THE IMPACT OF AGRICULTURAL POLICIES ON , REGIONAL GRAIN ANII- LIVESTOCK PRIcEs'IN, V THE EUROPEAN ECONOMIC COMMUNITY : ~ Thesis for the Degree of Ph. D. ‘ MICHIGAN STATE UNIVERSITY DONALD I._ EPP; 1967 7 an. . . LIBRA P; Michigan are University TH E818 This is to certify that the thesis entitled THE IMPACT OF AGRICULTURAL POLICIES ON REGIONAL GRAIN AND LIVESTOCK PRICES IN THE EUROPEAN ECONOMIC C(MMUNITY presented by Donald J. Epp has been accepted towards fulfillment of the requirements for Doctor of Philosophy degree in Agricultural Economics 164/6! 8 fii cud-:71 Major professor Date May 19, 1967 0—169 .ABSTRACT THE DIPACT OF AGRICULTURAL POLICIES ON REGIONAL GRAIN AND LIVESTOCK PRICES IN THE EUROPEAN ECONOMIC COMMUNITY by Donald J. Epp Because of the importance of EurOpean markets for American agricul- tural products, changes in European farm.policies, such as the develop— 'ment of the Common Agricultural Policy of the EEC, have an important impact on UkS. farmers and exporters. This study is part of a larger effort to determine the consumption and production relationships for grain and livestock products in the EEG and to project the impact of the common policies to 1970 and 1975. Three other sub-projects studied the production relationships in different areas of the EEC-~Italy3 France and Northern EEC-ewhile this report gives the results of the fourth sub- project concerning the changes in the prices and marketing of grains and livestock in the EEC. One project objective was to describe the farm level prices prior to the introduction of EEG marketing policies. Since the EEC policies pro- vide for intervention at the wholesale level, it is necessary to under- stand the marketing system to know how the policies will affect the farmer. Thus, another objective was to describe the marketing system that generates the prices received by farmers. The third objective was 'to estimate the impact of the Common Agricultural Policy on the price surfaces and.marketing systems and to project producer prices to 1970 Iand 1975. This projection also considered the impact of changes in the 'transportation system on the flow of agricultural products in the EEC. Donald J. Epp The EEC was divided into 19 regions and average producer prices were calculated.for each region for four time periods--l9S9-6l, 1963~6h, 1970 and 1975. The prices in the first two periods came from.secondary sources while those for 1970 and 1975 were projected by this study. The price study indicated that (1) French wheat prices will increase about 20 per- cent and French and Italian feed grain prices will increase from.25 to 35 percent from 1960 to 1970, (2) all areas will have beef, veal and milk price increases ranging from 15 to 55 percent, and (3) price declines for hogs, broilers and eggs in most areas will range from less than 5 percent to over 50 percent from 1960 to 1970. The movement to a common price policy changed the relative prices of grains so that wheat is overpriced relative to its feeding value. This may contribute to further wheat production and less utilization of wheat for feed. Furthermore, the present surplus production of butter and powdered skim.mi1k in the EEG and the potential surplus of cheese may increase the cost of supporting the milk prices. The increasing Agricul- tural Fund expenditures due to these develOpments may require adjustment in EEG policies or intervention price levels. The Common Agricultural Policy also affects the balance of payments of the member countries and causes income transfers through the European Agricultural Guidance and Guarantee Fund. Net importers of agricultural products, such as Italy and Germany, send agricultural import duties to the Fund and net exporters, such as France and the Netherlands, receive export restitutions from.the Fund. Regional differences in commodity price changes due to adopting the EEC policies increase this transfer of funds from.the net importing to the net exporting countries. Drawing upon an EEC study of returns to labor and capital in Donald J. Epp farming, this report indicates that the greatest increases in product prices are projected for those regions and for the commodities produced by the farms already having the highest incomes. This finding indicates the difficulty of solving low income problems in agriculture using price policy alone and may affect future policy decisions of the EEC. THE IMPACT OF AGRICULTURAL POLICIES ON REGIONAL GRAIN AND LIVESTOCK PRICES III THE EIHZOI’EAN ECONOMIC (XXIIIIUI'IITY BY .Ul' Donald JEIEpp A THESIS Submitted to ‘Michigan State University in partial fulfillment of the requirements for the degree of DOCTOR OF PHILOSOPHY Department of Agricultural Economics 1967 Aclmmvledgments The research study for this thesis received the assis cance of many individuals whose contributions are greatfully acknowledged. Dr. Dale E. Hathaway, chairman of the guidance committee , and Dr. Vernon L. Sorenson contributed to the design of the study, assisted in contacting information sources in Europe and reviewed the thesis at various stages. A large number of people in Europe assisted in a variety of ways. Public officials, university research peOple, grain company officials, representatives of U.S. marketing organizations, and the Office of the Agricultural Attache in the American Embassies in the EEC member countries provided information and advice. Dr. Friedrich - Christoph Rusteneyer was of great help in locating and analyzing information and in inter- viewing people in Europe. Professor Arthur Hanan, Institut fflr landwirt- schaftliche Marktlehre, Gdttingen, Germany, and Professor Mario Bondini, Director of the Instituto Nazionale di Economica Agraria, Rome, were especially helpful in arranging contacts with other researchers in Europe. The author received financial support for his graduate training from a National Defense Education Act Fellowship in International Agriculture and from the Department of Agricultural Economics, Dr. Lawrence 1.. Boger, Chairman. Intellectual support and encouragement were received from many individuals whose interest is greatly appreciated. ii TABLE OF COT‘ITEIIITS Page ACKNOWLEDGMENTS . . . . . . . . . . . ii IIIST OF TABES O I O O O O O O O O O V, LISTOFAPPENDDC TABLES . . . . . . . . . viii IIIST 0F mIJSTMTIONS O O O O O O O O O x LIST OF APPENDICES . . . . . . . . . . xi Chapter I. INTRODUCTION . . . . . . . . . . l The Study of EEC Agriculture The Study of Prices and Marketing Organization of the Report II. THE MARKET FOR FARM PRODUCTS . . . . . . 6 The Marketing of Grain International Grain Trade of the EEC Importance The Patterns of Grain Flows Marketing Channels Germany Italy France The Marketing of Livestock and Livestock Products III. MARKETING AND PRICE POLICIES . . . . . . 83 The Common Agricultural Policy Grains Beef Grain Consuming Livestock Milk and Dairy Products~ The Guidance and Guarantee Fund Significant Policy Changes iii Chapter Page IV. CQ‘MODITY PIECES o o o o o o o o o 99 Grains Beef, Veal and Milk Grain Consuming Livestock Changes From 1970-75 V. THE IMPACT OF PRICE POLICIES . . . . . . 122 The Movement of Grain Financing the Agricultural Fund Problems with the Price Policies BIBIICERAPHY . . . . . . . . . . . . 13 3 iv Table 9. 10. 12. 13. 1h. 15. 16. LIST OF TABLES Production, imports and exports of grain by EEC member countries, average of l962-6h . . . . . Percentage of wheat imported by EEC member countries from.selected origins, 1955-57, 1959-61 and 1963-65 . Percentage of feed grains imported by EEC member countries from.selected origins, 1955-57, 1959-61 and 1963-65 . German grain imports, by country of origin and mode of transportation, l962-l96h . . . . . . . . Imports of grain by ship to Germany from selected regions, 1962 and 1963 . . . . . . . . . Flows of grain from.German North Sea ports to the interior Movement of grain by barge from foreign regions to regions in Germany, average of 1962 and 1963 . . . Regional imports of corn by Italy by area of origin in thousands of tons, average of 1963 and l96h . . . Sales of grain as a percentage of production in Germany, 1955/56 to 196h/6: . . . . . . . . . . Percentage of total grain production rarketed bv regions in Germany, 1959/60 - l96h/65 . . . . . Monthly percentage of total grain sales in Germany . . Percentage of total grain marketed that is sold during July - September by regions in Germany, 1959/60 — 19614/65 . o o o o o o o o o o 0 Percentage of grain purchased by types of buyer in Gennany, 1955/56 to 1961I/65 . . . . . . . . Agricultural cooperatives engaged in commodity trade by regions in Germany, 1960 and l96h . . . . . . The number of agricultural cooperatives and membership in Germany . . . . . . . . . . . . Number of flour mills in Germany by size with proportion or tm grairl raj—118d O O O O O O O O O Page 12 17 18 19 21 2h 27 28 Table Page 17. Structure of the milling industry in Germany, 1960 alld 1961‘ s I a o o o o o o o o 37 18. Production of mixed feed in Germany, 1952/53 to 1964/65 . 39 19. The composition of the grain component of mixed feeds produced in Germany, 1955/56, 1960/61 and 196h/65 . . hO 20. Production of mixed feed by regions and percentage of total production in Germany, 1959/60 to l96h/65 . . hh 21. Mixed.feed production and consumption in percentage by regions of Germany, 1961/62 . . . . . . . h5 22. Average amounts of mixed feeds fed to dairy cows, hogs and laying hens by regions of Germany . . . . . . ho 23. Structure of mixed feed industry in Germany, 1960 and 196h o o o o o o o o o o o 0 ’47 2h. Beer output of breweries by regions in Germany, 1961 and 1961‘ o o o o o o o o o o o ’48 25. The use of domestically produced corn in the regions Of Italy, 1961.!» o c o o o o o o o o o 51 26. The use of domestically produced barley in the regions Of Italy, 1961‘ o o o o o o o o o o 0 S2 27. Percentage of grain production sold in France, 1950/51, 1960/61 and 1962/63. . . . . . . . . . 55 28. Production and off-farm sales ("collecte") of corn in certain. dBpar‘bmntS o o o o o o o o o 56 29. Exports as a percentage of grain sold in France, 1958/59, 1960/61 and 1962/63 0 o o o o o o o o 0 S9 30. Percentage of crop used for specific purposes in France, 1959/60 - 1961/62 . . . . . . . . . . #9 31. Production, imports and exports of livestock products by EEC member countries, average of 1959—61 . . . . 61 32. ‘Meat imports by EEC member countries from selected origins, 1955-57, 1959-61 Emd 1963-65 0 o o o . LII-2 33. Butter imports by EEC member countries from selected origins, 1955-57; 1959-61 and 1963-65 . . . . . 63 vi Table Page 3h. Cheese imports by EEC member countries from selected origins, 1955-57. 1959-61 and 1963-65 . . . . . 6h 35. Egg imports by EEC member countries from selected origins, 1955—57, 1959-61 and 1963-65 . . . . . C\ \71 36. Average annual production of grains by regions of the EEC for 1960-62 and percentage of total EEC production . 103 37. Average annual production of livestock products by regions of the EEC for 1960-62 and percentage of total EEC production . . . . . . . . . . 110 Table l. 2. 13. 1h. 15. 16. 17. 18. 19. LIST OF APPENDIX TABLES Wheat prices by region in the EEC. . . . . Barley prices by region in the EEC . . . . Corn prices by region in the EEC . . . . . Rye prices by region in the EEC . . . . . - Melting barley prices by region in the EEC . . Durum.wheat prices by region in the EEC . . . The ratio of wheat price to barley price by region in the m0. 0 O O O O O O O O O The ratio of wheat price to corn price by region in the EC. 0 O O O O O 0 O O O The ratio of barley price to corn price by region in the EEC O O O O O O O O O O 0 Beef cattle prices by region in the EEC . . . Calf prices by region.in the EEC . . . . . The ratio of calf price to beef price by region in the EC. 0 O O O O O O O O 0 Milk prices by region in the EEC . . . . . The ratio of beef price to milk price by region in the EEC O O O O 0 O O O O O O The ratio of calf price to milk price by region in the EC. 0 O O O O 0 O O O O The ratio of beef price to barley price by region in the mo. 0 O O O I O O O O O The ratio of beef price to corn price by region in the EC. 0 O O O O 0 O O O O The ratio of calf price to barley price by region in tm EC. 0 O O O 0 O O O O O The ratio of milk price to barley price by region in tlle EEC. O I I O O O O O O 0 viii 1b6 1h? 1h? lh8 lh9 1A9 150 151 152 153 15h 155 156 157 158 159 Table age 20. Hog prices by region in the EEC . . . . . . . 160 21. The ratio of hog price to barley price by region in the EEC O O O O O O O O O 0 O O O 161 22. The ratio of hog price to corn price by region in the EEC. . . . . . . . . . . . . 162 23. Broiler prices by region in the EEC . . . . . . 163 2b. The ratio of broiler price to barley price by region intheEEC e o u e o e e o e e o 0 161.1. 25. The ratio of broiler price to corn price by region in the EEC . . . . . . . . . . . . 165 26. Egg prices by region in the EEC . . . . . . . 166 27. The ratio of egg price to corn price by region in the EC 0 e e e o e e e e e o e e 167 28. The ratio of egg price to barley price by region in tm EC. 0 O I O O O O O O I O O 168 29. Amount and percentage of land in each farm size group by region in France, 1963 . . . . . . . . . 173 30. Production of wheat in each region in France and average production per farm.by‘farm.size group, 1963 . . . 17h 31. Production of barley in each region in France and average production per farm by farm.size group, 1963 . . . 175 32. Coefficients for computing national average prices of beef and calves. . . . . . . . . . . 177 33. Comparison of cereal price estimates for 1970 with results of other studies . . . . . . . . . . 181 3h. Augmentation rates for transportation costs . . . . 187 35. Feed ration weights for calculating feed costs for broilers . . . . . . . . . . . . 190 36. Eeed ration weights for calculating feed costs for eggs . 191 37. Kilograms of feed.grain required per kilogram of eggs. . 191 38. Feed ration weights for calculating i‘eed costs for hogs . 192 39. Kilograms of feed grain required per kilogram.of hog . 192 ix LIST OF ILLUSTRATIONS Figure 1. The regions of the EEC . . . . . . . . 2. Population of regions and major cities in the EEC . 3. Annual per capita income . . . . . . . . h. Marketing channels for grain in Germany . . . . 5. Location of mixed feed industry in Germany, 1957 . . 6. Mixed feed production in Germany by regions, 1962/63 . 7. Marketing channels for wheat in Italy . . . . 8. Marketing channels for wheat in France . . . . 9. livestock and.meat marketing channels in France, 1965 General marketing channels for cattle and hogs in northern Europe. . . . . . . . . . Marketing channels for beef in Italy . . . . . Hog marketing channels in Italy . . . . . . Marketing channels for fluid milk in France . . . Marketing channels for fluid milk in Germany . . . Marketing channels for broilers in Europe. . . . Marketing channels for eggs in the EEC . . . . Page 70 71 73 76 78 80 81 LIST OF APPENDICES Appendix Page I WEIGHTS, TEASURES, MOI‘IETMIY EQUIVALENTS AND ABBIEVIATIWSO o o e o o o o o o e BIO II PRICE TABIES AND CQIPUTATIONAL PROCEDURES . . o . 1112 III PROCEDURES FOR PROJECTING PRODUCTI PRICES . . . . 179 a ! -° .'-.L CHAPTER I INTRODUCTION The signing of the Treaty of Rome by Belgium, France, west Germany, Italy, Luxembourg and the Netherlands on March 25, 1957, created the European Economic Community and touched off a series of changes with world-wide significance. The form of economic integration envisioned in the Treaty of Rome is what Balassa calls a common market.1 This elimi- nates all tariff and quantitative trade barriers between members, estab- lishes a common tariff on trade with non-members and abolishes restric- tions of factor movements between members. It is the first time that this many advanced economies have been united to this extent and the potential impact of the unification is likely to be felt in many different countries. The Study of EEC Agriculture While all areas of economic activity have caused adjustment prob- lems, one of the most troublesome has been devising a common policy for agriculture. The difficulties on this subject even resulted in the French government boycotting the meetings of the EEC during the last half of 1965. The American government has also maintained a close watch on developments in EEC agricultural policy; The formation of the Common lBela Balassa, The Thegry of Economic Integration (Homewood, Illinois: Richard.D. Irwin, Inc., I961), p.2. 2 Market unites five of the top ten foreign cash markets for U.S. agricul- tural products2 into a single entity, whose policies may influence our future sales abroad. In order to preperly guide the development of Amer- ican production, policy makers and advisors must consider the adjustments that will result from this major change in the market. To better understand the changes resulting from.the shift to a common agricultural policy in the EEC and to learn more about the pro— duction and consumption of agricultural products in the EEC, the U.S. Department of Agriculture contracted with the Department of Agricultural Economics at Michigan State University to study the EEC. One objective of the study is to develop better estimates of the relationships between the output of grains and livestock and agricultural prices, market struc- tures, production techniques and farm structure. Another goal is to analyze the deve10pment of consumer demand for farm products and project this demand to 1970 and 1975. The third objective is to determine the likely impact of developments in the EEC on the agricultural exports of the united States. To facilitate the research, the project was divided into four sub- projects, each of which involved the study of a portion of the EEC. The titles of the four sub-projects are as follows: 1. Changes in the livestock and feed economy of the Northern EEC, 2. Changes in the livestock and feed economy of the Southern EEC, 3. Changes in the livestock and feed economy of France, 2The leading dollar markets for U.S. agricultural exports in the 1965-66 marketing year were Japan, Canada, Netherlands, West Germany, United Kingdom, Italy, Spain, BelgiumpLuxembourg, France, and Denmark, as reported in U.S. Department of Agriculture, Economic Research Service, Foreign.Agricultural Trade of the United States (washington: November, 5566), P0 3;- 3 h. Changes in prices and marketing of grains and livestock in the EEC. The results of each sub-project are published separately with a final report of the overall project drawing on the sub-project reports and projections of demand to relate expected changes in EEC agriculture to the trade prospects for U.S. agricultural exports. The Study of Prices and Marketing This report gives the results of the fourth sub-project concerning the changes in the prices and marketing of grains and livestock in the EC. The Specific commodities studied were wheat, durum wheat, barley, melting barley, rye, corn, beef cattle, calves, hogs, milk, broilers and eggs. One of the project objectives is to describe the farm level prices for these commodities prior to the introduction of the EEC marketing pol- icies. Since the EEC policies provide for intervention at the wholesale level, it is necessary to understand the marketing system to know hOW’the policies will affect the farmer. Thus, another objective is to describe the marketing system.that generates the prices received by farmers. The third Objective is to estimate the impact of the Common Agricultural Policy on the price surfaces and marketing systems and to project pro- ducer prices to 1970 and 1975. This projection also considers any changes in the transportation system.and how such changes will affect the flow of agricultural products in the EEC. Coordination with the other sub-projects became very important in this study since the production analysis was based on regions within France, Germany, and Italy. This required that the regions established for the production studies be the same as those used for reporting h prices so that production projections to 1970 and 1975 could include the effects of price changes. Figure 1 shows the regions of the EEC used in all sub-projects. Since very little grain or livestock is produced in the South region in France, it is given only cursory coverage in the pro- duction study of France and no prices were collected for the region. Organization of the Report The next chapter describes the market systems for grains and live- stock products. Both the organizations that handle the products and the transportation flows are included. Chapter III discusses the Common Agricultural Policy of the EEG and relates it to previous policies of the member countries. The description of the past and projected price sur- faces is found in Chapter IV and Appendix II, while the final chapter includes observations on the impact of the new policies on the EEC. S Fig. l.—-The regions of the EEC Germany 1 Schleswig-Holstein 2 Niedersachsen 3 Nordrheinrwestfalen h Hessen 5 Rheinland-Pfalz 6 BadenAWflrttemburg '.-' 7 Bayern . 