The effects of EU corn, cotton, and sugar beet policies on Greek producers: a multimarket analysis

Abstract

AbstractThis article examines the welfare effects of the European Union's Common Agricultural Policy (CAP) corn, cotton, and sugar beet regimes practiced in Greece after its 1981 entry into the European Union. Since Greek farmers produce corn, cotton, and sugar beets on the same land in different years, we model these markets as horizontally linked. By incorporating the demand for corn in our model, we take into account that corn is used as feed in livestock production. We use line integral theory to properly deal with the complications of welfare measurement in a multimarket setting. We estimate producer welfare effects of Greek corn, cotton, and sugar beet policy, and use bootstrapping techniques to obtain confidence intervals for the welfare measurements. Our analysis indicates that the income transfers to Greek farmers, (corn, cotton, and sugar beet growers as well as livestock producers considered as a total), rose between 1981 and 1992. The 1992 CAP reform led to a stabilization of income transfers to crop farmers, and lessened the negative impact on livestock producers.