© 2008 Séan Rickard WHAT PRICE PROTECTION: An economic assessment of the impact of proposed restrictions WHAT PRICE PROTECTION: An economic assessment of the impact of proposed restrictions Séan Rickard Cranfield School of Management Séan Rickard Cranfield School of Management

© 2008 Séan Rickard  I have worked as an economist in agriculture for more than 30 years; Introduction …  Most of my work has been focused on the direct and indirect effects of policies;  The impact of any significant change in policy should be assessed and understood.

© 2008 Séan Rickard Based on two earlier studies – a PSD interpretation of the loss of substances under four scenarios Based on two earlier studies – a PSD interpretation of the loss of substances under four scenarios My study was … And a study by ADAS – the UK’s science based consultancy – estimating the associated loss of yields And a study by ADAS – the UK’s science based consultancy – estimating the associated loss of yields My study translated this work into the effect on farm and retail prices

© 2008 Séan Rickard Herbicide Fungicide Insecticide Herbicide Fungicide Insecticide Herbicide Fungicide Insecticide Herbicide Fungicide Insecticide Herbicide Fungicide Insecticide Herbicide Fungicide Insecticide Wheat: Potatoes: Brassicas: Wheat: Potatoes: Brassicas: Commission Ex Sub Parliament Ex Sub Percent loss (PSD) …

© 2008 Séan Rickard Yield (t/ha) Price (£/t) Revenue Op. Costs (£/ha) Margin (£/ha) % rise in price Yield (t/ha) Price (£/t) Revenue Op. Costs (£/ha) Margin (£/ha) % rise in price Scenarios Status Quo Status Quo Commission Minimum % Commission Minimum % Parliament Maximum % Parliament Maximum % Wheat margins …

© 2008 Séan Rickard Yield (t/ha) Price (£/t) Revenue V. Costs (£/ha) Margin (£/ha) % rise in price Yield (t/ha) Price (£/t) Revenue V. Costs (£/ha) Margin (£/ha) % rise in price Scenarios Status Quo , , , Status Quo , , , Commission Minimum , , , % Commission Minimum , , , % Parliament Maximum , , , % Parliament Maximum , , , % Potato margins …

© 2008 Séan Rickard Yield (t/ha) Price (£/t) Revenue V. Costs (£/ha) Margin (£/ha) % rise in price Yield (t/ha) Price (£/t) Revenue V. Costs (£/ha) Margin (£/ha) % rise in price Scenarios Status Quo , , , Status Quo , , , Commission Minimum , , , % Commission Minimum , , , % Parliament Maximum 2.0 2, , , , % Parliament Maximum 2.0 2, , , , % Calabrese margins …

© 2008 Séan Rickard A 100% increase in cereal prices – without any mark-up – would raise a standard loaf by 9p, a litre of milk by 3p & a kilo of pork 40p A 100% increase in cereal prices – without any mark-up – would raise a standard loaf by 9p, a litre of milk by 3p & a kilo of pork 40p Retail food prices … The knock on effects from the recent 100% cereals price rise raised retail food inflation in the UK to 13% but for low income families the increase was higher The knock on effects from the recent 100% cereals price rise raised retail food inflation in the UK to 13% but for low income families the increase was higher The potential impact on vegetables very severe so less healthy eating

© 2008 Séan Rickard  The increase in prices could be lower if the lost output was made up with imports;  But in this situation many farm businesses would be unviable with widespread hardship;  Reduced domestic production puts at risk many food processing-manufacturing jobs;  The effects for EU countries’ trade in food would be adverse;  Recent events point to the need for higher not lower productivity from EU’s farms.  But in this situation many farm businesses would be unviable with widespread hardship;  Reduced domestic production puts at risk many food processing-manufacturing jobs;  The effects for EU countries’ trade in food would be adverse;  Recent events point to the need for higher not lower productivity from EU’s farms. Wider considerations …

© 2008 Séan Rickard  Food inflation returned in 2008 and food prices are predicted to be higher in future;  The over-riding lesson is that the world needs to increase the productivity of farming;  Restrictions on protection substances are not appropriate at this time and are not substitutes for training and education. Concluding thoughts …

© 2008 Séan Rickard WHAT PRICE PROTECTION: ANY QUESTIONS? WHAT PRICE PROTECTION: ANY QUESTIONS? Séan Rickard Cranfield School of Management Séan Rickard Cranfield School of Management