8 Netherlands ' 9 Belgiuanuxembourg K France 10 North East 11 North Central Italy 12 North west 16 North 13 South west 17 Center It Central Mountain 18 South 15 South 19 Islands CHAPTER II THE MARKET FOR FAR}! PRODUCTS The marketing aspects of greatest concern in this chapter are the spatial separation of production and consumption and the system of organ— izations developed to overcome this geographic separation. Most of the chapter discusses the system for moving goods from.the area of production to the area of consumption, including the organizations that handle the goods and the flows of these goods from.place to place in the Community. Of course, the analysis of commodity movements must include a description of production locations, but these areas are treated in greater detail elsewhere.1 Thus, the first part of the chapter describes the location of demand in the EEC followed by a discussion of the marketing systems and commodity movements of grains and livestock products. One aspect of the demand for farm products is the number of people. The location of the population, particularly in large cities, determines many of the flows of agricultural products. Figure 2, showing the popu- lation of areas of the EEC as well as the location of the major cities, indicates the concentration of people into the northwestern parts of the Community. Over half of the people in the EEC live north of a line run- ning through Munich and Paris, and nearly one-third are in the triangle having Paris at the apex and the Netherlands and Nordrhein—Uestfalen as _ 1See the reports of the sub-projects covering the Northern EEC, the Southern EEG, and France. 7 Fig. 2.--Population of regions and major cities in the EECa 1%: '\\\\\\\\\ a“ Population (in millions) *a Regions Cities J’ y . 10.0 and . 5.0 and “ , r over m . . a. " 5 0—9 9 O l O 9 $94? 2.5-h.9 . 0.6-0.99 *‘g Q 9 6 Q 1.0-ah . o.h-o.59 ? less than 1.0 % a United Nations, Demographic Yearbook, 1963, Su lement, and OEEC, ._‘.,ggicult1u‘a1 Regions in the European Eonomic CommIE _, I96 8 a base. rtainly, the large cities in other areas, such as Milan and Rome, are important demand centers, but the high concentration of people into a relatively small part of the Community, means that much of the movement of internally produced food must be directed toward the North- west. A simple head-count, however, is not sufficient to describe the location of demand for agricultural products. Money also talks by making people's wants effective in the marketplace. Figure 3, showing the per capita income by regions in the EEC, again stresses the importance of the northern parts of the Community. Most of the large population centers of Germany, the Netherlands and Belgium are in areas with per capita in- comes equivalent to $1000 or more. The most densely populated area, the Ruhr River valley, has incomes over $11400 as does the Paris area and Saarland. The regions of high per capita incomes in southern France are located in resort areas having small populations. Thus, the combination of pOpulation density and high incoms makes the northwestern part of the EEC the most important demand center for farm products. With further develoPment of the Common Market, many of the income differences may be reduced and the new marketing technology permits storing and transporting perishable commodities to distant areas. While these trends will cause the diets of all areas of the EEC to become more alike, it is likely that the large differences in the kinds of food de- manded in different parts of the Community will continue for many years. The Marketing of Grain In this section the marketing channels for grains are described as well as the movements of grains between regions of the BBC. The first 10 part describes the movements of grains between the regions of the EEC. Because one of the primary advantages of a customs union is the unrestrict— ed movement of goods across country boundries, it is believed that one of the important results of the Common Agricultural Policy and the uni- fied market will be an increased interchange of agricultural products within the Community. By examining the most important trade routes used at present and the possible shifts in these routes, it is possible to gain insights into the potential for future movement. Also, the informa- tion on the important transportation methods employed will be useful when discussing the future price surface for grains. At that point it will be necessary to adjust price projections to reflect inter-regional transportation costs, which will depend on the routes available and the modes of transportation used. The second part deals with the outlets available to farmers for grain in the three major grain countries of the EEC-~C-ermany, Italy and France. The discussion follows the marketing channels from the farm to the first processor of the grain, or alternatively, to the exporter. From this discussion of the marketing system it is possible to understand more clearly how the price system operates and how the prices established. by EC policies will be transmitted to the farmer. Thus, the following material provides a fuller understanding of European markets and a necessary background for subsequent portions of this report. 11 International Grain Trade of The EEC Importance Exports and imports of grain play an important part in the grain trade of the EEC. France is the only member country that exports size- able quantities of grains, although the Netherlands and Belgium-Luxem- bourg also export about one-fifth of their wheat production and almost half of the Dutch feed grain production was exported during the early 1960's. (See Table 1.) The nearly three million tons of wheat exported by France and the 2.3 million tons of feed grains accounted for about 85 percent and 77 percent respectively of the average exports of the EEC countries of these grains from 1962 to l96h. Thus, France is the only nember country that has a major concern for developing markets in third countries for its grain production. The other countries use most of their production internally, and, as will be shown later, what little they export goes mainly to other EEC countries. Imports, on the other hand, are an important matter for every coun- try except France. Germany has the biggest average imports of both wheat and feed grains, but Italy, Netherlands and Belgium-Luxembourg all import from 1.5 to 3 million tons of feed grains a year. (See Table 1.) Imports are equal to three-fourths of the annual production in Germany and Italy, are three times annual production in Belgium, and are nearly six times domestic output in the Netherlands. 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Adv sampH a.a e.sm pe.om a.ea m.~ “0v o.ooa m.a m.~H H.oo ~.ma Ape o.mmo m.©m H.NHH H.m~m m.:ma va seesaw e.m m.e H.: a.e N. on o.ooa m.m N.m m.mm m.e Anv «.msa a.e o.m m.ema «.5 Amy xeqlseamaom w.mm m.mp m.m T2. m. A3 es mi w m. e a . . . :wH oH .ON m mmemaso dz Ammo. Immu.% x0555 g 4N0. .66; AM@. Imm.fi Haves mmsam seem .I handed: cowpepnodnedna mo opoz «somaumpma «coapwpnoamcenp He sees use damage we znpcsoo he awesome“ cflmnm emenecnu.: mnmda 18 TABLE 5.--Imports of grain by ship to Germany from selected regions , 1962 and 1963"”1 Region of Origin 1962 1000 tons 1000 tons 11‘ Netherlands 21.2 19.7 0.6 Belgium-Lwcembourg 5 . l 9. 3 0 . 3 France Near English Channel 2h.1 105.1 3.1 Near Atlantic Lu? 1111-2 3.3 MI. """ e2 --- 28.8 219.3 6171 Canada Near Atlantic 665.5 796.14 23.3 Near Great Lakes 1h.5 19.5 .6 Near Pacific 2514.9 120.1; 2..” 935.9 9 .3 27.8 United States Near Great Lakes 566.5 11.3 188.3 5.5 Near Atlantic 116.6 2.3 259.3 7.6 Near Gulf of Mexico 737.1 1h.6 198.3 314.6 Near Pacific 276.1 “2.6 914.6 2.8 1595.3 33.7 10 O. 30.5 All Other 23h7.7 has 1192.3 314.9 Total 5031; . o oo. o 31:17 . 6 100 . o aStatistiches Bundesamt, Seeschiffahrt (Fachserie H., Verkehr, Reihe 2). 19 .5308 000...... 08‘. 0800.000 pmdmo .00 0000000000 000000> .050000000 00000000000000 .cmpsé 050 0.0825ch mfiesaofiv seeenm 0000000000000 0.000 5.0000 0.000 0.005 0.000 0.500 0.000 0.0000 0.000 0.0000 00000 03.30800 cmHOsom 0.00 0.0000 0.00 0.000 0.0 0.50 0.00 0.000 0.0 5.000 000 000000 00000 0.0 5.0 0.0 0.0 0.0 0.00 .. -- 00000000 0.0 0.55 5.50 0.000 0.00 0.000 0.0 5.0 0.0 0.00 000000 0.0 0.5 5.0 0.00 0.0 0.00 0.0 5.000 0.0 0.000 0:02.30 0003:0300 0.0 0.0 0.0 0.00 0.0 0.00 0.0 5.00 0.0 0.00 0000 :0ezwe0000 0.0 0.5 0.5 0.00 0.0 0.00 0.00 0.000 5.00 0.000 099. 00.00.0090 0.00 0.500 0.50 0.050 5.00 0.000 0.00 0.000 0.00 0.0000 0005000 pmoznepsoz 0 .0 0000 0 .0 0000 __ 0 .p 0000 0 .0 0000 0 .p 0000 0000 0000 0000 0000 0000 000000 0000 00000 s 000.035 one. on 03.0000 mum 03.002 088.000 08.0.0 500.00 .00 2.6.3.36 00002.0 20 with the Netherlands providing 73?? and France 1753. (See Table 7.) The Rhein-Rhur area is the major grain deficit area and is easily accesable by waterway. Therefore it is the destination of most of the barge in— ports. While 57% of the barge imports head for the Rhein-Rhur area, another 21% are directed toward the Southwestern area. These two areas are primarily served by imports from the Netherlands with lesser amounts coming from France and Belgium. It is interesting to note the difference in the areas of France serving the two different areas of Germany. 0f the imports arriving from France, the Rhein-Rhur area received its grain mainly from the area near the English Channel while the Southwest got its grain from the Strasbourg area of France. France Being a surplus grain producer, France exports large amounts of feed grains and wheat. Currently about half of her feed grain exports and about 13 percent of the wheat exports go to EC member countries, Germany being the primary destination for both. Almost all experts to Gem and the Benelux countries are from the northeastern one-fourth of France where the canals provide cheap transportation to the deficit regions of the importing countries. Grain produced in the western half of France is generally shipped by rail to Atlantic ports and has histori- cally been sold to the United Kingdom and the Scandinavian countries, as well as recent sales to Comunist China. After 1962 the price advantages in EEG countries resulted in small shipments to North Sea ports of the Netherlands and Germany and in some wheat shipments to Sicily. Apparently the shipments to Sicily have replaced the traditional movements from northern Italy and are due solely to price differences during the transi- tion period that will be eliminated as the EEC adopts a common price .AH exam: annexno> .m mflnemnowmv wawaMHnomcmssHm .pseumUQSQ me£0flpmflpepmw A.mpsmeanoo semen mo new map Hence no: has waspop use awakens messages m an ohswfim seem .eonsom deemed one Seem Umadflnm sflmnw Hmpop mo ommpsmoemm on .soapmsflpmmp pepmfla one op baggage madam Hepop Ho ewepsoonmm Anv 21 .Amaop oooav games no sneeze Adv o.ooa o.ooa o.ooa o.ooH o.ooa o.ooH o.ooa o.ooa o.ooa on o.ooa a.a N.H a.0 N.m H.m 0.: 5.0 5.m5 Anv n.0amm N.Hm c.0m m.:ma ®.N5 o.aa N.mOH m.a:fl m.am0a Amy endgame a. -- -- a. a.a m.a -- a. ;. on o.ooa -- -- m.a 5.HN 0.00 -1 H.0N x- Anv 0.: n: a: m.o o.H m.m nu m.fl :1 Amy wasfipdsm m.m -- 0.00 a.m a.m m.a H.a m. :.N on o.ooa - m.0m 0.0 5.N a. H.ma 0. H.om Apv 0.05 -- o.am m.m H.m 5. a.m m.o H.0m Aav qnmaam 0.mm 0.0a -- 5.wm a.oa 0.0a 0.0: m.m H.0N on 0.00H 0. u- 3.0 m.H a.H o.m 5. ;.05 A90 H.amm m.m .. 4.4: m.5 0.5 m.5e m.m 0.4a: Amy samenepsom m.aa a.oa .. H.0H 4.0H 5.ma 0.mm a.m 0.0a A00 o.ooa m.H .. o.a a.m s.m m.ma 5.H m.m0 any a.5mm :.m -1 m.mm 0.5 H.0 5.4m 4.4 5.05M Aav eaathamna n.5m 0.05 -- H.Hm m.m0 m.5m a.OH m.aa a.mm on o.ooa 0.” .: H.0 5.m H.m m. m.oa o.m5 ADV a.40ma 5.mm -- m.05 0.5: 0.5m m.HH m.mma 0.m0a Amy neam-eamem a.m 0.N N.aa a.H H.0H a.0 m. a.: a.m A00 o.ooa a. a.m m.m m.ma a.m 0. 0.a m.a0 Ana n.0w m.o o.m m.m 5.HH m.m m.o :.5 5.mm Adv pmmzwnpnoz AOHMmpeH pmwonpnoz \musonmmupw Hosanna _ b a name :oapaqapmon fleece guano secede .m.m .xsq-.aom~ - manage , M_ .aaoz mmwma new Nwma Ho emwum>m shadshmc nH meowwon op meowmen qmfimnom Seem amass he madam Mo pcesm>ozxu.5 mnmoao medium mgfima 438$” SEES” N233” H9603” ookmma mm\mmm.n wmhmma wm\0mma 0m\mmm._u op modem $.03:me op 03.0mm.” nhgéeu sun amaze me mom? .3 0032990 309m Ho owspsoonemnséfl Ema. 33 Fig. h.--Marketing channels for grain in Germany Farmer 1:176 1w; 5% Private Country Cooperative Elevator Jhnports l Wholesaler‘] L iii Commercial USers 3h TABII": lb.--Agricultural cooperatives engaged in commodity trade by regions in Germany, 1960 and 1961;“ Co operative region 1960 19611 Number Percent rNumber Percent Hannover 610 5. h 5176 5’ . 2 Kiel h31 3 . 8 396 3 . 8 Oldenberg 21.6 2 . 2 2M; 2 . 3 litinster 335 3.0 331 3.1 Kenn 1.72 14.2 10.9 8.0 Kas sel 565 5. 0 511 1.1 . 8 Fralflcfurt 1,1171 10.2 1,065 10.1 Karlsruhe 1,161. 10.1. 1,171. 11.1 Stuttgart 1,865 13 . 0 1,1107 13 .u M“lichen 3,1139 31. l 3 3 2172 30. 8 KOblenZ 611).]. 5 o 9 6114 S 0 8 Ludwigsharen 839 3.9 L10 3.9 Searbrucken 209 1.9 179 1.7 \f .7 _ TOTAL 11,2110 100. 0 10,538 100. 0 \ i aDeutscher Raiffeisenverband e.V. , Jahrbuch, 1960 and l96h. 35 The private firms tend to be larger than the coops and are concen— trated in the areas of larger farms. Thus, the private elevator channel on the flow chart is most important in Schleswig-Holstein, I‘Iiedersaehen Nordrhein-Westfalen, and Rheinland-Pfalz. Cooperatives have a long his- tory in Germany, beginning as local bargaining groups for social as well as economic reforms in the rural community. Only recently have they be- gun to consolidate into larger units. Table 15 shows the trend toward increased membership and fewer numbers of cooperatives. TABLE 15.--The number of agricultural cgoperatives and membership in Germany Number of—fietmbzvrs ~ Year A Number of Cooperatives _ (in millions) 1938 26,250 3.1 1957 23,300 3.82 1960 22,900 8.10 1961; 21,100 1.. 52 aDeutscher Raiffeisenverband e. V., Jahrbuch, 1961;. The milling industry absorbs much of the wheat and some of the rye produced in Germany. There are two distinct types of mills: the craft mills are primarily concerned with custom nulling for famners while the trade mills buy grain and sell the flour produced. Generally, the craft mills are very small and serve only a local area. These small mills are typically found in the southern areas of the country where farms are also small and use much of their 01m production. Table 16 shows that there were a large number of small mills in Genaany during the early 1960's, but that they handled only about 10 36 TABLE 16.--Number of flour mills in Germany by size with proportion of the grain milled‘jI _ V Daily Number of .1 Percentage of total Size _ Capacity fiff Mills ~ __ grain milled Small 5 tons 6,062 10.1; Medium 5-80 tons 1,016 355 Large over 80 tons 56 514.1 _ A- — —— aF.W. Hardach, "Gctmidemflhlen," Handwdrterbuch der Sozialwissen- schai’ten, Vol. IX (Stuttgart, 1965) p. 561-67. percent of the grain milled. 0f greater importance are the large and medium sized mills. The medium sized mills are usually found in areas with a moderate surplus of grain production over local flour needs, such as in northern Germany with its larger farms and in Bayern where many medium sized mills are found along with the small mills serving local needs. The large mills are located along transportation routes where large quantities of wheat can be brought in both from imports and from domestic production. Thus, the major locations of large mills are the port cities of Hamburg and Bremen, the lower Rhine valley near the population centers of the Rhur, and the middle Rhine area around Mannheim. The importance of the larger mills has increased as can be seen from Table 17. The proportion of total sales has increased for those firms employing more than 50 employees. One of the important problems facing the milling industry has been an excess capacity. To aleviate this problem, a law was passed in 1957 which requires government permission to build new facilities or expand 37 .9:me avggfi Ho soapwmom wagon .3on on 6030.33.99 pom 5.3.22” page £3332. 35303.03 3320...” .95 #38523 g .5.“ Ease??? nan. «Afipmwpepmofluumsw Han . em 332.65% an: 03933 «a 0.80233 «somnegoemono some 38:5 .98 gomom 33.33 «gunning 3283393? 1 I‘ll! E .22 E .3”: A0.mNNuV lemm.eauv Am.waanv loom.mflnv 0.02 0.02 0.02 «am 0.02 0.02 0.02 a... 038. sham A 0m.0mA l3 2 .32 A no.0? 0.: 2 .88 05 000 0.5m mam 4.2 mm 002A 9202A 0.2 6 02.3 332A 922A 92 02 mam emu .33 :2 2 .2 4.0 ma m2 3 m.~ 0.m 0.mm «2 m A a - a 4e is“ all; a a .02 i 3.3m couch mode .893 95a _ mam .3an age 5% you 982.83 no 3852 402 yon—soda 82 30.5303 e62 e5 82 .590 fi 533 wfidne 3p “.6 95323..-.2 2mg 38 existing mills and also provides payments for mills going out of business. Studies of the results of this law show that most of the applications for discontinued operation have been from small craft mills and that many of these mills had already ceased Operations. Thus, the problem.has not been solved and becomes more acute as per capita consumption of flour decreases. It is difficult to say what the impact of the EEC policwaill be on this prOblemm IMuch of the milling industry is affected by the transportation subsidies given to grain and these probably will be discontinued. This would give local mills an advantage of lower costs for acquiring domestic grain, but the large mills would still enjoy their location advantages for imported.grains and for bulk shipments of grains and flour on the major‘waterways. The mixed feed industry is the primary buyer of feed grains that are sold by farmers and is growing rapidly; Mfixed.feed production has increased almost six times since 1952 and has doubled during the six year period of this study. (See Table 18.) The importance of this industry varies for different grains, currently being most important for corn and barley. During the past 10 years the amount of wheat used in.mixed feeds fell from 22.6 percent of the grain in feeds to only 8.8 percent. (See Table 19.) Barley has also decreased in importance, falling from 35.5 percent to 22.2 percent, but it is still a major component of mixed feeds. Corn, along with millet, has shown the most dramatic increase jumping from 23.0 percent of the grain in mixed.feeds in 1955-56 to 51.2 percent in 196h-6S. Hills are located.where they have easy access to grains and addi- tives that go into the feed product and where they have good access to livestock feeding operations. Thus, the most important of the large 39 TABLE 18.--Production of mixed feed in Germany, 1952/53 to l96h/658“ Cr0p Year 1000 G Eb Percentage of Percentage of total feed concentrated feed 1952/53 880 2.5 9.1 1953/51: 1205 3.3 12.34 19511/55 1613 1:3 15.0 1955/56 1911 5.0 17.1 1956/57 221.2 5.8 18.5 1957/58 2567 6.h 19.9 1958/59 2922 7.1 22.6 1959/60 3596 8.5 21.2 1960/61 3532 8.1 28.7 1961/62 M89 9.9 28.3 1962/63 5020 10.9 30.7 1963/6b. 5059 10.7 30.3 1968/65 6023° 13.1° 31.9c AA— W aR. Beckmarm,"1ntensive Tierhaltung erfordert Mischfutter," _Krr_aftfutter, Vol. XLIX (1966), p.20. For these figures also compare Bundesministerimn fur Ernéihrung, Landwirtschaft und Forsten, Unterlgen zur Futterwirtschaft. be E = Grain Unit. cPreliminary. 80 TABLE l9.--The composition of the grain component of mixed feeds produced in Germany, 1955/56, 1960/61 and 19611/65a (Percent each grain is of total grain) Grain 1955/56 1960/61 196h/65 Wheat 22.6 20.6 8.8 Rye 2.1, 10.3 3.11 Barley 35.5 211.6 22.2 Oats 16.5 1.11.0 1.11.1; Corn and Millet 23.0 30.5 51.2 Total Grain (1000 tons) 782.9 1571.0 2293.2 Total Grain as a percentage of total mixed feed production 39.8 343.9 37.6 aBundesministerium fflr Ernéhrung, Iandwirtschaft und Forsten, Statistisches Jahrbuch, various issues. mills are located in the Hamburg - Schleswig-Holstein area, the Bremen area, around the Rhur valley, and in the Mannheim area. All of these locations have easy access to water transportation for imported or domestic grain, are near industries that have by-products used in mixed feeds, such as fish meals and chemical by-products, and are near major livestock feeding areas. There are, of course, many other feed mills that are either smaller private Operations, or are a part of an agri- cultural c00perative or other industry that has branched into the feed mixing business. Figure 5 shows the geographical locations of the mixed feed mills and Figure 6 shows the total mixed feed production of the different regions of Germany. h1 Fig. 5.--Location of mined feed industry in Germany, 19573 a 9 . a- ' . . , ea c 0 \.°. ' z e\' . o 8 1 ° 9 9' r 0 ' 1 \ O O . ' '0 ° I .' °' 1 0'- ~.‘ . s 1 2 ‘ C l O.’. . O ‘0 ‘3. .: 'OQ‘ .. O ‘ \. | e ‘ a : g f. : O 0' ' ' .:J 0'. . . . .| 1‘. ' ' ‘ e‘ ‘ o e o 0 s 0‘ . .' s. O . 1 e e ‘e‘ . . . . l x. - ' ' -‘ 0 O s 9". . ‘ u . \ . .0 P Number of mills per location: 0 l-h; o 5-9; 0 l0 or more a ' e . A- Karl-gar: Die Entwmklung der Mischfutterindustrie in De t land h- , (Verdffentlichungen der Wirtschaftshochschule Mannhe ' ' u so No. 11) , Stuttgart, 1963, 1m, Reihe I, h2 a Fig. 6.