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From "Reports on Agriculture", exercise number 2, September 2010

EU agricultural policy after 2013 - Plea for a new policy for food, agriculture and rural areas

By Scientific Advisory Board on Agricultural Policy at the BMELV1)

The CAP reforms of the past two decades are to be welcomed in principle. However, with the instruments currently in place we will not succeed in effectively and efficiently mastering the future challenges in the global food situation, food safety, competitiveness, climate change, biodiversity and rural regions. Given that minor modifications will not suffice, a fundamentally different policy architecture for food, agriculture and rural areas must be developed, supporting a policy that helps shape a competitive agri-food industry and is structured to tessellate with other policy fields such as nature conservation, climate, energy, technology, consumer policy and the global food situation. Deployment of funds and instruments should be purely target-orientated, in line with the respective challenge. Since an immediate change in policy is unrealistic, the coming policy period 2014–2020 should be conceived as a transitional period away from a primarily protective agricultural policy towards a policy that focuses primarily on providing structure. The market-orientated course of EU agricultural policy should be maintained. Progressive cuts in direct payments should be made and, to balance this, policy measures should be redesigned or funds for these measures topped up in order to specifically prepare the agri-food sector and rural areas for future challenges. The EU Commission should be mandated to draw up a comprehensive concept proposal for a fundamental overhaul of the policy field in its entirety that should start with the mid-term review 2017/2018 and take effect in 2020 at the latest.

1) Members of the scientific advisory board: Prof. Prof. Dr. Folkhard Isermeyer (Vorsitzender). Johann Heinrich von Thünen-Institut (vTI), Braunschweig; Prof. Dr. Dr. Annette Otte (Stellvertretende Vorsitzende), Universität Gießen; Prof. Dr. Jürgen Bauhaus, Universität Freiburg; Prof. Dr. Olaf Christen, Martin-Luther-Universität Halle-Wittenberg, Prof. Dr. Stephan Dabbert, Universität Hohenheim; Prof. Dr. Dr. Matthias Gauly, Universität Göttingen; Prof. Dr. Dr. h. c. Alois Heißenhuber, Technische Universität München, Prof. Dr. Jürgen Hess, Universität Kassel, Prof. Dr. Dr. h. c. Dieter Kirschke, Humboldt-Universität Berlin; Prof. Dr. Uwe Latacz-Lohmann, Christian-Albrecht-Universität zu Kiel; Prof. Dr. Matin Qaim, Universität Göttingen; Prof. Dr. Peter Michael Schmitz, Universität Gießen; Prof. Dr. Achim Spiller, Universität Göttingen; Prof. Dr. Albert Sundrum, Universität Kassel; Prof. Dr. Peter Weingarten, Johann Heinrich von Thünen-Institut (vTI), Braunschweig

20 Years of Rebuilding the Agricultural East

By Halvor Jochimsen, Flintbek

20 years after the peaceful revolution in the GDR, this paper takes stock of the development in the New States. Starting from an agricultural sector that was made up of publicly owned land and collective farms (LPG), there were huge differences in the personal experiences of those involved, namely the farmers of the cooperatives, farmers reestablishing an old farm or starting up a new one, dismissed employees, old and new boards of directors, former and expropriated owners, and new settlers from the West.

The conversion of the LPG is regulated by the "Landwirtschaftsanpassungsgesetz" (Agricultural Adjustment Law). The necessary assignment of assets included an unsolvable conflict between capital preservation for the LPG successor and distribution of equity capital to all former participants. The balance strategies and legal mistakes during the conversion are described. The publicly owned land that resulted from the expropriation 1945–49 and other sources had to be transferred back or privatized by sale or temporary lease. A cautious assessment shows severe faults, especially due to a lack of clarity in political requirements, and changes being made to these requirements.

