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The Real Rate Of Protection: The Stabilizing Effect Of Price Policies And Direct Payments

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  • Thompson, Stanley R.
  • Schmitz, P. Michael

Abstract

Traditional indicators of protection refer to the level effect of price policies on income and ignore the stabilizing effect. We derive a measure of the real rate of protection which incorporates these dual dimensions. The income stabilizing effects of price policy protection lead to a greater level of real protection than would be measured conventionally. Computed real protection rates for the European Union wheat market over the pre- and post-MacSharry reform periods were found to be some 3-5 percent greater than traditional indicators. Moreover, the compensatory payments to farmers following the 1992 reforms had a major risk reducing impact.

Suggested Citation

  • Thompson, Stanley R. & Schmitz, P. Michael, 2001. "The Real Rate Of Protection: The Stabilizing Effect Of Price Policies And Direct Payments," 2001 Annual meeting, August 5-8, Chicago, IL 20503, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea01:20503
    DOI: 10.22004/ag.econ.20503
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    References listed on IDEAS

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    1. Bureau, Jean Christophe & Butault, Jean-Pierre & Hoque, Anwarul, 1992. "International Comparisons of Costs of Wheat Production in the EC and United States," Staff Reports 278676, United States Department of Agriculture, Economic Research Service.
    2. Atanu Saha & C. Richard Shumway & Hovav Talpaz, 1994. "Joint Estimation of Risk Preference Structure and Technology Using Expo-Power Utility," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(2), pages 173-184.
    3. Cuddy, John D A & Della Valle, P A, 1978. "Measuring the Instability of Time Series Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 40(1), pages 79-85, February.
    4. Schmitz, Michael, 1997. "Cap and Food Security," 1997 Occasional Paper Series No. 7 198056, International Association of Agricultural Economists.
    5. Tyers,Rod & Anderson,Kym, 2011. "Disarray in World Food Markets," Cambridge Books, Cambridge University Press, number 9780521172318, November.
    6. Stanley R. Thompson & Roland Herrmann & Wolfgang Gohout, 2000. "Agricultural Market Liberalization and Instability of Domestic Agricultural Markets: The Case of the CAP," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(3), pages 718-726.
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    Cited by:

    1. Harsche, J., 2007. "Räumlich differenzierte Stabilisierungswirkungen der Europäischen Agrarpolitik in unterschiedlich konditionierten Erzeugerregionen in Hessen," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 42, March.
    2. Harsche, Johannes, 2006. "Räumlich Differenzierte Stabilisierungswirkungen Der Europäischen Agrarpolitik In Unterschiedlich Konditionierten Erzeugerregionen In Hessen," 46th Annual Conference, Giessen, Germany, October 4-6, 2006 14949, German Association of Agricultural Economists (GEWISOLA).

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