--Mfixed feed production in Germany by regions, 1962/63 A. h an. Tewes, Der Einfluss der Gfltertarifpolitik auf die Futtermittel- markte der Bundesre ublIE fiéutschland, (Landwirtschaft:Angewandte Wiesen- schaft, No. 121), RETEEE, 1966. h3 During the period of this study, the relative prOportions of the mixed feed output for different regions has remained fairly stable (See Table 20), but over the 12 year period from.1952 the southern regions (Bayern, BadenAWflrttemberg, and Rheinland-Pfalz) increased their share of production from about 5 percent to over 20 percent. leading feed companies have established branch plants in the South and cooperatives have expanded.into the production of mixed feeds. The existing propor— tions are likely to remain stable unless there is a major shift in the location Of livestock feeding. Table 21 indicates that the consumption Of mixed feed tends to parallel the production, implying that there is very little interregional movement Of mixed feeds. One factor which might alter the pattern is the shift to increased feed use by farmers in southern Germany. At present, farmers in northern Germany, especially Schleswig-Holstein, use far more mixed feed for livestock than do farmers in southern.Germany. (See Table 22.) The industry presently consists of about 380 larger mills special- izing in the production Of mixed feeds and another 1,500 to 1,600 smaller Operations that are a branch Of some other business. There is very little information available on these branch Operations, but it can be seen from.Tab1e 23 that the specialized Operations have tended to become larger over the past h or 5 years. The brewing industry is another user Of German grains, generally buying about to percent of the summer barley production. The exact pro— portion depends on the quality and quantity available from domestic and from imported sources. This demand exhibits large regional differences since the major part Of the brewing industry is located in the southern parts of Germany and in Nordrhein-Westfalen. (See Table 2h.) ‘With hh TlBLE 20.--Production of mixed feed by regions and percegtage of total production in Germany, 1959/60 to l96h/65 (1000 tons) Schleswig- :5E83561n— Crop_year Holstein Hamburg_, Niedersachsen Bremen westfalen 1959/60 598.3 326.7 5h2.9 lh0.6 13h2.8 16.5% 9.0% 1h.9% 3.9% 36.9% 1960/61 609.7 3h6.6 515.5 138.7 1250.2 17.0% 9.7% 1h.h% 3.9% 35.06 1961/62 775.3 h08.6 679.3 181.7 1638.7 16.8% 8.9% 18.8% 3.9% 35.5% 1962/63 853.3 h22.8 818.1 190.0 1728.9 17.0% 8.8% 16.3% 3.8% 3h..% 1963/6h 8h3.6 h53.2 799.9 200.9 17h6.1 16.5% 8.8% 15.6% 3.9% 38.0% 196h/65 957.7 89h.6 930.6 20h.7 2105.3 15.7% 8-1% 15.3% 3.h% 3h.6% Rhe inlrand- mean West b Crop mar Hessen Pfalz Wflrttemberg Bayern Germany 1959/60 55.2 105.0 237.8 251.8 3633.9 1.5% 2. % 6.5% 6.9% 100.0% 1960/61 5h.h 113.1 266.h 237.3 3576.1 1.5% 3.2% 7.8% 6.6% 100.0% 1961/62 83.2 1h0.3 3h9.2 300.8 h6oh.5 1.8% 3.0% 7.6% 6.5% 100.0% 1962/63 85.5 168.2 360.h 383.8 5015.6 1.7% 3.h% 7.2% 6.9% 100.0% 1963/6h 88.5 170.8 371.u h03.h 5128.8 1.7% 3.3% 7.2% 7.9% 100.0% 1968/65 100.9 231.8 h82.9 530.2 6090.9 1.7% 3.8% 7.9% 8.7% 100.0% aR. Beckmann, "Intensive Tierhaltung erfordert Mischfutter," Kraftfutter; Vol. 89 (1966), p. 20. bIncluding Saarland and west Berlin hS TABLE 21.-~Nixed.feed production and consumption in percentage by regions of Germany, 1961/62 .i v—— Region Production Consumption Schleswig-Holstein 16.8 20.7 ——- Hamburg 8.9 0.h Niedersachsenb 18.7 27.1 Nordrhein—Westfalen 35.5 2h.3 Hessen 1.8 5.7 Rheinland-Pfalz 3.1 3.3 Saarland 0.9 0.6 Baden4Wflrttemberg 7.6 8.1 Bayern 6.5 9.6 Berlin 0.2 0.2 Germany * 100.0 100.0 .5 k _.- u aBundesministeriumfflr Ernahrung, Landwirtschaft und Forsten, Statistiche Mbnatsberichte, various issues. bIncluding Bremen. h6 TABLE 22.--Average amountsa of mixed feeds fed to dairybcows, hogs and laying hens by regions of Germany, 1963 Region Dairy cows Hogs Laying hens SchleSWig-Holstein --- 220 -- Niedersachsen 270 6? ho Nordrhein-westfalen 390 6b 38 Hessen 2h0 3h 26 Rheinland-Pfalz 100 30 27 Bade n-Wflrttemberg 110 2 9 2 7 Bayern 90 26 13 Germany 195 66 3O aKilograms per animal or bird per production period. bR. Beckmann, "Intensive Tierhaltung erfordert Mischfutter," Kraftfutter, Vol. h9 (1966). h? .8353 8820283 .0322 05 63638283 .0558m at 528880800000 08 22833923802 as 6022380060 .0 626m «sausage 05 2.56002 .0 2828.3 66662026820 82 Bass 05 8260288 .3288 $8808 63832630.. l 20.2.0.2 5.20.0 Am.m0wnv lame.-l.v Am.amuv Acca.auv 0.02 0.02 0.02 02 0.02 0.02 0.02 0mm 2.38.. tom mew 00 2 mam mam ham 0 982 08 000 has 2.3 0.2 mm 33 0.3 m2 3 20.2 p.02 2mm 22. 22 0.2 22 0.2 m2 3 .2 hm m.m 2.3 $2 5.... a; fimm m2 0 .2 m a m +62 a a a .oz eonom venom modem 903.3 mafia meamm .83 5 22.3. and :02 031.8060 1" 002 “68380 08620.: MO .8852 ”~4me use 003” «had—.206 5 5.3.265 com.“ pound: Mo g90§h¢mn£Mm H.346 b8 .39” Nam .53“ “20532on .HH .nmsmpmmnosdanhg .m ofimm .Eosmpm was comqmsflm .3330me .pmdsompnfifimpm .pcflmmvgm mgomflpmfipmpmo. mg.“ Hwflapmgfi magnum “and H.Hm o.ooa Hwamw mNmN o.mN o.ooa Nflflmm Nmmm “adapma m.mmH H.m mmmm 4H m.:mfl o.m 4mhfi «H .1, qfianom m.HNH o.m mmaa NH o.ooa .m ooNH NH ucmaummm 4.NH m.mm :zwom oped :.m 0.0m moapa ommfi aumhwm N.mm H.4H Hwfioa 50m 0.6m H.3H 40mm mam mponsmgpuazwumumm o.ww w.m new: m: 0.50 m.m «Ham Hm uflmmm-u:maaflonm N.mm 0.5 pmgm mm H.wo m.o ”Ho: mm ammmom m.oma m.~m mmmafl Hmfi m.ooa o.om muzma :ma cmammpmm3-cfimsncgoz N.HNN H.m mama N m.mma m.m ommfl m cosmpm m.Hoa m.m Juan mm m.m~ v :.m mqfim on consummnoumwz 4.0mm m.m waom m ~.:~N m.m mzca o wusnsmm o.m~ m.o moo m m.;m a.o am: a aflmpmfiom-mwzmmflnom Em“ . .gqofi .2ng Ex . .2ka 32%.... 5.... amp honesz .mm gonauz zoma acma .: gamma new .83” £5.58 nun magma .3 .mmmflnmsonp Ho 9:950 3811.8 ”55.9 h9 continued increases in beer production, it seems likely that the brewing and.malting industries will remain an important market for summer barley. Italy About 88 percent of the wheat produced is marketed with the remain— der used on the farm, primarily for seed and a small amount for feed. (See Figure 7.) On the other hand, feed grains are used primarily on the farm'with about 20-30 percent of the corn sold and only about 10 percent of the barley leaving the farm. (See Tables 25 and 26.) However, in the case of corn there is a great deal of variation among regions of the country in the amount that is marketed. Farmers in regions with a large livestock feeding operation coupled with moderate feed grain production, such as Emilia and Toscana, sell only very small portions of their crops, whereas those in regions with only small scale feeding operations, such as Puglia, or with a large surplus of grain production, such as Veneto, market about half of their total production. These figures all indicate the close tie between domestically produced feed grains and the livestock producing operations. Since the market is most important for wheat, an examination of the marketing channels may indicate what factors affect the demand for the farmer's produce. Figure 7 shows that most wheat is marketed through local merchants, with another important, though smaller, part marketed through the Federconsorzi.h Prior to 1962 the Italian policies required that about 20 percent of each year's wheat production be marketed through the Federconsorzi and receive a price set by the government. Even though 24The Federconsorzi is an agency of the Italian government that ad- ministers the agricultural commodity support programs. it 4 50 Fig. 7.--Marketing channels for wheat in Italy 12% used on farm for seed.and feed 88% 80% 15-20% 1*? L Local Federconsirzi Local Merchants Cooperatives fpriqg_t9_12§2)_/ ' In [I Imports 1L-.. (Since 1962) Other Users 8In some areas strong cooperatives account for up to 15% of wheat marketings. 51 TABLE 25.-~The use of domestically produced corn in the regions of Italy, 196b,a Production Percentage used on the farm Percentage (1000 tons) __ sold Region Seed Animal Human fee food Piemonte 556.3 \ 0.7 58.2 6.5 3h.6 Valle d'Aosta 0.9 —-- 55. 22.2 22.2 Lombardia 988.6 0.6 67.2 6.9 25.3 Trentino 30.1 2.0 h7.8 28.9 21.6 veneto 1011.8 0.5 h7.1 8.5 h3.9 Friuli 3h2.0 0.3 h8.2 9.3 h2.2 Liguria 11.9 2.5 81.5 5.0 10.9 Emilia ll9.h 0.5 9h.6 3.9 0.9 North 3061.0 0.6 57.8 7.7 3h.0 Toscana 107.5 2.1 ‘83.? gh.7—’ 9.53 Umbria h0.0 2.2 86.2 h.5 7.0 Marche 132.6 1.8 85.1 3 2 9.8 Lazio 137.1 2.8 73.9 2.8 20.6 Abruzzi 1h8.8 __2.6 62.2 ;.8_ A 31.5 Center 566.0 2.h 76.3 3.6 17.9 Campania T 199.1 30 69.3 _ 0.5 27.2 Puglia 36.0 3.1 38.1 --- 58.9 Basilicata 28.h 3.9 6h.1 2.1 29.9 Calabria 731.5 h.1 68.3 1.0 27.0 South 295.0 3.2 6h.9 0.6 31.3 3105.113- 309 EDT 8000 “"- IA???— Sardegna 3.0 --- #53.3 --- h3.3 Islands 6.5 3.1 67.7 --- 29.2 Italy 392877” 1.0 51.1) 6.6 31.5 aItalianIMinistry of Agriculture, Instituto per le Ricerche e 1e Analisi di Hercato, ”Rapporto sull'impiego del Granoturco, Orzo ed Avena, sia diBProduzione nazionale che d'importazione nel l96h," Rome, 196k, pp. 5'. 52 TABIE 26.-~‘1‘he use of dorestically produced barley in the regions of Italy, 1961.a Production Percentage used on the farm Percentage Region (100 tons) sold Seed 1 Animal feed Piemonte 9.11 8.5 91.5 -- Valle d'Aosta 0.6 --- 100.0 -- I-Ornbardia 11.2 5.1. 911.6 .. Trentino 1111.11 10.1 1111.8 115.0 Veneto 111.6 6.8 93.2 -- Mimi 651: 5.2 51.2 113.6 Liguria 1.0 10.0 90.0 _- Endlia _ 2211.0 6.0 87.7 6.3 North 1470.6 6.1 75.1 13.9 Toscana — 260.0 W3 mfififl 7.7 “- Umbria 125.6 9.1 80.5 10.11 Marche 135.8 6.8 89.1 8.1 Lazio 153.1 8.2 80.5 11.3 Abruzzi 68.8 9.9 85.9 11.11 Center 7143.3 8-7 83.8 3.9 Calamania 73.6 $6” 88.6 1.8—.— Paglia 331.9 12.9 68.1. 18.7 Basmcata 15h.8 12.1. 87.6 .. Oaklabria 162.0 __ 13.1 79. 7.7 South 722.3 12.5 76.7 10.h Sic 3‘ 113' 1155.2 11.1 80 .5 8.71 Sardegna 123.0 12.3 83. [1. Islands 578.2 11.3 81.2 7.5 Italy 2515.0 10.0 80.2 9.8 A —— —' aItalian Ministry of Agriculture, Instituto per le Ricerche e le Analisi di Mercato, "Rapporto sull'impiego del Granoturco, Orzo ed Avena, sia de Produzione nazionale chi d'importazione nel 19614," Rome, 1961;, pp. 16-19. 5') .2 this delivery requirement has been abolished, the Federconsorsi maintains rib out. the same proportion of the mrket. The third group handling the farmer's output is the cooperatives, who are of very little importance when viewed from a national Viewoint, but have considerable importance in certain localities. In areas with strong cooperatives, they account for as much as 15 percent of the total whe at marketings, even though they only account for one percent of the national total mrketed. Although there are some films that operate at what might be called the wholesale level, generally the initial collector sells the wheat to Processing firms. The cooperatives and the Federconsorzi have rather Strong central control and can bargain effectively with the large wheat 3113.13, but the small local elevators, or wheat buying merchants, are not Ln :1 position to bargain with the large mills. Some people express con- CGI'n over the impact this imbalance of bargaining power has on the price re4::eived by farmers. It is thought that large flour mills may dictate the price paid for wheat, setting it lower than would result with stronger selling groups. Another source of power for these mills is that since 1962 they have been allowed to import wheat directly for mixing in flour I"Elizl’xer than having all imports go through the Federconsorzi. The flour mills which are the primary buyers of wheat are located in the Northern region and in the South, including the island of Sicily. The northern nfills primarily make bread flour using the soft wheats pro- duced in that region supplemented by small quantities of durum wheat from Toscana and the South. On the other hand, the southern mills use durum wheat almost exclusively, supplemented with a minimum of soft wheat from the North or from France. The durum flour is especially good for the Sh manufacture of pasta, and some is also used for bread along with the im- ported soft wheat. Almost 90 percent of the wheat grown in Sicily and tile South is ground into flour within the region and used to make pasta or shipped to other regions of Italy as flour. Very little wheat is e3:- POr‘bed from Italy, so it is apparent that the mills are the major point 01‘ disposal for the domestic wheat crOp. As indicated previously, domestically produced feed grains we used. primarily on the farms where they are produced. Thus, the comxercial Tearkets handle primarily imported feed grains. Since most of the live- Stock feeding is in the North, most imports are through the ports in northern Italy. Many large feed mills are located in port cities, such as Genoa, Venice, Ravenna, and Ancona. thers are located in the Po val— 16y at Farms. and Foli. About 96 percent of the corn and barley that is - S L’fi’ljported eventually goes into mixed feeds for livestock, although the grain may go through several steps in the marketing system before arriv— ing at the feed mill. Of the corn imported, about 30 percent is sold dLjarectly to feed mills, about 55 percent to traders, and the remaining 15 percent goes through other channels to both farm and industrial users. Apparently the major portion of that purchased by traders and by other Channels goes to mixed feed mills eventually, since nearly all of the imported corn is ground into livestock feed. However, not all of this Would go to the large commercial mills, since there are many family Oper— ated, small feed mills. These small firms are not subjected to many of the taxes levied on the larger firms and can sell to local customers at lower prices than can the larger firms. A —— 5 Italian rfinistry of Agriculture, Instituto per le Ricerche e le Analisi de Hercato, "Rapporto sull' impiego del Granoturco, Orzo ed Avena, sia di Produzione nazionale che d'importazione nel 1961;," Rome, 19611. SS 1?}?axr1cxs Table 27 indicates the percentage of the total production of each <3zrcxpn sold off-farm.over the twelve year period 1950-1962. The propor- txicbri of the wheat crop that is marketed has remained relatively stable crvreze the entire period at about 70 percent while for feed grains lillczzseasing prOportions are being marketed off of the farm. This results from the increased production in the Paris Basin, which is a major grain airwaai with little livestock. Also, the proportion of rye marketed has decreased by about 50 percent over the twelve year period; probably due i3<> (flecreased human consumption and increased feed uses. TABLE 27.-—Percentage of grain production sold in France, 1950/51, 1960/61 and 1962/638 1950/51 1950/61 1962/63 Wheat 70 70 72-5 Rye 28 16 lh.5 Barley 26 5h h8 Corn 3.2 50 89 aInformation et Documentation Agricoles, C00per- atives LaFayette (Paris, I96h) No. 16, p.37. The percentage of corn production marketed in various regions of Fifixnce reflects differences in the utilization of feed grains in different armaas. The Paris Basin markets a large proportion of its corn production vflxile the South-East and SouthAWest regions use more of the production cu: the farm as feed for livestock. (See Table 28.) 56 TABLE 28.--Production and off-farm sales (”collecte") of corn in certain departmentsa (1000 metric tons) Production Collecte 1963-19611 19611-1965 1965-1966 1963-1961; 19611-1965 m Paris Basin 9,219 11,961; 9,216 6,221 11,721 % of Production 67.5 95.0 South-East 2,368 1,253 2,1112 1,176 936 % of Production 50.0 75.0 South-West 19,739 10, 722 16,729 10, 032 5 , 5 91; 51.0 52.0 55 of Production awn. Butterwick and E. Neville Rolfe, An Examination of the Market Structure in the BENELIK Ports and their Hinterlancf for Imported Feed Grains and for Compound Feeds, A Report to the 7.7.6. Feed Grains Council (fiaslfington, 15.0., 1966), Appendix Table 13. The marketing channels for corn are diagramed in Figure 8. The c=<><>:peratives are the most important of the two types of local elevators (manianes stockeurs) in terms of the amount of grain they handle. About 75 percent of all the grain marketed are first delivered to a coop- erative storage agency with about 80 percent of the wheat going to this type of firm. These youps have several choices for disposing of their grain and the outlet chosen depends on the managerial abilities of the 30°83. director and the location of the firm. The two National Cooperative "hi—0113 provide an outlet for many of the local cooperatives. The Unions 883:1. grain on the export market or may direct deliveries to private amorters and to feed and flour mills. oh the other hand, the local °°°I> manager may, if he desires, sell directly to the mills and private e fibctbters. Some even do their own exporting, although this is unusual. 57 Fig. 8.--Marketing channels for wheat in France Farm J Storage Organization Total No. = 1906 1 V Coop Private (8&2) (1061:) Direct grain exports [Coop Union ]'-———— } ~ _ ii, aL Intermediate Handlers and Storage | mk— ‘ ‘ 3; Exporters Flour Mills and Feed Mills SICA Private Coops -A‘ --_- 58 There has been some movement toward grouping together several local coop— eratives to export directly to users in other EEC countries. This tend- ency is most pronoxmced in the northern part of the Paris Basin where transportation connections are good to Belgium, Holland, and Germany.6 Because France produces a surplus of grain, export channels are important for French farmers. About 25 percent of the wheat produced in France is exported and the proportion of feed grains varies from 2S-h0 percent, depending on the quality of the crop and the markets abroad. (See Table 29.) Rye is not an important export crop with only about 7 percent of the production going to foreign markets. 0f the wheat used within the country, about 63 percent is eventu— ally consumed by humans while over 28 percent is used in livestock feeds. (See Table 30.) The remainder is med for seed and some industrial p1u*- poses. Almost 90 percent of the corn and barley is used for livestock feed with the remainder used for seed and industrial purposes. The bar- ley going to the industrial category is used mostly for brewing while the corn in this classification is used for making starch. Both of these industries are minor users from a national viewpoint, but are important for producers in Northeastern France. The Marketing of Livestock and Livestock Products This section describes the movements of livestock products between the countries of the EEC as well as the marketing channels through which products pass from the farm to the consumer. The description is less detailed than the discussion of grain marketing since other information h A M 6From personal interview with Mr. Senechal, Director of the local Cooperative at Pontoise, France, May 16, 1966. 59 TABLE 29.--Exports as a percentage of grain 581d in France, 1958/59, 1960/61 and 1962/63 1958/59 1960/61 1962/63 Wheat (and flour in wheat equivalent) 10.7% 21.5% 25.0% Barleyb 3.5% 36.3% 3mm; Cornb 9.6% h2.0% 27.6% Rye 13.2% 15.h% 7.2% aInformations et Documentation Agricoles, Cooperatives La Fayette, (Paris, 19611) No. 16, p. 57-61. bThere is a large variation from one season to the next in the percent exported. TABLE 30.--Peroentage of crop used for specigic purposes in France, l959/6O - 1961/62 Wheat Barley Corn Seed 8.2 7.9 1.5 Animal feed 28.14 88.3 89.0 Industrial uses 0.6 3.h 8.3 Human food 62.8 0.1 0.9 aInformation et Documentation Agrigples, Cooperatives La Fayette (Paris: 19611) No. 16, p. 118. 60 on livestock marketing is available. The importance of international trade in livestock products varies greatly among the countries of the EEG and among products. Table 31 in- dicates that meat exports are important only for the Netherlands where 36 percent of the production enters foreign markets. The international trade data during this period does not indicate the type of meat traded, but the Dutch export mostly pork. Imports of neat into Germany and Italy exceed. 10 percent of domestic production and probably consist primarily of beef and veal. The egg trade is important for both the Netherlands and Germany; the former as an exporter and the latter as an importer. For the other EEC members the domestic production meets home needs and very little is imported, with the exception of Belgitm-Luxembourg which exports about 15 percent of their egg production. Because most of the trade in milk takes the form of cheese and butter, it is meaningless to compare the volumes traded with the amount of milk produced. The follow- ing discussion does, however, include the magnitude of the trade in butter and cheese with the sources and destinations of trade flows within the EEC. Tables 32 through 35 show the development of trade patterns over tine for several categories of livestock products. Internal EEC trade dominates only the French egg imports and Dutch and Belgian cheese imports. In most cases imports from other EEC members contribute less than three- fourths of the total -- in many cases less than one-fowth. For meat imports, this can be explained by the general shortage of beef within the community and the easy access to Denmark, a large supplier of pork and veal. 