The land market in East Germany was marked in the past by low prices and rent. Through the influence of product prices, increasing shortage of available land and changing regulations for privatization of publicly owned land, the land prices came more into line with the West. The regulation for the former debts of the LPG is described. As a final result some successors received a competitive advantage. Concerning size and legal form of farms, there exists a clear difference to the western states of Germany. Analyzing the figures of the Farm Account Network proves the astonishing profitability of large family farms. But also the legal entities like cooperatives and companies with limited liability show a higher profitability than farms typical for the West. The study ends with a critical personal conclusion about 20 years of rebuilding the agricultural east".

Bioenergy potential in Germany – studies in comparison

By Arlette Ostermeyer and Frauke Pirscher, Halle/Saale

In recent years there has been a multitude of scientific studies on the medium-term potential of bioenergy in the areas of heat, power and fuel generation. Beyond the general statement that the importance of bioenergy will increase in the future the results of these analyses clearly vary, particularly because of the differences in the underlying assumptions. Hence, the aim of this contribution is to compare three important studies on potential with each other, on the one hand to contribute to a better assessability of the bioenergy potential in Germany, on the other hand to indicate the importance of considering the context of the studies in the public discussion. The chosen studies are the "Pilot study 2008" by NITSCH (29), the "Material flow analysis for sustainable and energetic use of biomass" by FRITSCHE et al. (15) and the study "Bioenergy and decentralised energy supply" by HAUFF, HAG and ZYWIETZ (20). The comparison is carried out on the basis of the assumed resource base, the concept of sustainability, the assumptions about the economic and population development, the underlying rates of technical progress as well as the considered political framework. It can be shown that the results of the studies differ only little with regard to the biomass potential. When considering the bioenergy potential in the areas of heat, power and fuel generation, however, the results of the studies vary much more. While the biomass potential is influenced above all by the assumed resource base, the population development and the technical progress, the bioenergy potential is particularly affected by the technologies and systems used as well as by the political framework.

Agricultural and food markets after the boom – Report on the 49th Annual convention of the Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues (GEWISOLA) from 30 September to 2 October 2009 in Kiel

By Gunnar Breustedt, Jens-Peter Loy, Rolf A. E. Müller, Kiel and Jon Hanf, Halle

The price boom of 2007/2008 put agricultural commodities back on center stage. Never since the oil price shock of the 1970s have agricultural commodities received as much attention from politicians, consumers, and financial investors alike. This highlighted once again the crucial role that agricultural commodity prices play for the well-being of all, and in particular of the poor. Since late 2008, most agricultural commodity prices have fallen again to their pre-2007 levels and the boom has apparently run its course. The events led the Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues to choose „Agricultural and Food Markets After the Boom" as the theme for its 49th annual convention which was held at the University of Kiel from 29th September – 2nd October 2009. The convention opened with four invited papers. Prof. DANIEL A. SUMNER of the University of California in Davis, USA, analyzed the most recent price boom from the perspective of earlier price booms, and Prof. Dr. GLAUBEN of IAMO, Halle, highlighted how the governments of some exporting countries stoked the price boom by closing their borders for exports. Dr. GOEDDE of the Melinda & Bill Gate Foundation in Seattle, USA explained how the Foundation promotes agricultural development and fights poverty in Africa and Asia. Finally, Prof. Dr. THOROE introduced the Gesellschaft to the objectives and anticipated activities of the newly created BioÖkonomieRat. During the following days the convention featured a further thirty-three papers and a poster session with 23 posters, covering a wide range of topics. The main themes addressed by the papers and posters comprised theeconomics of new technologies, consumer behavior, and innovative research methods. IAMO held a special session to commemorate the 20th anniversary of the beginning of the transformation of socialist planned economies. The convention closed with an invited paper session on "Open Access to Scientific Information". The social highlight for the 170 economists in attendance was a reception by the Chief Minister of Schleswig-Holstein at the university’s hall of arts.

