates influence structural change for both sectors. The study points to the importance of sector-specific research.


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