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In some cases the portion of total butter and cheese imports coming from other EEC members is also low. While this might seem unusual con- sidering the large output of these products in the Netherlands, it prob- ably reflects the short distances to other major producers, such as Demmark and SI-Iitzerland. The Dutch do have the largest share of the im- ports that come from within the EEC. However, the French have greatly increased their share of the German butter and cheese market and both France and Gennany have a large part of the Italian market. The large Shipments of eggs between EEC members come from the Netherlands, with 301713 additional supplies from Belgimn—Lwembourg. From this brief look at the flow of livestock products in the EEC it- is apparent that the Benelux countries, particularly the Netherlands, halve the biggest stake in the international market. Much of this trade ill the past has been with Germany, but the market is expanding in other HBITJSber countries. To develop these new markets requires good organiza— tion of the marketing system to collect the produce and distribute it throughout the Comrmmity. The following section contains a brief review Of the major producing regions and how the market system is organized for each product. The most important livestock areas in France are the regions of Nerd, Normandie, Bretagne, and Pays de la Loire as well as the area an”mind the Massif Centrale. But, since the major market for meat is Paris , the animals or the meat must be transported over relatively long distances from the producing areas. Present freight rates for livestock and. treats favor transporting live animals up to 300 masters and to 67 slaughter the animals in the producing region and ship the meat if the distance is greater than 500 kilometers. There is no clear cut differ- ence in costs for distances between 300 and 500 kilometers. Since Paris is within 300 kilometers of most of the producing regions, and all of the other cities of France are near livestock areas, most of the slaughtering takes place near the centers of consumption. The marketing channels used to ship the animals to the city markets and process the meat are shown on Figure 9. Nearly all of the livestock sold in France goes to a dealer, sometime two or more before reaching the final buyer. In some markets the commission men, representing both fa-I'rners and dealers, are very important, for example, they handle 50 to 70 percent of the cattle sold on the Paris market. The cooperatives bundle only about 5 percent of the neat marketed and are therefore not very important in the total market, but the dealers handle an estimated 55 percent of the livestock with the remaining 30 percent sold directly to the chevillard or to the retail butcher. The chevillard, or wholesale butcher, buys the animals, slaughters them, and sells the carcass either to wholesale meat dealers or to retail butchers and institutions. The wholesale meat dealers also receive meat from cooperative slaughtering plants and other slaughterers located out- side the market city. About 60 percent of the meat sold in Paris is h"="-ndled by commission men with the other to percent sold directly to I“ta-i]. butchers and food chains. The retail butcher is the traditional outlet for meat, but is \ 7G.A. Peterson and Michel Petit, Current Changes in the Livestock and. Grain Economy of France and Their Effect Lipon Foreign Traie Patterns, 5(apartnent of AgriculturaIJETonondcs, University of Wisconsin, Madison, lurch“scare-rated). p. 6 - 1:. "F‘h'fi' _- _ ” 68 Fig. 9.--Livestock and meat marketing channels in France, 1965a Farmer cooperative mm t: Liza-1:?“ Slaughtering fi - i Plant I \ \ Retail ’ Butcher Consumer aIbid. , Figure VI-l. 69 facing increased competition from the supermarket chain stores. Many of the butcher shops handle only fresh meat and have little or no refriger- ated storage. They must, therefore, buy meat every day or two from a wholesale butcher or through a commission man. Figure 10 shows the general pattern of marketing for cattle and h0gs in the Northern EEC. In Germany, Belgium and the Netherlands, the ET! raising of cattle and hogs is evenly dispursed over most of the area; thus, the animals do not have to be transported over long distances to reach the market. Farmers frequently deliver the animals to the local market where they will be slaughtered and consumed. In large cities, Where the wholesale meat market is more important than in the smaller tow-«ms, additional supplies of meat may come from outside the immediate area, but long distance shipping is not usually required. In the past, the most commonly used channel of marketing was that shown on the right Side of Figure 10. In this channel the farmer delivers his animal to the local livestock market where the local butcher buys it, slaughters it at. the municipal slaughtering plant, and takes the carcass to his shop. With the development of multiple-line grocery stores, the channels through the wholesale meat market became more important. It is very likely that the expansion of supermarket chains will result in a larger proportion of the animals being slaughtered in the producing regions and the meat moving th-I‘O‘ugh the warehouses of the retail chain organizations into the super- markets. Because of special production arrangements, the markets in Italy f°r beef and pork differ from those in the other countries. Figure ll 9‘th the channels used to market beef animals. About to percent of the c"aw-tile in Italy are sold at the farm usually to travelling dealers who 70 Fig. lO.--General marketing channels for cattle and hogs in northern Europea L Producers Private slaughtering plants in the production ——o"-.‘-'—'-"n-‘—V-V‘I" "'r regions "fir: __ Municipal livestock ’ market 1 r l J ‘} Municipal t , slaughtering house V _ _ ___ Private Wholesale meat ‘ storage market Supermarkets Grocery Butcher stores ShOpS aAdapted from 0.E .E.C., Documentation in Food and Agriculture, 1959 Series, No. 15, Marketlfng’ and Distribution Mar ins for Livestock and Heat in OOEOEOC. com r163 GEE : PES, 1959), p0 O. 71 Fig. ll.-—Marketing channels for beef in Italy:1 l Farmers in Small markets or fairs Local Traveling Broker Other wholesaler dealer markets _ _-—._. ——.—— Local market [ ht. | Commission slaughterer Retailer or butcher shops Consumer —— A aU.S. Feed.Grains Council, La Carne Bovine: Produgione E Commercig, (Ufficio Italiano del U.S. Feed Grains Council: Roma,‘fi.d7) p. 61. 72 then take the animal to the local market.8 The other 60 :‘Cl‘fifin'b of the cattle are taken by the farmer to market, either a local market or a small fair or bazaar. From these markets the animals go either to the slaughterer or to other markets in the larger cities where they are slaughtered. The carcasses then go to retailers or to butcher shops where they are cut into retail cuts and sold to the consumer. The production of pork in Italy is closely associated with cheese making. Much of the pork for salami and other processed products is fed the whey by-product of the cheese factories. Figure 12 shows the central position of the cheese factories in the hog marketing channels. Another feature of the Italian hog system that is unique is the geographical sep- aration of the piglet raising and the hog feeding operations. About 60 percent of the feeder pigs purchased by the cheese factories come from the Central region of Italy and are trucked north to be fed.9 This move- ment is accomplished by travelling collectors who buy the pigs on the farm and sell them either to agents of the cheese factories or directly to the factory. Milk production in the EEC is concentrated in the northern part of the Commmity. The Netherlands and Belgium are both large milk producing regions as are the northern areas of Germany. Southern Bayern and Baden- Wflrttenberg also produce large amounts of milk. In ance, the major producing regions are Nerd, Normandie and Bretagne in the North and Franche Comte and the Rhone Alpes in the Southeast. Almost all of the Italian milk production occurs in the Po River Valley of the North. 8Ibid., p. 59. 9Fred A. Mangum, Jr., mes in the Livestock and Feed Econong of Italy, forthcoming. . 73 . . ... 1 Fig. 12.--Hog marketing channels in ltzly Feeder pigs produced in central Italy V Collectors from farms Feeder pigs produce in northern Italy Fat hogs from northern Italy A: Cheese factory r Intermediate agents T feeding 3 Cheese factories plan”: 7 —- ll. Imports Jr - fl..- it Processed pork (hams, salami, etc.) albid. , R f .___L__l___. Farm consumption and "porcetta" 7h All milk producing regions do not, however, produce the same pro- ducts. The northern areas of France produce most of the fluid milk used in Paris as well as butter. (h the other hand, a large proportion of the milk produced in the Central Mountain region is used to make cheese. Cheese is also produced in the Allgflu region of Bayern and Baden-Whrttem- berg, but northern Germany produces butter from the milk not needed for fluid consumption. In the Netherlands, the milk from the western parts of the country is used in the cities for fluid consumption while that from the eastern areas is made into cheese and butter. Much of the Italian milk is made into cheese and butter, but the milk for fluid uses also comes from the same areas of Northern Italy. The marketing channels for milk in the Netherlands and Belgium are short and uncomplicated compared to those in France or Germany. In the Netherlands the milk produced in the Western areas, primarily Noord and Zuid Holland, is delivered to the city dairies for bottling and delivery to retail stores or direct to the consumer. Since not enough milk is produced in these areas to meet the needs of the large cities, about 30 to to percent of the milk supply used by the city dairies cones from country dairies in the eastern areas of the Netherlands. The eastern areas make butter and cheese from the milk that is not sent to the cities. Cooperatives are very important cheese producers, accounting for over 85 percent of the Dutch cheese output. In Belgium, the marketing channels for milk are also very direct, since much of the fluid milk is produced in the areas near Brussels and Antwerp. This milk is delivered to dairies which process it and deliver it either to wholesalers or to in- dependent delivery men. The wholesalers also sell to the delivery men and to the retail stores. 75 Figure 13 shows the channels used to market fluid milk for Paris. Milk is collected from the producers by the rural dairies, standardized to 3 percent butterfat, and pasteurized. The rural dairies then either deliver the milk to the city dairies which bottle the milk and distribute it to the retailers, or the rural dairies distribute the milk themselves. Both the urban and rural dairies maintain sales depots to supply retailers, who come daily to purchase the quantities needed for that day's sales. Sometimes wholesalers handle this function, especially where the rural dairies deliver large quantities to the city rather than to the urban dairies. A channel of increasing importance is the sale of nu’lk by rural dairies through their own retafl stores. About 140 percent of the milk produced on Italian farms is used on the farm.10 01' this, about 60 percent is used as feed for livestock and the remainder for making cheese and fluid uses. 0f the 60 percent that is delivered to the dairies, about to percent is used to make cheese, about the same amount for fluid uses, and the remainder for butter. Rome and the larger cities in the North established municipal collection cen- ters to receive the fluid milk and distribute it within the city, but the remainder of the country does not have such centers to coordinate the activities of the dairies. The collection center in Rome not only re— ceives milk from the surrounding area, but also gets milk from the north, because there is not enough milk produced in the Home area to supply its needs. Milk production in Germany is quite different in the northern areas 100.E.C.D., Documentation in Agriculture and Food, 1962 Series, No. 55, O anisation and Structure of the Milk Markets in O.E.C.D_._M_e*m_ber Cami—Wes, o.s"“'.c.n'.“‘§e‘r: isfl963) pp. 300 and 301;. “' 76 Fig. 13.--Marketing channels for fluid milk in France3 Producer Rural dairy Urban dairies \ l. t Urban Rural dairy Wholesaler dairy owned sales r_g, owned depot sales depot _L‘ r ___l Retailers Rural dairy __ - ___7 fi_ owned retail shop a o Ibld., p. 277. 77 than ii; is in the southern areas. The dairy herds in Schleswig—Holstein and Nordrheinewestfalen are large, whereas those in Badenewflrttemberg, Rheinland-Pfalz, and parts of Bayern are very small. This means that dairies in Nordrheinewestfalen are larger than those in the South. There is also a difference in the uses these dairies make of the milk delivered to them. The northern dairies use about 22 percent of their milk for fluid sales while southern dairies only use 15 percent.11 How- ever, the southern dairies produce mcre cheese, particularly in the foot- hills of the Alps. Southern dairies use about 11 percent of their milk for making cheese while northern dairies use only about 2 percent. A large proportion of the milk is used to make butter in both the North and in the South. The typical.merketing channels for fluid milk in Germany are shown in.Figure 1h. Collection centers are found in all parts of Germany, but are particularly important in Baden-Wtrttemburg and Rheinland—Pfalz where the very small farms necessitate a central collection point. In the northern part of’Germany, 82 percent of the milk is delivered directly to a dairy, whereas 63 percent of the production in the South passes through a collection center.12 In some parts of the country, the urban dairies handle all of the fluid.milk consumed in the city and may also perform the services handled by the distribution centers. Munich is an example where all the milk comes to the city dairies, either from producers or rural dairies, and is distributed eitherix>the retailers or directly to consumers. The direct channel from the producer to the consumer is still A‘ 11Ibid., p. 23h. 121bid., p. 232. 78 Fig. lbw-Marketing channels for fluid milk in Germanya L.-—~_—- . -m—‘un—n— --‘— ”wwwg-Q- -omm— -_.. ’— Hilk producers Collection centers rural dairies and 3Ibid., p. l i Urban dairy Distribution centers Consumers # A —”””~.. 2h8. -_- 79 used in some areas, but is being replaced by distribution through the dairies. Broiler production in the EEC is concentrated in several different areas; one of the biggest producing regions being Bretagne. The Nether- lands and Nordrheinewestfalen in Germany also produce large numbers of birds in commercial operations. The North region in Italy is another imp portant producer with the industry concentrated around Milan and Cuneo in the upper part of the Po Valley and.between'Venice and Forli in the lower Po valley. There are several other areas in southwestern and south— eastern France that produce broilers as well as in southern Germany and in Belgium» Figure 15 shows the marketing channels used in the EEC. Certain channels may be more important in one country than in others, but the trend in all countries is to shorten the channels and reduce the number of steps in the marketing process. The larger poultry farmers frequently byapass the dealers and sell directly to the slaughterer; the vertically integrated Operations often have their own slaughtering plant and sell directly to retail outlets. In those countries where imports or exports are important, they enter and leave the flow pattern between the whole- sale and retail levels. The central market is very important in some cities, such as Paris, but does not exist in others. Whereas, in the past the sale of live birds directly to the consumer was important in certain regions, it is now almost eliminated. The production of eggs is important in many of the same areas that produce broilers. large quantities of eggs for export are produced in the Netherlands, since Germany, Italy and France do not produce enough for their own consumption. Figure 16 shows the general pattern of 80 Fig. lS.--Marketing channels for broilers in Europe:1 Producers Dealers [Wholesaler and slaughterer 7 .___l Central market ] '1 1 Retailer Consumers 9611aFr°m information in O .E .C.D., Documentation in Food and Agriculture, eries, No. 58, Survey on the Organization of Marketing Poultry Meat Metal aphasia on Brdilers, TO.E. C.D.: Paris, n. d. ). MI .4..- D -i. Fig. 16.-€Marketing channels for eggs in the EEC 81 a Producers 7] } Egg collectors l Paceing central 3 JEnuports euui Iihquorts 5 Bl Wholesaler ‘J P s ‘ I D # Smaller wholesaler and special storage L A x: Ww"_w——.m '— '_ Retailer t Consumers ] fi - ._‘ _ w ww- — v— w—‘ ' 192535; HDompiled from O.E.E.C., Documentation in Food and Agriculture, O-E ~E ries, No. 16, Marketing and Distribution Margins for Eggs in ‘9. Countries, @.E.E.C.: Paris, 3359). 82 marketing channels in the EEC. Direct sales from the producer to the r smaller cities and retailer or the consumer are still important in m In towns, although an increasing volume moves through other channels. some countries, steps may be omitted or functions indicated in Figure 16 may be performed by two different types of firms. Thus, several channels may be created at certain points. But, the most important flow is the 71 collection of eggs from the producer and channeling them through the wholesale market either to exporters or to the retail firms. #4. CHAPTER III IMUETING AND PRICE POLICIES "J Fundamental to agriculture in all developed economies today is the They attempt to guide significant role played by govermrent policies. farm production, determine a minimum price for farm products, help farm- All of ers obtain needed inputs, and support market development efforts. these policies developed over a long period of time in response to prob- lems faced by agriculture and the belief that a stable agricultural econ- omy was essential to the well-being of the nation. Even though the poli- cies differ from one country to the next in the breadth of their applica- tion and in the strength of their control, all of the national governments 0f the advanced economies in Europe and North America have followed a It is the objective Program of assistance to the agricultural sector. or 131113 chapter to present the major features of the Common Agricultural POlicy' and indicate which changes from the previous policies will affect agricultural production, consumption and trade. \ 1For details of the history of agricultural policies in Western see, Michael Tracy, Agiculture in Western_Eurgpe (New York: Mn ck A. Praeger, 1961;), Helen C. Farnsworth, "Determinants of ch Grain Production, Past and Prospective," Food Research Institute 88, IV (1962;), pp. 225-272, and Karen J. Friedmann, "German Grain 31:11:11 1:» - 0 Gigs and Prices, 1925-19614," Ibid., V (1965), pp. 31-98- 83 8h The Common Agricultural Policy To move from the variety of policy measures employed prior to the Treaty of Rome to a major reliance on price policy involves much analyti- cal and diplomatic effort. The task was eased somewhat by choosing to rely on price policy rather than production controls, since production El did not then have to be allocated between member states; one decision could be made on an overall price level and market forces would produce t the rest of the price surface. The nearly exclusive reliance on price policy by the EEC has several First, by studying the possible changes in implications for this study. product prices we can estimate the probable changes in quantities demanded Second, assuming that product prices are important in by consumers . fa—r'rrers' production decisions, we can learn something of the possible These esti- PrOduction changes from examining the likely price changes. mates of supply demand in the EEC permit trade flow projections, both Third, farm incomes can Within the Community and with third countries. be projected from the production and price estimates and, because of the pohtical importance of the farm income situation, possible changes in policies may be foreseen. Due to the great diversity of policies used by the six member ta1 grain production in France in the future. Another important change in grain price policies occurs in Germany, w‘klez‘e the previous system established prices in four different regions that-h transportation subsidies and milling regulations that helped support the? price of grains. The prices set under the old system were not always determined by economic forces, but more frequently, reflected the polit— lea; power of farm groups in certain areas of the country. When the BE 95 system replaced the political considerations with transportation cost calculations, the southeastern parts of Germany changed from the region uri‘th the highest grain prices to the region with the lowest. Compounding this shift in relative prices is the lowering of the general level of German grain prices to conform with the common price. Also, the elimina- tion of subsidies on rail shipments of grain will further lower the price :received in these areas furthest from the consumption centers along the Fhur River. It seems that the readjustments in the relative prices of grains in the different regions of Germany may have a large effect on the future production of grains and livestock there. In