Udder health status at farm level -current situation and prospects from a systemic point of view

By Albert Sundrum, Kassel

Mastitis has been one of the main problems for dairy farmers for several decades. Research work over many years has provided a lot of detailed knowledge about the development of mastitis and possible diagnostic and preventive measures. In this review, the potential causes of variance are discussed at different levels: udder quarter, individual cow and herd; and with regard to the potential for diagnostic, preventive and qualitative improvements.

Numerous studies show a large variation in the incidence of mastitis within and between dairy farms and indicate a corresponding potential for optimization. However, the diagnostic possibilities of making use of cytological and bacteriological assessments at the level of udder quarters and of conducting comparative and longitudinal analysis are seldom exploited in farm practice.
From a systemic perspective, SCC from samples of bulk and tank milk do not provide a suitable diagnostic selectivity and qualitative meaningfulness due to the milk being mixed. Therefore, relevant preconditions are missing for the use of SCC as a quality criterion for added value in national and international competition. For this purpose, it is essential that inter alia the previous milk control plans are expanded to include the assessment of SCC at the quarter level.

The issues of animal health and milk quality are of increasing importance due to the interest of consumers in this topic and as an added value in the highly competitive milk market. Nevertheless, many dairy farms still fail to reduce the incidence of mastitis to a low level.

It is concluded that the current unsatisfactory situation with regard to the udder health status will not improve while dairy farmers have no clear objectives that they must achieve with regard to SCC at quarter and cow level and the incidence of mastitis. The situation will also continue while farmers have no financial incentives via graded milk prices. The example of udder health clearly shows that the deterministic approach has limits in respect of combating multi-factorial diseases. Complex processes in different subsystems require a complex approach. To assess the effectiveness and efficiency of measures for the improvement of udder health at farm level, there is need for both detailed knowledge and an appropriate allocation of detailed knowledge to the specific farm context by means of a systemic and output oriented approach.

Production functions for crop production: Substitutionality or complementarity of the factors of production?

By Friedrich Kuhlmann, Gießen

This paper deals with the question of the appropriate production function to be applied for economic analyses of crop production problems. Usually, quantitative expressions of the "law of diminishing returns" are used for such analyses. Its property of decreasing marginal returns in response to increasing factor supplies has been demonstrated time and again by numerous crop experiments.

One important consequence of this "law" is the possibility of peripheral substitution among essential production factors generating the yield. This, however, is contradictory to basic (bio-) chemical laws stating that production factors – and especially nutrients – are strongly complementary to each other. This means that both for technical processes of industrial production and for biotic processes of crop production, the linear limitational production function (LEONTIEF function) should be assumed as the basic input-output relationship.

Following a general definition of production functions and their boundary conditions, quantitative expressions of crop yield functions, so far proposed by agronomists, are presented. Then, by means of a theoretical analysis, it is shown that the inconsistency between the "law of diminishing returns" with its property of peripheral substitution and the linear limitational function and its property of factor complementarity may plausibly be resolved by considering the former not as a production function but merely as a description of the yield response in relation to partial factor supply variations.

The "law of diminishing returns" violates essential specifications of production functions (technical efficiency, well-defined product quality). In particular, this "law" (i) does not distinguish between supplied and actually consumed factor quantities, (ii) it does not account for the spatial variability of factor supplies from single plant to single plant of a crop parcel, and (iii) the yield is solely measured as bulk yield with no regard to its quality (i.e. chemical composition).

On the basis of these deficits, it is shown that yield response curves of plant populations, which are typical for the "law of diminishing returns", can be derived from linear limitational production functions for the single plants of the population. Furthermore, it is demonstrated that the peripheral factor substitution is merely a pseudo-substitution.

Nevertheless, the "law of diminishing returns" may be used as an input-output relationship for economic analyses on the – admittedly questionable – assumptions that factor quantities supplied to the plant population are identical to the quantities actually consumed by the plants and that the crop yield may be assumed as bulk yield irrespective of its quality (chemical composition).

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