addition to the changes in grain policies, important adjustments Frill occur in the price policies for milk and dairy products in Germany. T118 previous regulations provided a uniform nu'lk price for farmers through- out Germany through a government price equalization fund. The price of Ill—ilk received support from consumption subsidies and government purchases of butter and powdered skim milk. On the other hand, under the EEC reg- u-:l--a‘tions the prices in different areas will reflect the market conditions of that area and only butter will. be purchased by price supporting a-gencies. A priori, one would expect that greater regional price differ- 911093 will result, possibly altering the patterns of milk production. But, the level of the intervention price is important, since a high inter- vention price would mean that most milk would receive the intervention price, resulting in a uniform price surface for the country. In View of the near surplus position of the EEC at this time, this policy change and the intervention price established are both important. Previously, Italy also faces an important shift in grain policies. the Italian government followed a policy of supporting wheat prices at 96 11igh levels relative to feed grains and depended on imported feeds to support the livestock feeding industry. Consequently, Italy's feed grain prices must be substantially increased to reach the common price level. This has two important effects on Italian agriculture. First, it alters the relative prices of wheat and feed grains, so that feed grains become more attractive crops to produce. Second, it alters the profitability of livestock feeding, which has become an important source of income for farmers in northern Italy. Because of the importance of tile sectors of agriculture affected by these policy changes and became of the magnitude of the changes, this policy revision ranks high in the list of significant impacts of the move to a Common Market. A final change that should be mentioned here is the revision of the pork policies in the Netherlands. Under the previous policies the Ne therlands and the United Kingdom had a trade agreement whereby the Netherlands controlled the amount of pork exported to the U.K. and set the prices paid to farmers for their hogs. Due to the EEC policies on irrbernal pricing for hogs and for foreign trade in agricultural products, the agreement with the U.K. expired and the market price for hogs is now 03% protected from low priced imports. In view of the fact that pork p-'r‘<'->c1uction in the Netherlands exceeds domestic consumption by more than 60 percent, this is no support at all. In fact, by eliminating the SDSCial arrangement with the United Kingdom, the EEC diverted a substan- tial amount of pork for sale in the other EEC countries where Dutch pork has a preference over imports from third countries. But, this increase 5.11 Sales from the Netherlands will tend to depress prices in other member countries, thus affecting their producers. This could be one of the p1‘<><1‘ucts which demonstrates the inadequacy of the EEC support mechanism for pork, eggs and poultry. One policy change that may be very important to the future of the agricultural policies of the RE affects all countries and an products co-vered in the regulations. This is the shift to a common fund to finance the operations supporting the agriculture of the Community. A :1 though the idea of paying for support measures from the revenues received on import levies may not immediately seem controversial, it may easily become a major source of friction. France and the Netherlands 23.-re both important exporters of crops organized under the Common Agricul- tural Policy: France sells wheat and the Netherlands exports dairy products. The producers in these two countries can expect valuable price support for their products from the export restitutions given by the Agricultural Fund. On the other hand, Germany imports large amounts of agricultural products for domestic consumption and Italy imports feeds for her livestock feeding industry. Both groups will have to pay higher prices due to the levies imposed on these imports. It is possible that the spirit of economic cooperation in the EEC may not be strong enough to t-rithstand the political pressures likely to result from these inter- country' financial transfers. If such pressures develop, it is very ‘ {Sly that policies will be changed or price levels adjusted to reduce the imbalances in the net positions of the various members with respect t0 the Agricultural F'lmd. Certainly the policy changes mentioned here are not a complete list of Changes that must occur as the Common Agricultural Policy replaces the previous policies of the six member nations. Almost all country policies or price levels must be adjusted in those products with EC market 98 regulations and these may seem very important to the producers and the countries involved. But, only those that appear to have the greatest impact on EEC agriculture have been discussed. CHAPTER IV CG-H'IODI TY PRICES The first step in the study of agricultural product prices was to The three year period centered on 1960 was selected allaJyze past prices. the base period since it preceded the introduction of the EEC policies. 8. b PI‘ices in that period, hereafter referred to as 1960 prices, indicate the pre -EEC relationships between regions. Also, prices were assembled from the most recent two or three years for which data was available, usually 1963 and 1961:, although in some cases 1965 data was included. These prices, called 196‘; prices in the rest of this report, serve two pur- poses : they indicate price developments during the transition period, and they provide a current reference point for future price and production 9 S t inmates . Public sources were used for most price information, usually from ”Linistries of agriculture, although publications of trade groups and comicdity associations were used as were the publications of the Statis- tical Office of the European Communities. Some unpublished sources wer~ “Sad. to calculate average prices for sub-regions of the bigger countries. there several different price sources existed, we compared several to i118 L‘I‘e that the prices are representative. The prices determined by EB PQZLj - reles are reported in the Bulletin of the BBC for grain commodities, ma _- 4‘11 Agra~Euroue and the Daily Bulletin of the Europe igence Inter—- \o \o loo nationals Information pour la Presse for livestock products.1 In every case an attempt was made to get prices that the producer received. In some countries producer prices ar‘ publis’ed, but in others they must be calculated from.published market prices. In such cases, adjustment was based on marketing margins obtained from government and university research people. Converting all prices to the producer level was an attempt to insure comparability between the different countries and to estimate prices more relevant to the production decisions of producers. weighted average prices were calculated for ach region where 1 marketing volure or production cata could be used for weighting the prices reported in the region. In other cases an unweighted average of the reported prices was used. Since some regions do not have a market for certain commodities, an average of nearby markets represents the average producer price in ‘he region. For example, none of the 2h reporting liVCSUOCk markets in Germany is located in Rheinland-Pfalz, though Coleg 9, Frankfurt and Karlsruhc are near its border. The prices in these three markets were averaged to represent the Rheinland—Pfals Q rice as well as seins included in the average for their own regions. 0 ’U The French quantum.price system for wheat and barley required a special adjustment to make French prices comparable to those in other countries. This was accomplished by calculating the proportions of grain sold that paid the higher quantumtax.2 Recalculating the average price for each French region to consider the differential return from lSources for individual prices are listed with the price tables in Appendix II. 2See the Appendix for the details of this adjustment. 101 different sizes of marketings gives a price that more accurately repre- sents the income from grain enterprises. Other examples of special adjustments are the weighting of milk prices to include both fluid con- sumption and manufacturing purposes and the weighting of cattle prices to include various quality grades. In all of these cases the resulting price estimates better reflect the returns to the farmer than do the unadjusted prices reported in the statistical sources. The price policies and price levels determined by the EEC for the unified market provide the basis for projecting prices for each region to 1970. Assumptions about possible price policy goals were included when extending the projections to 1975, resulting in a high and a low 3 projection for that year. The remainder of this chapter includes a review of the prices existing in 1960 and 1965, including a discussion of inter—regional price relationships, and the results of the 1970 and 1975 price projections. When examining the potential impacts of the EEC on European produc- tion, it is useful to consider groups of related products. One such group is the grains, where the relevant questions concern the impact of the Common Policy on the production of various cereals. Another related group of commodities is beef, veal and.milk, which are joint products of the cattle enterprise in Europe. The big question is whether adequate supplies of beef and veal can be produced without creating a surplus of milk and milk products. A third group is the livestock products requiring large quantities of feed grains--pork, broilers and eggs. The most interesting questions relating to this group involve determining _h ;— _.__ _ 3The projection procedures are described in detail in the Appendix. 102 the levels of production and the corresponding levels of grain use. Perhaps a look at likely price changes in these commodity groups will give some insights on these problems. Grains The cereal of most interest to many observers is wheat, because the EEC produces large amounts of wheat as is shown in Table 36. Also, about one-fourth of the wheat produced in the EEC comes from.the Paris Basin area of France, while another fourth is grown in other parts of France. This means that the large changes in price policy in France affect an important part of the wheat production of the EEC. Appendix Table 1 shows that Italy and Germany had the highest wheat prices in the 1960 period, averaging over 100 u.a. per ton. The Benelux countries had prices of about 85 u.a. and France had the lOWGSU wheat prices with 77 u.a. per ton. By 196h the relative positions had not changed, although the highest prices (in Germany, Italy and Belgiumr Imxembourg) had increased by only a small percentage while French and Dutch prices had increased about 12 percent from 1960. The major excep- tion to this trend was the price in the Paris Basin area where the wheat price increased only h.5 percent from.1960 to l96h, due to the greater incidence of the quantum.taxes on sales in the Paris area, most of which come from.1arge grain farms. Thus, after two to three years of adjust- ment toward the new grain policies the prices for wheat became more uniform throughout the EEC. With the prices projected for 1970 the price surface for wheat in the EEC will be even more uniform, Prices in Germany will fall by about 10 percent from.196h—7O and Italian prices will fall by about 3.5 percent. 103 £830 weep Eon.“ 633.6me one: £033 emuoo I .3qu 0900 n @3965 cam ooeodwqmn menace.“ no: mooao 1 .mefiaasfiz ”mmmwompmwmphfiflhz assumes use as coapxseoha coeoaapeseompnazeqwa amassoamon nus cmmsae pspasmsH-0aH .33an mod 5:0. meHn pmwnomfimemmgwmsompfiz nonomwwmogm new Lopez .3950 353m 52%. I 111111-} ‘I , a 0 -0 a o o o a oWHnWNMN HdPOu. 0mm mums H.nmewwvmumo \«0.0~nnm new 0.nm 0.m 0mmmm. 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In the process, wheat prices in Germany will have fallen from.6 to 11 percent, Belgian and Italian prices will have remained about constant, Dutch prices will have increased about 17 percent and the regions in France will have had prices rise between 18 and 22 percent. The sustained increase, averaging about 2 percent per year, in the regions producing over half of the wheat in the EEC is an.important deveIOpment in the shift to a common policy. Barley is another important grain in the EEC, with much of its production concentrated in France and Germany. In 1960 the highest prices in the EEC were received by German farmers and the lowest by French farmers, with Italian, Belgian and.Dutch.prices in between.h This pattern.remained the same in l96h, although the total gap was narrowed by the more rapid increase in French prices than in other areas. The projected prices for 1970 show that most of the inter-regional differences will be eliminated with an 8 to 11 percent drop in the different regions of Germany and continued increases in prices elsewhere, especially the North.East and North Central regions of France. The overall change from 1960-70 shows Germany with an 8-9 percent decline in barley prices with all other areas showing a marked increase. The biggest improvement in barley prices comes in France where the annual average increase is 3.5 to h percent over the 10 years. This large increase in the major pro- ducing area of the Community is an important result of the new policies. A.- .— hSee Appendix Table 2. 105 France and Italy are the only important producers of corn in the EEC with about 60 percent being produced in Italy and the remainder in France. In 1960 the price received by French producers was a little higher than that received by Italians, but by 19614 they were about the same .5 The projections for 1970 show a slight fall in corn prices in France due to lower intervention prices under the EEC policies than was used in the past. At the same time, Italian corn prices will increase nearly 15 percent from l96h-7O so that the increase from 1960-70 averages about 3.5 percent a year. In the northern cozmtries of the EEC, rye is used both as a bread grain and a feed grain, but it is only a feed grain in France and Italy. In 1960 rye prices were highest in Germany and lower in the Benelux coun- tries and in France.6 Italy had high rye prices, but produced very little rye. From 1960-61; prices in Germany remained fairly stable with slight rises in Belgiuzn-meembourg and France and large increases in the Netherlands and Italy. The 1970 projections have continued increases in the Netherlands and in France with smaller increases in Belgium-Ltmenfloourg and about 12-13 percent decreases in prices in Italy and Germany. The resulting price surface for 1970 is nearly uniform throughout the community with slightly higher prices in Italy. Since about three-fourths of the EEC production of rye is in Germany, the sustained decrease in German prices from 1960-70 is the most important feature of the new policies. However, the demand for feed grains results in increased prices in other areas of the Conmmity and may influence its production depending on the use of rye in feeding rations in the future. SSee Appendix Table 3. 6See Appendix Table ’4. 106 Because of their importance in certain parts of the EEC, malting barley prices and durum wheat prices were also studied. Although much of the French barley may be used for malting, the production of barley varieties especially suited for malting is more important for the northern EEC countries. In 1960 the prices for malting barley in Germany were much greater than in the Netherlands and Belgium-meembourg.7 By 1961; this difference had been reduced only slightly. The projections for 1970, however, indicate an approximately uniform price surface between these three areas. This is primarily due to the more uniform price surface for feed quality barley, which has a definite price relationship to malting barley because of the ease with which land may be switched from PI‘Od‘ucing one to the other. The only regions producing durum wheat in important amounts are the South and Islands regions of Italy. The price has been about the same in botlh, areas and is projected to remain constant from l96h-7O after having had a slight increase from 1960-624.8 Another way of looking at the important changes in grain prices in the EC is to look at the major producing regions and compare price devel- °Dments in them. For wheat the most important regions are the North Genli'dl‘al and North West regions of France, the North, Center and South regions of Italy and Bayern in Germany. The wheat prices in the three regimme of Italy remain almost constant during the 10 years from 1960-70, but. the effective producer price increases almost 20 percent in the two French regions. The wheat prices in Bayern fall, not only in relation — f 7See Appendix Table 5. 8See Appendix Table 6. 107 to those in the French and Italian regions, but also in relation to other regions in Germany. The equalization of prices in Bayern and the Paris Basin is the greater change, but the reduction of Bayern prices relative to the northern German prices also indicates the internal adjustments caused by the Common Agricultural Policy. Three of the important wheat regions are also the most important barley regions: the North Central and North Western regions of France and Bayern. The barley prices increased by 10-16 percent in the French regions from 1960-61; but only about one percent in Bayern. From 19614-70 the French prices continue to increase while the Bayern prices are proj— ected to fall by almost 11 percent. Thus. in 1960 the Bayern price for barley was nearly 50 percent greater than in the major producing regions in France, but will be slightly lower than the French prices in 1970. Not only are the prices of the grains important, but the prices of one grain relative to the prices of others also influences the production and use of grains in the EC. The ratio of wheat price to barley price falls in most areas of the Community with only a slight shift in Germany and the Benelux countries, but a larger change in France and Italy.9 The price shift in France results in a 12 percent decline in the wheat/barley price ratio from 1960-70 while in Italy the decline is about 20 percent. The wheat/corn price ratio exhibits a different shift for France than for Italy.10 In France the price of wheat increases relative to the price of corn over the entire period of the study, which may have impor- tant implications in the northern grain areas where corn production has 9Sec Appendix Table 7 . 10See Appendix Table 8 . 108 been increasing. In Italy, on the other hand, there is a continued shift in the price ratio in favor of corn. The 12 percent drOp in the wheat/ corn price ratio from 1960-61.; is projected to be followed by a 16 percent drop from 196h-70. Since corn and wheat are both important crops in the northern region of Italy, this price shift could have important implica- tions for grain production in Italy. The barley/corn price ratio exhibits a time pattern similar to that of the wheat/corn price ratio.u The price of barley increases relative to corn in France from 1960-61; and the projected trend continues to 1970. Over the 10 year period the barley/corn price ratio increases about 1:0 percent. In Italy, however, corn prices increase relative to barley prices, mostly from 1960-61; when the barley/corn price ratio declined 15 percent. There is very little further decline in the ratio projected for 1970, leaving a 15 percent decline over the 10 years from 1960-70. The most significant feature of these relative price changes is that they coincide with the shifts in the wheat/corn price ratio. The changes in these ratios encourages the production of corn in Italy and wheat and barley in France. Considering the total picture, the most important price changes are the increases in barley prices outside of Germany and the increases in corn prices in Italy. Both of these reflect the new EEC policies which changed the former price ratios. Beef, Veal and Milk Another important series of questions concerns the impact of the Cannon Agricultural Policy on the production of beef and veal as well as ’— A_— _._ nSee Appendix Table 9. 109 the possible surplus of milk. Because most cattle are dual purpose animals in Europe, beef and milk are joint products of the same production enterprise. Efforts to expand the meat supply may aggravate the surplus of milk, and conversely) efforts to reduce the milk surplus reduce the supply of meat. Therefore, the unified market for these products may have serious consequences for the EEC. Table 37 shows that the most important beef producing areas are the North Central and North West regions of France, the North region in Italy, and Bayern in Germany; In France and Italy the price of beef cattle increased to percent from 1960-6h, an average of 8 percent per year over the period.12 In the parts of these countries producing fewer cattle as well as in the Netherlands and BelgiumrLuxembourg the prices increased by only about 20 percent for the five years. All of Germany had very small increases in beef prices from.1960-6h, which meant that Bayern prices fell behind the prices in the other major beef producing areas. The projections to 1970, however, indicate that Germany will have greater beef price increases than the other countries of the EEC. With the low projection of 1970 prices, the increase from.196h in Germany will be 26.5 percent and it will be over ho percent with the high projection. In contrast, France is projected to have only an 11 percent increase under the low assumption and Italy has a dr0p in price of h percent. Even the high projection does not bring these two countries up to the levels projected for Germany, since the prices increase only 28.5 percent in France and.ll.h percent in.ItaIy. The different rates of change result in a uniform price surface throughout the EEC by 1970. There appears to 12See Appendix Table 10. llO .empooépdufp ovooaoonoabnm US.) oovosmfimq $505.. pea op mdapop omega shod 68.. ENE «dumb «moon homo =.mceaaonn Heappnzeea= same a. :1 .mm.a .mesa .aa2_.s..o2 .pmmeommmazequ sons comqsaaoppasmssm .nopaasm-m3m noelmm.mwoeese $33on no». 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The North region in Italy and all re- gions in France, except the North East are large producers of veal. In 1960 the price of calves was highest in the North region of Italy and in the Central Mountain.and the South'west regions of France.13 Prices in Germany and the Netherlands were a little lower than in France and Italy. By'l96h, however, the prices in southern France and the North region of Italy had increased 31 percent from.1960-6h and the increase ranged.from 13 to 31 percent in Italy while German prices remained almost constant. But from 196h-70, the prices in Germany are projected to increase 19.6 percent with the low assumption of 38.5 percent with the high. This contrasts sharply with the decreases in price projected for Italy and France under the low projections and the slight increases under the high. Although calf prices will go up substantially in all areas of the EEC from.1960-70, this increase has already occurred in France and Italy, but is still taking place in Germany. With both calf prices and beef prices increasing rapidly it is imr portant to examine the relative prices for any incentive to shift produc- tion from one product to the other. In all important calf and beef pro- ducing areas the price of calves falls relative to beef prices during the 10 year period i‘rom.l960-—7O.l,4 In Bayern and the Central Mountain region in.France the price ratio remained nearly constant from.1960-6h before declining from 196h-70, but the other regions had declines in the calf/ 133ee Appendix Table 11. 31‘s” Appendix Table 12 . 112 beef price ratio throughout the period. In North Italy and North West and South west France the decline in the calf/beef price ratio is over 2 percent per year for the 10 year period, which is a significant change in the price relationships in major producing regions. Milk, the third product in this commodity group, has had price increases in every region from.1960-6h and is projected to increase in price from.196h-7O.15 The regions producing the most milk in the EEC are the North Central, North West and Central Mountain regions of France, the Netherlands, the North region in Italy and Bayern in Germany. Several regions in northern Germany also produce important amounts of milk. The highest prices for milk in 1960 were received by farmers in Germany, with Italian and Dutch prices being nearly as high and French and Belgian prices being somewhat lower. From.1960-6h the prices in France and Italy increased about 25 percent while those in other regions increased about 10 to 15 percent. The projections for 1970 indicate another increase in France and Belgium-Luxembourg of nearly 25 percent while the prices in Italy and Germany are projected to remain nearly constant. The result of the different rates of increase is a more uniform price surface in 1970 than in l96h. The ratio of milk prices to beef and calf prices has several possi- ble implications for production of these products, the mix of which is so important to the EEC. In most of the important producing regions the price of beef increases faster than does the price of milk between 1960 and 1970.16 ¥ For Germany the price of milk has increased faster than 15See Appendix Table 13 16See Appendix Table 1h 113 beef from 1960-6h, but the large increase in beef prices projected for the 19613-70 period will offset this. In Germany the calf price also increases faster than the milk price during the 10 year period, but in the major producing areas of the Netherlands, France and Italy, the price of milk increases faster than calf prices.17 The relative rise in beef and milk prices should encourage (1) an increase in the number of dairy cows, (2) feeding calves to heavier weights, and (3) using feed grains or other feeds to substitute for milk in calf feeding rations. Another set of price relationships has relevance to the discussion of the production of beef, veal, and milk: that is the ratio of product prices to feed prices; Appendix Tables 16 and 17 show that beef prices are rising relative to barley and corn prices through most of the 1960- 70 period. The biggest jump in the beef/barley price ratio comes in Germany between 1961; and 1970 under both the low and the high projections for 1970. The same pattern holds for Belgimn-meembourg and for the North region in Italy, although reductions in the ratio in Italy from 1965-70 reduce the overall gain by 1970. Although there is a small im- provement in the beef/barley price ration in France, it is not large and is not likely to be important. The largest price incentives for feeding barley to beef animals in the important producing regions comes in Germany and North Italy. Corn, on the other hand, becomes more attractive as a feed in France, especially in the North Central, North West, and South West regions. These are all important corn growing regions and the first two are major cattle producing regions. Thus, grain feeding 0! beef cattle will be encouraged by price developments, with barley ‘ 173» Appendix Table 15. 1314 having the advantage in the Northern EEG and Italy and with corn being most attractive in France. In the veal producing regions, the price of calves declines relative 18 to the price of barley over the 10 year period from 1960-70. Both France and Italy had increasing calf/barley price ratios from 1960-61;, but the decreases projected from l96h-7O are large, even under the high price assumptions for calves in 1970. This results in little incentive to increase grain feeding of calves in the areas producing the most veal in the past. In Germany, however, the price of calves relative to barley increases substantially, both from l96h-7O and for the longer period from 1960-70. While Germany has not been a major producer in the past, it is possible that the attractive price relationships may cause increased grain feeding of calves in the future. While forage is the major portion of the feed inputs in milk produc- tion, feed grains have an important influence on milk output per cow, and can thus influence the total production of milk. All of the important milk producing regions in the EEC had increasing milk prices relative to 19 For Germany, the prices projected for barley prices from 1960-61;. 1970 result in an even greater increase for the 10 year period from 1960- 70. However, the Netherlands, France and Italy can expect declining m‘lk/ barley price ratios from 19614-70, resulting in only small increases from 1960—70. Belgimn-Lmoembourg, which produces sizable quantities of milk Own though not one of the leaders, can expect a large increase in the price ratio for the 10 year period, and may increase the amount of grain * 18See Appendix Table 18. 193» Appendix Table 19. 115 fed to milk cows. The projected impact of the EEC price policies on beef, veal and milk is a rise in the prices received by farmers for all three commodities. Not only do the prices of the commodities rise, but in most areas they rise in relation to the prices of feed grains, too. This improvement in the relationship between product prices and feed prices is particularly strong in Germany and Belgimn-Lmoembourg, where the prices projected indicate increased incentives for the use of barley in producing all three livestock products. The final impact on the production of meat and milk and the amount of feed grains used is analyzed in the production sub- projects. However, the price changes favor increased output through the use of more feed grains. Grain consuming livestock The third major commodity group of interest is the products of grain consuming livestock. This includes pork, broilers and eggs. Several features of the production conditions and policies make these products similar. They are all being produced in quantities close to the requirements of the EEG and are covered by similar EEC policies. Even though the policies differ from those for other commodities, the relevant questions are the same: what will the prices be and what happens to the relationship with feed prices? For hogs, the most important price develoPment is the projected drop in Germany, the most important producer. While hog prices remained stable from 1960-61; the decrease projected from l96h-70 causes a drop 0 from the 1960 level by 1970.2 In the rest of the EEC the prices for 203% Appendix Table 20. 116 hogs increased substantially from.1960-6h. For the Netherlands and Italy, the increase continues for the l96h-7O period, resulting in a 30 percent increase in hog prices over the entire 10 year period. Since these countries each produce about 10 percent of the hogs in the EEC, this large increase in price may significantly affect the total supply of hogs in the Community. The prices in France and BelgiumnImxembourg are projected to fall about 5 to 10 percent from.196h—7O which results in only a mod- erate increase from 1960-70. The ratio of hog prices to feed grain prices does not change greatly in.any area durin the 10 year period from 1960-70. There was a small increase in the hog/barley price ratio in Italy and Belgium-Luxembourg from 1960~6h, while the ratio was constant in the other regions.21 Pro- jected decreases in the ratio from.196h-7O result in a long run decrease for France, a slight increase for Italy, and stable ratios in the other areas. The decline in the hog/barley ratio in France may reduce the amount of barley'fed to hogs in the future, causing a shift to corn since the hog/corn price ratio is projected to increase slightly in the - important hog producing regions from.1960--70.22 Broiler prices have been falling throughout the EEC and are proj- ected to fall more in the next 3 to 8 years.23 From.l960-6h, broiler prices fell about 11 percent in Germany, 3 percent in France and Italy and.2 percent in the Benelux countries, widening the differences in prices between countries of the EEC. But, the projections to 1970 218cc Appendix Table 21. 223cc Appendix Table 22. 23See Appendix Table 23. 117 indicate that prices will even out over the entire Community with no change in the Dutch prices from l96h-70, a 10 percent drop in Belgium— Inxembourg, a 15 to 20 percent fall in Germany and Italy and a decrease of 50 percent in France. Such drastic changes in prices are certain to have production implications. However, the production of broilers in Europe has shifted from.small farm flocks to large, factory-type Opera- tions, frequently integrated with feed plants or poultry processing plants, producing large numbers of birds at very low cost per bird. It is likely that the reductions in price will not cause a reduction in production, but a shift to low-cost producing units. Because of the very large decreases in broiler prices, there is also a drop in the ratio of broiler prices to feed grain prices. From 1960-6h the broiler/barley price ratio fell about 10 to 15 percent in all regions except Italy, where the change was negligible.2h The prospects for 1970 result in a smaller decline in the ratio for Germany, but a much larger decline in Italy and in France. The 57 percent drop proj- ected.fOr France from.196h-70 means an average annual decline of over 11 percent. Similar changes are expected in the ratio of broiler prices to corn.prices in France and Italy.25 The decline in the broiler/corn ‘price ratio is projected to be 50 percent from.1960-7O in France and almost ITO percent in Italy. These large drops in the broiler/feed grain price relationships will also force the adoption of efficient production technologies. The price of eggs was stable in the northern EEC and Italy from 21‘See Appendix Table 2h. 25See Appendix Table 25. 118 1960—6h and increased 21 percent in France, but the prospects are for large decreases in prices from 196h-70.26 The projections for 1970 indi- cate constant prices for the Netherlands, a drop of to percent in Germany, and a drOp of 20 percent in the rest of the BBC. The net effect of these changes for the 1960-70 period is that prices will be about the same in 1970 as they were in 1960 in France and the Netherlands, will be about 20 percent lower in Italy and BelgiumeLuxembourg, and will be to percent lower in Germany. The relationships between egg prices and feed grain prices follow a time path similar to that of egg prices. The egg/corn27 and egg/ barley28 price ratios in France increased from 1960-6h and are projected to decrease for l96h—70. The relationship with barley decreases more than the one with corn so that for the 10 years from.1960-7O the egg/corn ratio remains nearly the same, while the egg/barley ratio falls nearly 30 percent. In the other countries of the EEC the egg/barley ratio decreases sharply from l96h—70, giving a down trend over the longer period from.1960-70. The egg/corn price ratio in Italy also has a decline of about to percent from.1960-70. Thus, the price relationships indicate a reduced profit margin for eggs in all areas of the EEC. But, as in the case of broilers, it is quite likely that thiS‘Will result in increased adoption of more efficient technology rather than reduced egg production. Changes from 1970-75 The assumed price changes from 1970-75 for grains were no change in 268ee Appendix Table 26. 27See Appendix Table 27. 288ee Appendix Table 28. 119 price as the low assumption and a 15.9 percent increase for the high assumption. Because there was no price change with the low assumption, the only impact it had was to spread any changes occurring up to 1970 over an additional 5 years. But, the high assmmation did result in significant price changes in France and the Netherlands for wheat, barley and rye. Wheat and barley prices are projected to increase from hO-éo percent between 1960 and 1975 and rye prices may increase by 68 percent. In Italy the barley price is projected to increase 115 percent while the corn price increases 57 percent over the 15 year period. In all of these cases the assumption of increasing prices from 1970-75 resulted in greater increases than had been projected for the period up to 1970. For beef and veal, prices increase 5 percent from 1970 to 1975 with the low projection and 27.5 percent with the high estimate. Milk prices are increased only 15.9 percent with the high assumption and are left at the 1970 levels for the low figure. Even the low projection gives sig- nificant increases in prices for beef in France, amounting to 60 percent from 1960-75. The high projections, of course, give even greater increases for France (up to 131 percent above 1960 levels), and they are important for all of the EEC countries. Not only are beef prices projected to increase by amounts exceeding 80 percent of the 1960 prices, but calf Prices also are projected at 80 percent above 1960 in all countries. Milk prices too, increase by 50-80 percent in all countries except Germany under the high assumptions. There is no change in the ratio of milk to feed grains in the 1975 PrOjections since both sets of prices change the same percentage. But, in France the beef/corn price ratio is projected to increase under both the high and low assumptions for 1975 with an 80—106 percent increase 120 for the various regions from 1960 to 1975. Barley also becomes more attractive as a feed for beef under the 1975 projections, decreasing in price relative to beef in Germany by 80 percent and in the North West region of France by 145 percent and in North Italy by 55 percent from 1960. Even calf feeding with barley in Gennany appears more profitable with the 1975 high projections since the calf/barley price ratio increases 70 percent over 1960. All of these increases are for products and areas that showed significant increases from 1960 to 1961; and 1970. For eggs, broilers and hogs the 1975 prices for both the high and low projections are calculated from feed grain prices projected under the corresponding high or low assumption. This resulted in different percentage changes for various countries from 1970-75 depending on the movements of grain prices. For example, the price of eggs is projected to decline 21 percent from 1970 under the low projection in France and Italy, but only by about 8 percent in the other countries. Even with this large fall in prices projected for France, the total change in prices from 1960 to 1975 was only significant in Germany where changes in price from 1970-75 coupled with earlier price changes produce a fall of nearly 50 percent during the 15 years. The change in the egg/barley price ratio, on the other hand, was important in all countries of the Community. Both the high and low projections indicate a decline in the ratio ranging from 35 to 145 percent in the regions of the Community. Broiler prices are projected to drOp by 19 percent from 1970-75 in all countries under the low assumptions and by 6.14 percent with the high projection. During the 15 years following 1960, prices fall h2 percent in Gennany and 60 percent in France with the low projection. Even the high projection shows a significant fall in prices in France, ‘53 percent. 121 These large declines in broiler prices also reduce the broiler/feed grain ratios. The broiler price falls 59 percent more than the corn price in France from 1960-75 and 50 percent in Italy over the same period. The broiler/barley price ratio also declines in all countries, by 70 percent in France and by about 140 percent elsewhere. In total, the trends proj- ected for earlier periods continue under the 1975 projections, with long term declines being particularly great in France. The projected changes in hog prices for 1975 are less severe than those for eggs or broilers, being a fall of 5.8 percent from 1970-75 under the low assumptions and an increase of 9.2 percent with the high projec- tion. These small changes cause an important long-term price change only in the North region of Italy where hog prices increase 1L5 percent from 1960-75 with the high projection. There are no important changes in the relationships between hog prices and those for feed grains. To szmmarize, the most important price developments as the Community shifts from individual policies to a common policy are, the increasing prices for feed grains, the improvement in beef prices relative to veal and milk, the very large decreases probable in broiler and egg prices, and the decrease in hog prices in Germany accompanied by an increase in the Netherlands and Italy. The projected price changes may cause some shifts in the areas with a production advantage in certain products , but this usually means the elimination of an advantage held by a particular region in the past and now spread to all parts of the EEC. One production char- acteristic which seems to be encouraged by the expected price developments is the expansion of feed-livestock enterprises. This trend is consistent with expectations in an advanced, high income econonv. CHAPTER V THE IMPACT OF PRICE POLICIES This chapter contains observations on some of the most critical problems arising from.the introduction of the Common Agricultural Policy. Three issues warrant comment: the problem of moving increased quantities of grain from.France to the Northern EEC, the transfer of funds between nember countries through the operations of the European.Agricultural Guidance and Guarantee Fund, and the problems developing in the commodity price policies. The Movement of Grain The price relationships in various areas of the EEC and the projected changes in these relationships indicate increased production of feed grains in.the Paris Basin and increased.amounts of grain fed to livestock in the Netherlands and northwestern Germany. The combination of these two projections leads to the expectation of increased movement of feed grains from central France to the northwestern EEC regions. Since this flow pattern accounted for about hO percent of French feed grain exports from.1963-65, the question is naturally raised about the capacity of the marketing and transportation system to handle increased flows of grain. The analysis of prices alone is insufficient to estimate the amounts of grain likely to be moved over the routes between France and the livestock feeding areas, but some general comments are possible. The study of the 122 is up} 123 grain marketing system reported in Chapter II showed that the facilities and organizations are adequate to organize the grain flows. The question ethich cannot be answered is whether the transportation facilities are adequate to handle the necessary volumes. Certainly the very small size of French canals, which limits the size of barges to less than 300 tons capacity, raises the costs of moving large quantities of grain and may cause a bottleneck in the physical flows. This may be especially critical if large volumes of grain must move within a short time period. A more detailed study of the transportation system is necessary before such Climestions can be answered. If problems arise in the movement of French grain to markets in the lower Rhine valley, French producers may face increased competition from fax-Iners in Bayern. Two canals are prOposed that will provide the grain are as of southern Germany with cheaper transportation to the demand areas in the Northwest. A canal from Ulm to Stuttgart will connect with the Ne<=kar River leading to the Rhine and the canal from Bamburg to Regensburg “13.1 connect the Main-Rhine network with the Danube River. By reducing the transportation charges for moving grain to the deficit region, these canals will result in higher grain prices for farmers in Bayern. The increased competition from these areas may provide an incentive to improve the canals in France. Financing the Agricultural Fund Under the current regulations, duties collected on agricultural imports covered by the marketing regulations of the EEC will be sent to the Agricultural Fund in Brussels, rather than being retained by the government of the importing country. Any export restitutions allowed 1211 under the EEC regulations as well as payments for structural reform.will be paid from.the Agricultural Fund. This financial arrangement leads to income transfers and possibly to balance of payments problems because some countries are net importers of agricultural products and others are net exporters. The Germans and the Italians import large quantities of feed grains as well as poultry and dairy products. On the other hand, the French export large amounts of wheat. The Dutch import large quan- tities of feed grains, but export dairy and pork products. ‘What does this trade balance have to do with the Fund? It means that the Italians and Germans are likely to contribute more to the Fund than they receive while the French, and possible the Dutch, will receive more from the Fund for export restitutions than they contribute in import duties. Importing has always involved the loss of foreign exchange to purchase the commodities. But, any duty levied on the imports stayed within the country, being sent to the government. In essence, import duties are a transfer of wealth from.the purchasers of imported goods to the recipients of government expenditures. This basic fact does not change, but because the taxing agency is the Agricultural Fund rather than the national government, the duty becomes an additional foreign exchange loss. The transfer of wealth goes from the purchaser of imports to the recipient of Agricultural.Fund.expenditures. The potential problem.lies in the fact that most of the recipients will live in a different country than the majority of the contributers. The consumers in countries re- quiring;large imports of agricultural products will contribute the most to the Fumd.while the producers of surplus commodities requiring support purchases and export restitutions will receive most from the Fund. The analysis so far has been concerned only with the change of 125’ paying the duties to the Agricultural Fund rather than to national govern- ments. It has not considered any cl'langes in the Luuount of the duty. But, the prices as they are currently established by the EC regulations in- crease the transfer of ftmds from importing countries to surplus producing countries. Grain policies are an example. Since Italy is a large importer of feed grains, the increase in feed grain prices in Italy results in higher duties and greater payments to the Agricultural Fund than would have been the case under Italy's former tariff rates. it the same tine, prices will increase in France resulting in larger export subsidies to permit the surplus grain to compete on world markets. This means that the Bench exporters and farmers receive more from the Agricultural Fund than would have been the case under the former French tariffs. While this ex- ample is the most obvious, similar cases can be develOped around Germany's imports of grains and livestock products and the Dutch exports of dairy products. In essence, the financing of the Agricultural Fund causes a transfer of funds irom net importing countries to net exporting countries and establishing a common price level increases the magnitude of this transfer. The transfer of funds between countries has already caused some difficulties in negotiating the Common Agricultural Policy. Several tem- porary measures were adepted to offset the impact of this transfer and gain the acceptance of the policy by all mmber governments. in initial adjustment was made by having part of the income of the Fund come from budgetary contributions, rather than relying solely on import duties. These budget funds are contributed by the member govermients according to a formula separate from the foreign trade balance. In addition, the to- tal contribution of any one member to the Fund was limited to stated 126 percentages of the total Agricultural Fund budget. Even with these pro— visions, the Italians and the Germans will contribute a large portion of the money in the Fund. In addition, the timing of certain policies was designed to help redress the balance. The olive oil policy was agreed on before the pol- icy for other fats and oils to give Italy additional payments from.the Fund during the transition period. Expenditures from.the Guidance sec- tion, although supposedly allocated on a "fair and.equitable" basis, can also be used to redress some of the imbalance in the Guarantee section. The special payment to Germany, Italy and Imxembourg is to compensate the income losses suffered.by farmers in.these countries when the start of the unified grain policies is speeded up.1 All of these measures give temporary adjustment, but do not change the eventual situation where the consumers in Germany and Italy will be subsidizing the French wheat farmers and the Dutch dairy farmers. This transfer problem.has caused policy changes during the transition period to obtain political acceptance. There is every reason to expect further problems with political acceptab- ility in the future. Problems with the Price Policies As the EEC moves closer to the full implementation of the Common Agricultural Policy, several critics have indicated.needed changes in the regulations. In.some cases the changes are suggested to correct inequi- ties in.the existing regulations; in other cases the objective is to prevent distortions of trade flows and production patterns. This section 1For further details of these measures, see Byron L. Berntson, The Wtwal Guidance and Guarantee Fund, U.S. Department of Agriculture, 4 -Foreign-1hh (Washington: June, 1966). 127 reviews some Of these criticisms and raises a few others for examination in light of the price projections included in this study. Because of the wide difference in the previous price levels, one of the difficult decisions for agricultural policy makers was to determine the common price for the unified market. For most commodities a price somewhere between the highest and lowest previous prices was designated as the common goal and other prices were adjusted to reach this goal, giving due consideration to transportation costs and other factors where pertinent. In the process, say several critics, the price relationships among various commodities were distorted. Langen argues that wheat prices are too high in relation to feed grain prices if relative feeding values are considered.2 He contends that the wheat/feed grain ratio should be 100:90 or less while a wheat/Corn ratio of 100:102 and a barley/corn ratio of 100:115 reflect the various feeding values. While Langen is correct to point out that the policy prices, particularly the threshold prices, give too high a price for wheat, the projected producer prices in this study are more nearly in line with his ideal ratios because the pro- jected prices for feed grain are above the intervention levels while Wheat prices are projected to be near the intervention price. The point that Langen makes, however, is valid. By adjusting the price ratios to reflect feeding values, the EEC would encourage greater utilization of wheat for livestock feed and reduce the necessity of supporting the prices of surplus production. A second concern deals with the policies for grain consuming live- 2H. Langen, "Some Comments on the Shaping of the New Eur0pean Mar— bet Regulations for Cereals," Agrarwirtschaft (Hannover: April, 1966) Vol. xv, No. it. pp. 130-137 (translated mfiummarized at Oxford Univer- sity for the U.S.D.A.) 128 stock products. The ez-zisting regulations for hogs, broilers and eggs do not include intervention mechanisms to support the internal price if sur- pluses are produced. Such a surplus has already appeared in broilers, making import restrictions ineffective for supporting internal prices. It is anticipated that similar surpluses will develOp in pork and egg production. The EEC Commission has already prOposed a new policy for hogs which would include establishing target and intervention prices, with support buying of hog carcasses when market prices fall below the intervention levels.h Several farm organizations have urged similar pro- posals in the past and the central associations of both the farmers' or— ganizations and the agricultural cooperatives have called for support buying schemems for pork.5 While it is true that such a support system might be very expensive for the Agricultural Fund, there is strong sup- port for it. Additional problems are beginning to arise in the Operation of the Butter stocks in the Community have continued to grow, dairy policies. increasing 51 percent from 1965-66 and 11 percent from 1966-67, to give a total of 152,700 tons of butter in storage on January l, 1967.0 These large stocks have forced expanded export efforts as well as sales of Increasing a- cold-storage butter at low prices within the Community. This increased mounts of milk are also being devoted to cheese making. production of cheese coupled with the increased threshold prices for 3.4gra—Eurom, No. 210, January 25, 1967, p. MI/2. “12231., p. mm. 5179221., No. 195, December 7, 1966, p. Era/h. 6Ibid. , No. 205, February 22, 1967, pp. MI/S-7. 129 cheese that take effect I-rithin the next year have led. to forecasts of an export surplus of cheese in the EEC.7 To the problems with cheese and butter are added the develOpment of surpluses of powdered skim milk re— quiring export programs. What effect the cost of these programs will. have on future policy decisions remains a matter of conjecture. However, the planners in the Commission and the representatives to the Council of Min- isters can hardly ignore the mounting costs. Another potential source of conflict that has not been discussed widely is the correlation of the greatest price increases and the highest farm incomes. A recent survey of family farm incomes in the {EC8 com- bined with the results of this study indicate that prices will increase most in those areas and for those commodities produced by farms with the highest returns to labor and capital. The farm survey found that the highest annual returns to capital and labor per full-time labor unit were earned on large CI‘Op farms and specialized dairy farms in northern France and the coastal regions of Belgium and the Netherlands. These farms re- turned about 2,000 u.a. or more per full-time labor unit on the labor and capital used. The livestock and mixed farms of the middle altitudes of France and Germny returned between 1,250 and 1,750 u.a. per full-time labor unit while the poorest returns were to small farms in central and southern Italy where returns ranged from 750 u.a. per full-time labor unit to less than 500 u.a. per year. The study attributed these income differences primarily to the number of workers per farm. Farms with high returns to labor and capital per full-time labor unit used fewer workers L 7Ibid., No. 202, February 1, 1967, p. III/2. 80733 - Commission, Informations internes sur L'Agriculture. No. 13, Tee Conditions de Productivite et la Situation des Revenue d'Eagploitations Agricflés Familiales dans les Etats Imxbpes de la $31, 7 0233: Brussels, T936) \ 130 than low income farms. The study also found that general economic condi- tions were better in areas of high farm incomes, permitting excess family labor to leave the farm for urban jobs. Although not indicated in the EEC study, the fact that high returns to labor and capital per full-time work unit occur in areas characterized by large farms, either in terms of total land Operated or number of animals raised, would suggest that large famis make better use of available family labor than small farms. How do the price changes projected in this report fit into this pattern of farm returns to labor and capital? The large increases in beef and milk prices benefit most the large dairy farms that produce the largest amounts of these products. It has already been shown that the areas producing the most milk and beef are in the I-Zetherlands and northern France.9 Thus, it will be the areas producing the largest amounts of beef and milk and the farms with the highest returns to labor and capital that will benefit most from the changes in livestock prices. The same pattern appears for grains. The largest price increases for wheat and barley occur in the northern regions of France, which produce over one- third of the wheat in the EEG and nearly half of the barley. The Paris Basin will be especially benefited because the price change is affected by eliminating the quantum tax. Again, the farms producing these grains have been identified by the EEC study. as having the highest returns per labor unit in the Community. A third example is the pattern of price changes for hogs and broil- ers. Hog prices will increase most rapidly in the Netherlands and in northern Italy where hogs are produced on large, well managed Operations. —_ 9See Chapter IV, Table 36. 131 Much of the Italian pork, however, is produced in conjunction with the cheese factories rather than on family farms and the benefits will go to non—farmers. Even in Germany, with price declines projected, the decline is greater in the southern areas where hogs are grown on small farms than in the North with its larger hog farms. Broiler prices too, fall most in western France and decline the least in the Netherlands. Both of these regions produce large quantities of broilers, but Bretagne is one of the low incom areas of the Commity that has received special assistance from the French government in the past. The purpose of the comparison of price changes and incomes is not to suggest that prices ought to increase most for the lowest income farm. Rather, it is intended to show that the price increases may be greatest for those farmers who produce large amounts to begin with and are there- fore in a position to benefit most from price increases. These farmers also earn the best returns on their labor and capital. Thus, the disparity in the earnings of different groups of producers will be magnified by the projected price changes, not diminished. This condition is likely to have implications regarding the political support for any changes pro- posed in the price policies. The evaluation of the relative political strengths of different interest groups, however, is beyond the scope of this investigation. The price projections to 1975 are based on two alternative assump- tions about policy objectives. The low projection assured that price policies would remain as presently written for the unified market. The high projection assde that price levels would be adjusted to give approximately a constant real price. What effect do these two policy assmnptions have on the problems discussed? Neither assumption changes 132 the ratios of grain prices to reflect feeding values and, while the high projection reduces the decline in hog and broiler prices compared to that with the low projection, neither policy alternative can be said to solve the problem identified earlier. Where the different policy alternatives do make a difference, however, is in their impact on the surpluses of milk and grains produced and on the disparity between income of different groups of farmers. While the low projections for 1975 do not eliminate the need for support purchases of milk products and wheat, they do reduce the cost of selling surplus production on the world market. The lower domestic prices may also result in greater consumption and lower production within the Commu- nity than would be expected with the high projection. The income disparity problem cannot be corrected with either of the two assumptions. Certainly all farmers will receive more gross income with high prices than with low prices. However, with the high projection for 1975 it appears that the high income farmers will benefit much more than the low income farmers, simply because they sell more products. The fact that their prices are projected to increase more than those of low income farmers only comoomds the basic condition. Thus, if it is desired to adjust the difference between the incomes of different farm groups, the price policy should be established to return an appropriate income to the large farms , and separate income policies not tied to production would have to be created for the low income farmers. 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Unterlagen zur Futterm'rtschaft, Bonn, Germany. Deutschen Bundesbalm. Deutscher Eisen’oalm - Gfltertarif, Teil II, Heft A. Harmover, Gennany, 1966. EurOpean Economic Community. Bulletin of the EEC, Brussels, (published monthly) . , Commission. _Ip§_Cond_i_tions de Productivite et_la Situation des Revenus d'fizplgitations Agricoles Familiales CT' 8 les Etats Yembres de la GEE, (Irfirmations internes sur LTAgriculture, No. 13X __ Brussels, 1966. , Commission. Organisation der Ex‘zeuvunrr und des Vertriebs von Eleischhflhneri in den EI'JG-Staaten, Iii-imzartnilamgen ifber Landi-rirt- schaft, No. 11) Brussels, 1965'. ., Official Spokesman of the Corrmdssion. "Common Price level for Milk, Milk Products, Beef and Veal, Sugar, Rice, Oil-seeds and Olive Oil from 1967/68," Information Memo, March, 1966, Brussels. Federazione Italiana dei Consorzi Agrari. Campagna di Conunercislizzazione Grano 19965-66: Pressi d'I_ntervento e Indicativi, Roma, 1765’. General Agreement on Tariffs and Trade. GATT Programme for Expansion of International Trade, Report of Committee II on the consultation with the European Economic Community, Geneva, 1902. . RadL in Agricultural Products, Reports of Committee II on con- sultations with the European Economic Comunity, the United States of America and the United Kingdom, Geneva, 1965. Instituto Centrale di Statistica. Annuario di Statistica Agraria, Rome. . Bulletino Mansile de Statistica, Home. Instituto per le Richerche e 1e Analisi di Mercato. Qpporto sull 'impiego del Granoturco Orzo ed Amna, sia di Prodpgione I‘IazionaTIe che d'im' portazi one he: ISL , Rome, n.d. 137 iournal Officiel des Cormmautes Eurppeenngs, Brussels, 27 Fevier 19511., 571/6h . Murray, Kenneth L. France's Key Role in the Grain Sector of the European Common Market, U.S. Dept. of Agriculture, Foreign Agriculturcl Ser— vice, FAR-1?? , Washington, D.C., April, 1963. Orvanization for Economic Coo ration and Develo ment. I‘mricultural and o P9 P .. Food Statistics: 1952-1963, Paris, 1965. . Survey on the Organization of Marketing Poul‘ cry He at with Special Euphasm on Broilers, (Docmnente ation in Food and Agri cult 111e, 1961 Series, No. 587, Paris, n. d. . Organisation and Structure of the Mill: Markets in 0.E.C. D. I-Iomber Countries, (Documentation in Agriculture and Food, I962 Ser1es, Ito. 5?), Paris, n.d. . Food Consumption in the OECD Countries, Paris, 1966. Organization for European Economic Cooperation. Agricultural Policies in Europe and North America, First report of the Ministerial Commi ttee for Igriculture and Food, P1111... , I-Iay , I956. . Agricultural Policies in Euro andI Iorth America, Price and In- come Policies, Second report 0 the IfinistErial Committee for Ag- :Ficflture and Food, Paris, July, 1957. . Sla hterhouse Facilities and Men. D.1' strict.“ u:_7_. on in 0.3.-.. . Countries, Tocurlentah on in Food and Agri ”culture, 1?)? cr.‘ es, Ho. “5, Paris, 1959. . 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Tre: 1os___ in Agrt’r .cul tur 1:1 Policies Since 19 SS, Fift- report on Arriculeu1 Policies in Europe and North America, Paris, July, l9ol. Schertz, L. P. Basic vaisions of Eurgaean Economic Cormunity Grain Regu- lations, U.S. Dept. of Agriculture, F010-. :1 Agricultural Semi1e, AS""II"EJ.7, IIaShmgUOn, D.C., J1me, 19630 . "Uorld Grain Prices and Outlets for French Grain, ” Agricultural Economics Research, XIX, No. 1, January, 190?, pp. 151-19. Statistical Office of the European Co.1mm11t1ee, Arrrarpre1se , Brussels, (published monthly). . Agrarstatistik, Brussels, (published monthly). Statistisches Bundesamt. Betriebe, Beschaftigte und Umsatz nagh Grossenlclassen, (Fachserie D, Reihel), Wiesbaden Germany, 1965. . Binnenschil‘fahrt, (Fachserie H, Verkehr, Reihe l), T-Iiesbaden, Germany, 196577 ..-' Bram-rirtschai‘t, (Fachserie, Reine 8, No. II), IIiesbaden, Germzmy. . Seeschiffahrt, (Fachserie H, VerIzehr, Reihe 2), T:Iiesbaden, Germny, 1965'. . Verkehr, Fachserie H), Wiesbaden, Gemlzmy, 1965’. Treaty establishing the European Economic Com 1 and connected_doc1- ,ments (an unofEicial English translation). Publ isheTby the inter- 111m Committee for the Common Market and Euratom, Brussels. United Nations. Conmodity Trade Statistics, New York, (published annually). . Demographic Yearbook, 1963LSupplement, New York, 1963. , Food and Agriculture Organization. "Agricultural Commodities-- Projections for 1970," a special supplement to Comodity Review, 1962. . "Long-term DeveIOpments and Contrasts in the Wheat and Coarse Grain Situations, " Monthly Bulletin of Agricultural Econpmics and: Statistics, XV, January, 1966, pp. lO-lEC . National Grain Policies, Rome, (published annually since 1959). . Production Yearbook, Rome. . "The Common Grain Policy of the European Economic Comunity,” Monthly Bulletin of Agricultural Economics and Statistics, XIV, 110. 3, 96—5,, ppoT9-2ho 139 United Nations. World Grain Trade Statistics, Rome, (published annually since 1952).— U.S. Dept. of Agriculture, Economic Research Service, Agigultural 1 Trade Policies Affecting Policies of Foreign Governments, Includ.’ Agriculture, Agricultural fiandbook No. 132, Washington, D.C., Rev. March, 19611. . The Grain-Livestock Econgmy of the European Economic Community: A Compgndimn of Basic Statistics, Statistical Bulletin No. 33 , Washington, D.C., November, 19611. "The Uniform Grain Price in the EurOpean Economic Comun‘ity," Foreign Agricultural Trade of the United States, February, 1965, pp. -11. Common Marla-2:111 U.S. Dept. of Agriculture, Foreign Agricultural Service. Grain Production and Trade Statistics, 1950:51 thrmfiflfifil—EL Washington, D.C., March, 1963. 1 . Foreign Agriculture, T'Iashington, D.C. APPEI-IDLY. I I'EIGH'I‘S, ITASUTEE“ , I-IOII'EEAI-Cf EQUIVALEETS _.-AT.ID ABBREVIATIONS weinhts #— 1 short ton = 2,000.0 pounds 1 long ton = 2,2h0.0 pounds 1 metric ton = 2,20h.622 pounds 1000 kilograms or kilo = 1 metric ton 100 kilograms = l quintal lO quintals = 1 metric ton 1 metric ton of wheat = 36.7113? bushels of wheat 1 metric ton of barley = h5.9296 bushels of barley 1 metric ton of corn = 39.33825 bushels of corn Sguare'geasures 1 hectare (ha) = 2.h7 acres 1 acre = 0.h0h7 hectare Official Exchange Rates 1.00 Unit of Account (u.a.) = $1.00 (U.S.) 1.00 u.a. = DH 11.00 (Germany) 1.00 u.a. = FF h.93706 (France) 1.00 u.a. ‘-" L. 625 (Italy) 1.00 u.a. = fl. 3.62 (Netherlands) 1.00 u.a. = BF 50.00 (Belgium) Abbreviations Benelux EEC FAO Belgium, Luxembourg and the Netherlands European Economic Community. Also known as the Common.Market, the Community and the Six. member countries are Belgium, the Nether- lands, Luxembourg, France, West Germany and Italy. Economic Research Service, a branch of the U.S. Dept. of Agriculture. The Food and Agriculture Organization, a specialized agency of the United Nations. 1110 FAB CEEC USDA 111.1 Foreign Agricultural Service, a branch of the U.S. Dept. of Afri- culture. Organization for Economic Cooperation and Development, formerly the DEC, see OEEC. Organization for European Economic Cooperation. Member countries were Austria, Belgium, Denmark, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Sweden, Switzerland, Turkey, the United Kingdom, and after 1959, Spain. Yugoslavia was represented by an observer. The United States and Canada were associate members. The OEEC was succeded in September, 1961, by the OECD, with the members listed above, but with the United States and Canada as full members. United States Department of Agriculture c.i.f. cost, insurance and freight. A term denoting that a given fimzre includes, in addition to the value of the merchandise shipped, the insurance paid on it and the carrier's charges. £.o.b. u.a. free on board. A term denoting that a given price includes load- ing costs, but does not include transportation charges. hectare , see measures Unit of Account. An accounting measure established by the EEC for expressing monetary values. For conversion to monetary units see Official Ibmhange Rates. .APPENDIX II PRICE TABLES AND COMPUTATIONAL PROCEDURES .mm manna Nascwma4.30HHom modems ocean Ham non mopospoomd l l l Ill ill“ ‘I‘ III" lh3 -- -- u- -- -- -- -- -- -- as m.mH o m.m- H.e mm.emH ea.moa ea.moa om.maa em.eoa ma a.ma o :.m- e.: He.mNH ee.moa e:.woa NN.NHH mm.eoa ea a.mH o o.e- m.e em.mNH mm.eoa am.eoa neo.HHH has.eoa SH -- -- -- -- -- -- u- -u -- ma a.mH o e.e o.me e~.aoa em.ea em.ea ee.eo am.ee ea a.mH o e.m m.NH em.eoa em.Ha em.am mo.em mm.ee ma a.ma o m.e N.MH mm.moa mm.aa mm.Ha ee.em am.ee NH a.ma o a.mH m.e ae.eoa 4H.Na ea.ma Hm.ow mm.ee Ha m.mH o m.m m.HH sm.moa sm.;m sm.:m Hesa.em mmm.e~ 0H a.mH o m.o m.m e4.HHH wa.em ma.em m:~.mm hoe.mm a a.mH o e.m a.mH me.maa ma.aa mfi.aa emm.ma .Ha.me a Ema 0 add- a6 3&3 8:3 8:3 863 odmoa a. m.ma o m.OH- m.H :w.mHH em.wm om.~m efl.moa NH.~oa e a.mfl o e.HH- e.o eH.moa mm.ma mm.ma mm.moa mm.;oa m m.ma o ~.oa- m.a oa.eoa Ha.mm H:.mm mm.moa No.HOH : m.ma o e.HH- m.m me.HHH me.em me.em mw.woa om.~oa m a.mH o e.oa- 0.; N4.NHH oo.ea oo.ea N~.woa Ne.moa N a.mH o m.m- m.s mm.0HH mm.mm mm.ma eae.moa eoe.aoa H aimed» Ami: 8.6 6-8 mmRH Amen” can” 063 e83 seamen momnwno mwepeoonmm 9.89 non 5.5 5Q moaned emu one as cosmon_he moneys easg:-u.a mamas anzmema lhh a.mH o.m ®.:H e.a mH.mOH Hm.00H Hm.mm mm.Hm mm.ee mH a.mH m.w m.eH m.HH eN.JOH ea.ea em.aw mm.ms wm.oe mH o.mH m.o e.aH e.a oe.mOH ae.mm mH.Hm em.me mm.me eH a.mH m.» m.eH 5.0 mm.OHH NH.m0H Ne.ma sme.mw nOH.mw eH -- -- -- u- -- -- -- -- -- mH a.mH o m.aH m.eH Ne.HOH me.em N~.~w H:.me HH.me 4H a.mH o a.eH :.mH em.me eo.mm so.mm mm.me HH.me MH a.mH o H.wH H.eH Hm.ooH mm.em mm.em om.me HH.me NH a.mH o e.mm o.OH Ne.wm mH.mm MH.mw “3.00 HH.me HH m.mH o o.mm 0.0H eo.HOH om.ew Om.ew Heoe.me mHH.me OH m.mH o a.m H.e ne.ma am.ow am.om moo.me mmo.me a a.mH o m.mH ~.a m:.OOH oe.e@ o~.em ewm.ee eHe.ao m “.mH o 5.0H- m.H em.oa :H.mm eH.mm OH.ma oa.Ha e a.mH o m.0H- m.a wm.aa me.mw ma.ma me.ma w:.:a e a.mH 0 :.HH- m.m ma.aa Hm.Hm Hm.Hm ::.mm mm.om m u.mH o H.HH, o.m am.mm em.mw «.mw m:.ma ee.oa ; a.mH o e.HH- H.m Ha.ma em.mm em.mw am.ea ee.ma m m.mH o p.0H- m.m em.NOH m:.mm as.mw HH.eo we.mm m m.mH o e.m- m.H wH.moH me.om me.oa e;:.mm eo~.em H mme-oe Hme.0e oe-ee ee-oe mmeaH HmeaH oemH caemH eoeaH scammm ammcdnu mmmpsoopmm Amos pom .w.s Gav moofipm 1‘ i use see ea eOHmea an moOHea soHeem--.N mHmae Nanmmaa th I1 (I 1“ m.m._u {a mid“ HdH 40.40H 5.3 :23 .nwfiéw mambo 0H -- -- -- -- -- -- -- -- -- mH a.mH o e.m- m.e He.mm Wm.- mm.ee mo.om mm.ea 4H a.mH o o.m- e.H ee.mm am.He aa.He ae.me mm.ee mH m.mH 0 m3- m.m 3.3 3.2. 3.2. 3.2. 34:. NH SE 0 m3: m.m dumm 3.3. 3.2. Hméw 3.4:. HH a.mH o a.e- m.m HH.me ma.me me.me HeHN.ee mam.ee OH @332. HERON. 2.30 40:00 mummmfl .Hmumfi 03H enema nowma m sea on emwcsno owgcmonom T89 you 6.: 23 goofing one we» eH :onee he meOHee shoe--.m mamas anzmaaa a.mH o u- -- mH.m0H Hm.mm Hm.mm .. .. mH a.mH o N.N N.aH eN.a0H ea.mw ea.aw mo.mm mN.eN NH a.mH o u- -- ae.m0H mH.Hm mH.Ha -- -- NH a.mH o H.NH- H.om Nm.0HH Ne.mm Ne.mm meN.mOH nme.mm eH -- -- -- -- -- -- n- -- .. mH a.mH o e.Nm 4.0H ee.H0H Ne.ew Ne.~w HH.ee em.am 4H a.mH o m.eN e.HH oe.mm eo.mw eo.mm mm.ee ~m.am mH a.mH o e.om e.OH Hm.OOH mm.ew mm.ew :N.ee em.am NH a.mH o n.0m o.m Ne.mm mH.mw mH.mw eN.me em.mm HH a.mH o m.mm a.m aa.H0H oo.mw oo.mw www.me mew.am 0H a.uH o m.HH e.m ae.:a oe.Hw 0N.Hm am:.me amm.ae a a.mH o m.eN m.eH mH.mOH oo.aN oo.aw ace.He one.He w a.uH o N.mH- m.H mN.ma me.ew me.em ee.em ma.ma e a.mH o e.mH- :.N me.ooH Ha.ew Ha.em mm.00H mH.ma e m.mH o N.mH- w.o- mN.ma wH.Nm mH.Nm ee.em mm.mm m m.mH o m.MH- m.N mm.em Nm.Hm Nm.Hm ee.em am.Nm a a.mH o s.mH- m.m oe.ea HN.4m HN.am 4N.em Nm.Nm m a.mH o e.NH- m.e ao.mm om.mw om.mm we.ea ee.mm N m.mH o m.HH- :.m Ne.mm oo.ew oo.em ewm.~m eNe.Nm H €78 .572. 8-6 6.8 HmRH HmNmH QRH 063 e83 defimmm wmmcmno omepnoonmm Asap pom .m.s :Hv macapm 1' one one eH cosmet.ae meeHee mam--.e Names Nanmmaa 1h? m.mH o o e.e mo.meH oo.m4H oo.m:H :N.H;H No.0mH mH o.o mo.meH oo.m:H oo.maH noa.eeH Hme.mmH mH mme-o> Hme.oe cause eeuoe mmemH HmemH oemH oHemH eoemH coewom mowswno mmmpzoohmm “sop non .m.s eHV moOHhm 11“" 11" I‘ll ll 14‘ 0mm one 2H seamen he manage pangs swasnsu.o wands anzmmm< {1.1 ‘ ll: l I (III ‘II‘ ‘4' a.mH o N.HH H.e mN.HOH em.ew em.~m mmH.wN mmm.NN a a.mH o H.eH w.m mm.m0H :e.ma ee.ma eeo.NN tam.ee a a.mH o H.eH- H.H- eo.e0H ae.aw ae.am aa.eoH NN.®OH e a.mH o a.HH- m.o mm.e0H He.Na He.Na we.mOH Nm.NOH e a.mH o m.mH- m.N- mm.NOH eH.NN ee.wm HH.m0H Nm.e0H m a.mH o o.mH- H.m- em.NOH He.mw em.mm em.40H mm.NOH e a.mH o H.MH- e.N- mm.eOH NH.Na NH.Na NH.e0H 0H.a0H m a.mH o e.a- e.H- 55.0HH em.ma em.ma ea.m0H Nm.eOH N a.mH o m.N- N.H- mm.mHH Ho.ma Ho.ma ema.mOH eeNm.NOH H mmpno~ Hmsuos 05-30 £9-00 mmemH HmsmH osmH oeomH aoomH m eOH em momsdno omsenoonmm Amos and .m.s eflv mmlom I‘ll 0mm wee eH eOHNee.ae meoHaa_aeHeee meHeHazw-.m mHmag Hanmmaa APPENDIX TABLE 7.-The ratio of wheat price to barley price by region in the EEC Percentage Changea 60-6h 6h-7o 70-75L 70-7511 Price Ratio 1970 1975L 1975B 196h° 1960b gion Re OOOOOOO OOOOOOO N—dNQ .304 O... .0 HOOOOC'DCID Or-lr-lr-lr-th-i r-lr-ir-lr-lr-IHu—I 9'4".”‘1'1'1'1 HHHHHHH oHHHHHH HHHHHHH HHHHHHH HHHHHHH OHHHNHH o o o o o o o HHHHHt—IH HNMJmQN ‘905 '301 Bfi -h.5 1.1 1.1 1.3 1.1 L2 M8 13 1.2 L2 L2 L3 00000 00000 -12.h l\-O -2.5 “206 “209 -7.1 “1107 ‘906 '908 HHHHH HHHHH HHHHH HHHHH Firiririri . 0.. r-lr-lr-‘lr-lr-l mmmmm HHHHH NNNNN o o e o HHHHH HNN .0. HHH Or-lr-l HHH HNN o o o HHH HHH m‘mm . m N m N o m.oa J.on m.:Hu H.H H.H H.H H.H m.H 0H -- -- .. .. .. .. .. .. -- mH o o ~.mm a.o H.H H.H H.H m.o w.o :H o o m.mm b.MH N.H N.H N.H o.H w.o mH o o m.:m m.mH N.H N.H N.H m.o m.o NH 0 o m.wm m.o N.H N.H N.H m.o m.o HH 0 o H.Hm w.b N.H N.H N.H m.o m.o 0H age 3.2. 2-6 6-8 BRH .52 2.2 .63 eoeaH N oOH mm momcmnu amendmenmm OHpmm olom 11:9 ll 0mm esp sH sOHmmn he ooHam anon on 00Hnm.moHnsn mo oHpsa m:9uu.m mHmHH anzmmm< o N.H- :.eH- N.HH- N.H H.H N.H :.H o.H eH .... .i .i I. .i u- .i u- .. H o o o.HH m.m N.H N.H N.H H.H o.H 4H 0 o N.HH H.0H N.H H.H H.H H.H o.H NH 0 o e.a H.a N.H N.H N.H H.H o.H NH o o H.aH o.H m.H H.H N.H o.H o.H HH 0 o N.mH e.» m.H H.H H.H H.H o.H 0H amines Hmeuoa. 2-6 6.8 ERH HmRH SE 063 eoemH N nOH om someone omwpsoonmm OHBem mOHNm I! ll“ l Ill 1‘11 1 i ‘1 0mm 33 a...” 5%? .3 moHud 53 8. ooHnm pawns mo 032 manic mamas fipzamd. 150 '1 l I l 1 l m.NN H.m H.HH N.H- e.NN No.mm om.ou we.NN wo.Ne mN.ae em.em mH m.NN H.m H.HH N.H- m.eN ew.N~ eo.ee me.N~ em.Ne Hm.me mN.Hm NH m.NN H.m H.HH a.m- e.NN Hm.Ho Na.ee mm.He Nm.He om.ee mH.Nm NH m.NN H.m H.HH a.m- m.mH ma.ma HH.HN mm.wN ee.ee oem.oe omH.mH eH -- -- -- u- -- -- -- -- -- n- -- mH e.eN H.m m.mN o.HH o.HN ma.HHH ae.me om.Nm Nm.me mm.me eN.mm .HH m.NN H.m m.NN o.HH m.os Hm.mm Hm.oe NH.HN om.ee NN.oe om.NH HH m.eN H.m m.wN a.0H e.o: mm.om as. oo.He Hm.He eN.mm mN.mm NH m.NN H.m e.NN o.HH H.Hm em.mm No.40 mm.o~ Hm.oe em.am mH.HH HH e.NN H.m e.mN o.HH o.eN om.mm :m.me Ho.0N es.oe emH.Hm eHN.mH OH EN H.m Em EH 98 3.3 8% Neee mNee seam eases a e.NN .H.m m.oN H.H a.wH ma.mm NN.me NN.mH em.ee aeNs.Ne emH.Nm m e.NN H.m m.ea m.eN e.m em.Nm oo.ee om.NN NN.Ne we.mH Nm.HH N o.HN H.m e.es e.eN N.H me.00H me.He em.o~ NH.Ne Hw.mm mm.Nm e m.NN H.m e.ee e.eN m.N eN.OOH HH.HN He.me NN.Ne Ne.mm eH.Nm m m.NN H.m m.ee m.eN e.N Hm.ma Ne.oN em.NN HN.~e HH.mm NH.Hm H m.NN H.m m.eH m.eN w.m Nw.ma mo.HN eN.NN om.ee Ha.mm m:.Hm m mNN H.m es: 98 ms Heaa 3.3 OS: 13.3 N.Hm Ed N m.eN H.m e.ea e.eN ~.N Nw.4m NH.Ne Hm.HN oN.He HNN.om HHH.mH H mme-mce HmN.H0N seesaw Hoe-ee ee-oe mmNaH HmemH monH HoNaH o eaH eoemH N QOH mm womnwnu omwpnoenmm A.mx 00H\.w.s eHv molom i ll I‘ll 1 1 ‘1 ('1 I one one He 8&2 .3 moeHh £38 SEES Ema. fig 151 11‘"! ll 1" ll 1 1‘ All" 11]“ m.NN H.m m.NH e.N- N.Hm HH.NNH Nm.Ha No.00H em.em NN.NN ow.Ne NH e.NN H.m m.NH e.N- H.eN em.aHH NN.mm NN.ma mH.HN Nm.me mH.Ne NH m.NN H.m N.NH e.N- e.oN eH.mmH Nm.ea ee.JCH em.oa mN.NN NN.eN NH e.NN H.m N.NH e.N- H.mH mo.emH Hm.em ee.e0H HH.NN ONm.;N ONe.mN eH -- -- -- -- -- -- u- -- -- -- .. mH e.NN H.m N.N w.e- H.Hm NN.HmH me.N0H He.NHH NH.NOH HN.NOH HN.NN HH m.NN H.m N.N N.e- N.HH Ne.mmH Na.em ee.40H mm.oa NN.eN ew.mN mH m.NN H.m N.N w.e- N.HH mm.NNH eo.Ne Ha.ma NN.NN Hm.mm NN.Ne NH m.NN H.m o.m m.e- N.HH em.HNH N:.em NN.mN NN.Nw NN.NN mN.Ne HH m.NN H.m o.m m6- n.d.. édNH mafia amid No.8 @8wa :fidw 0H m.NN H.m a.OH m.e- N.NH NH.NHH eo.ea He.m0H om.ae eemm.ma eee.eN N m.NN H.m m.mH N.o- N.HN me.NNH eN.NN me.HOH NN.NN aeNN.Nm er.oN N m.NN H.m mam ENH N.H mH.mNH 8.8 oNHOH .35 OHHN NN.% N m.NN H.m mam 0.3 m.m NmNsH Hm.HOH NEHHH mmda mmdm mmNN e m.NN H.m mém v.3 N.o 8&9 Hmém 3.8..“ HHH.“ ONSN NH.wN m m.NN H.m mam v.3 m.H mmde m4. Nm.NOH NN.NN Nm.NN meN H m.NN H.m m.mm e.NH N.H- me.mmH Hm.em sm.e0H mm.HN om.eN eN.NN m m.NN H.m Ham 0.9” N.o Nm.mNH soda NNdm mN.mm HQHN deN N m.NN H.m m.Nm e.mH N.o- eo.mNH Nm.NN Ne.ea Nm.mw Hme.ae HoN.0N H HmNumoN HmNLHON moNLHe HONLHe 6-8 mmNmH HmNmH monH HONmH 063 n83 m eeH om newness omopsoohom 7mg 00H\.m.s a3 moOHum one we» eH eOHmon Ne moeHna NHeo--.HH NHmaH HanmNaH Percentage Changea 60—6’4 6h-7OL 6h-7OH 7OL-7SL 70H-7SH by region in the EEC ice 197SH 1970H 197SL f calf price to beef pr 100 Price Ratio 196h° 1970L 1960b lOI'l leg APPENDDC TABLE 12.-The rat I J. OOOOOOO OOOOOOO In\0 InInInInIn InInLnU‘InmIn I l I I I I I m0 IF.mmIf\L'\ o O o o e o o InInInInInInIn I I I | I I I MCDInHOInH coco... “\NInHNHH l l I l I mmHHHHH HHHHHHH QQiSéqq HHHHHHH MMJ—II—fl—fl—Ii HHHHHHH VIM—3.3.3.3.: HHHHHHH HmHmmmm HHHHHHH HHmmmmm HHHHHHH r-IN MJInON -h.1 -h.1 “19011 O —19.h ht 4t 1.h 1.h 1.h 1.h 1.h 1.7 1.h 1.h 1.h 1.h Lb L? 00000 00000 €€€€€ HHHHH HHHHH HHHHH éfifififi HHHHH SSQSS HHHHH ©0060 HHHHH O O I HHHHH m u E B M E m U 0000 0000 amen HHHH :Inmm . O . . HHHH Hmmm HHHH anon HHHH mHmm HHHH NIAONN HHHH m D 153 no .HH mm.m mm.m wo.m mmé O\ H m.ma o m.m w.:~ ma m.ma o ~.m- m.om uo.HH mm.m mm.m ma.oa mm.m NH m.ma o m.a N.HM po.HH mm.m mm.m oHH.m oao.p ea I- - - - II II I- -I II ma m.mH o H.m m.;m oa.HH mm.m mm.m Hm.m wo.~ mm m.ma o H.0N m.:~ 0H.HH mm.m mm.m om.~ mm.o NH m.ma o N.~N o.Hm oa.HH mm.m mm.m Hm.“ m~.o Ha m.mH o n.4N w.H~ OH.HH wm.m om.m Hmfl~.~ mwa.m 0H m.ma o m.:~ o.mH om.HH m~.m m~.m amm.u sam.o m m.mH o N.NH ~.oa mo.HH om.m om.m omm.m oom.~ m m.mH o I.» o.HH om.HH m~.m m». mo.m ma.m I m.ma o N.H H.HH om.HH m~.m m~.m o;.m mm.m o «.3 o H.H Wm 8.3 m5“ m3“ Sa 86 m m.mH o m.m m.0H oats” m?“ m. mH.m mmé H m.mH o N.HI 0;. RAM mug“ mpgm «Sm mm.m m m.ma o v.0 m.oa om.HH m~.m m~.m ma.m mm.m N m.ma o o.o m.mH on.HH m~.m m~.m nac~.a woo.m H MEIR amp-2 03% 40-8 Rafi .52“ 2.3 062 983 m so“ am momndas mmgaoonom 3x 8Q55 as $2.5 l I i 3m 23 fi 8&2 3 83a Mas-a? Emma “9an3 the EEC ion in price by reg .APPENDIX TABLE 1h.-The ratio of beef price to iii 1 t~ 1.1. a l b- .4 m m r— M 1%.» 6m “’2 §°3 $2\O 8 h .4 89.- 1:3 :3 c5 \0 {R p— O\ H ,4 m p. 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" e From unpublished producer prices supplied by the Ministerie van Landbouw en Visserij and in LandbouweEconomisch Instituut, Priissta- tistiek, Den Haag, selected monthly issues. f From.producer prices in Statistical Office of the EurOpean Communities, Agrarpreise, Brussels, various issues. g Producer prices obtained from.the Ministers de l'Agriculture, Paris. h From.prices received by country elevators obtained from the Office National Interprofessionel des Cereales (OHIO), Paris. For procedure used to convert to producer level prices, see the discussion following these notes. 1 Average of l96h/65 and 1965/66 prices. 3 From producer prices in Instituto Centrale di Statistica, Annuario di Statistica Agrarig, Rome, various issues. 1‘ Price for 1961/62 only. 1 Calculated from producer level prices given in Bundesministerium fur Ernflhrung, Landwirtschaft und Forsten, StatistischeZMonatsberichte, Bonn, various issues. ___ _’ m. From.producer prices in Statistical Office of the European Communities, Agrarstatistig, Brussels, various issues. n Calculated.by the author. 0 From.prices received by producers as reported in Instituto Centrale di Statistica, BulletinoiMensile de Statistica, Rome, various issues. p Average of l96h and 1965 prices. 170 q From producer level prices given in Bundesrdnisteriwn fur Emwhrmig, Lmdrfirtschaft und Forsten, Statistischer Bericht fiber die Milch- und Molkereiwirtsc aft im Bundesgebiet, Bonn, various issues. r Average of 1962/63 and 1963/61; prices. U1 Calculated by the author. t From producer level prices given in Bmdcsministerimn fur Ernahrung, Iandwirtschaft und Forsten, Ergebnisse der_betriebswirtschaft,; lichen I'Teldungen, Bonn, various issues. u Calculated from producer level prices given in Statistical m Office of the Burcpean Communities, Agrgrpreise and Asrarstatistig, various issues. 4‘..- 2': v Based on information obtained by Fred A. Mangmn, Jr. in intcr— 2* views with Italian poultry experts, including the poultry feeding special- ists at the University of Turin and at Agangelini Corporation's nixed feed mill. 171 Procedures USed to Compute Farm Level Prices for 1959—61 and 1963—cu Prench_grainpprices In most cases the prices obtained for the 1959—61 and 1963—6h per- iods were prices received by farmers.1 They usually were reported for a small administrative area, such as a province or department, and could be averaged to obtain the regional average price reported in the price tables of this appendix. For wheat, barley and corn prices in France, it was impossible to obtain producer level prices for points or areas within.the country dur- ing the 1963-6h period. Thus, it was necessary to use local elevator prices provided by the Office National Interprofessionel des Cereales and adjust them to producer level prices. First, a regional average price received by the local elevators was calculated from.the information ob- tained. Next, an approximate margin for transportation and local handling was deducted. Information for this calculation came from interviews with 2M. Senechal, Director of the cooperative elevator at Pontoise, France, and M. Tetu and Dr. Michel Petit of the Institut National de la Recherche Agronomique in Paris. In order to obtain the final price received by the farmer, an adjustment for the quantum.tax was necessary. 'With the start of the transition period for grains in 1962, the .French price support system.shifted from having a uniform.price for the entire country to one with regional price differences. The quantum.system, however, was retained to prevent prices from.increasing too rapidly, encouraging surplus production that was costly to sell on the world ——~—' 1The sources used for all commodities other than French grains in- dicated that the prices given were those received by producers. 172 market. Because the quantum tax varied depending on the quantities mar— keted, the impact of this tax differed from one region to another, accord— ing to the size of the farms in the region. To account for the quantum tax and get a better estimate of the returns to the farmer, wheat and barley prices for the 1963-6h period in France were adjusted by a computed incidence of the quantum.tax. Since no information was available on the proportion of marketings paying the higher quantum.tax, an approximate proportion was calculated for each region based on farm size and grain production data. Table 29 shows the amount of land in farms of different sizes for each region as well as the percentage of the total land that is in each size group. These figures were calculated from.data on the numbers of farms in each size group by assuming an average size of farm.within each group. Apply- ing the proportions shown in Table l to data on wheat and barley produc— tion by region gives the total production in each size group shown in Tables 30 and 31. In order to determine the proportion of the production that was sold.without paying the higher quantum tax, the average production was calculated for each size group. Cmun1the preportion of this average pro- duction falling within the 7.5 ton quantum.allowance was determined. Applying that preportion to the total production of each region gave the amount that could be sold within the quantum. The figures in Tables 30 and 31 indicate the large difference in impact of the quantum tax on different regions. 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