What are the areas of agricultural economics

Agricultural policy

1. Term: Sub-area of ​​agricultural economics, the subject of which is political action in the agricultural sector. The tasks of scientific agricultural policy include describing and explaining agricultural policy action and examining its effects.

2. Classification: Agricultural policy is a branch of the economic and social sciences of agriculture and thus of agricultural sciences. In terms of scientific theory, agricultural policy is based on various areas of economic theory and economic policy. There are particularly strong links with microeconomics and welfare economics, sectoral structural policy as well as trade policy and development policy.

3. Agricultural Sector: The agricultural sector comprises the entirety of all economic activities in the agricultural sector of an economy. As the economy grows, the agricultural and farm structure usually changes: the number of farms decreases and the farm units become larger. Overall, the economic contribution of the agricultural sector to economic development is shrinking.

4. Aims: a) Today's diversity of agricultural policy goals is explained by the development of the agricultural sector and the social demands that are placed on agricultural policy. General three target areas highlighted for agricultural policy: efficiency, equity and sustainability. Efficiency is about an optimal intra- and intersectoral allocation of resources. Distributive justice is about securing an adequate income for agriculture, but also about fighting poverty in rural areas and about food security. Sustainability deals with the environmental effects of agriculture and with other non-marketable agricultural services such as its contribution to rural development, animal welfare and food safety and quality (multifunctionality of agriculture).
b) In many industrialized countries, the stabilization of agricultural markets, securing an adequate income for agriculture and security of supply are "classic" agricultural policy goals. In addition, the agricultural sector is intended to contribute to increasing economic prosperity, to adequate supplies for consumers and to promoting international trade. Since 2013, the focus has increasingly been on using agricultural policy resources to honor public goods and social services. Agricultural policy goals for Germany can be found in the Agriculture Act, in the E (W) G Treaty and in the target catalog of the Federal Ministry of Food and Agriculture (BMEL). In the official catalogs of objectives, the objective of limiting the budget and avoiding international trade conflicts for agricultural policy is not mentioned, although it plays an essential role in the EU today.

5. Instruments: a) The field of action of agricultural policy consists of regulatory and procedural instruments. However, since regulatory issues mostly affect economic policy as a whole and are not constantly changed, agricultural policy instruments today are essentially understood as instruments of operational policy. In accordance with the target areas, agricultural policy instruments can be combined into areas of action.
b) The agricultural structure policy comprises measures aimed at efficient intra- and intersectoral structural change. As a rule, the structural change in the economy leads to a structural adjustment problem in agriculture. Overall, the economic contribution of the agricultural sector to economic development is shrinking, and factors of production have to migrate from agriculture to other sectors. This migration is inhibited due to transaction costs, and structural adjustment problems arise.
c) Agricultural price policy in most industrialized countries is determined by the income target. As a result of the inhibited structural change in the agricultural sector, the phenomenon of so-called intersectoral income disparity occurs, i.e. too many factors are employed in agriculture and are paid too low compared to the national average. The development of the German agricultural policy is a striking example of the emergence of the Agricultural protectionism in the course of industrial development to support income generated in the agricultural sector.
d) The Agricultural Social Policy primarily comprises the agricultural social security systems and the fight against poverty in rural areas.
e) The agri-environmental policy focuses on the goal of sustainable agricultural production. The aim is that the interests of food security, income generation and resource protection are taken into account in the best possible way.
f) The rural development policy aims to promote sustainable economic growth and quality of life in rural areas.

6. Institutional framework: a) The institutional framework can be described as a system of rules and organizations that provide the framework for private-sector action in the agricultural sector and for the use of agricultural policy instruments. In addition to the agricultural policy instruments, they belong to the fields of action of agricultural policy. In terms of philosophy of science, the analysis of the institutional framework is part of regulatory policy or New Institutional Economics and New Political Economy.
b) The totality of all rules for the agricultural sector can be called Agrarian Constitution describe. Relevant questions about the agricultural constitution are, for example, the importance of the international division of labor, private ownership of land and the distribution of this production factor as well as the labor constitution and the legal form of farms for agricultural development.
c) To shape the agricultural policy contribute different Institutions at. In Germany, the legislative bodies are the Bundestag, Bundesrat and Landtag, the implementing institutions are the government and ministries at federal and state level and beyond that, for example, the judiciary, chambers of agriculture, collective bargaining partners and interest groups such as the German Farmers' Association. There are also relevant institutions at the EU level such as the Commission, the Council of Ministers, the European Parliament and the European Court of Justice, as well as COPA as the European umbrella organization of national farmers' associations. After all, international organizations such as the World Trade Organization, the World Bank and the World Food Organization also help shape agricultural policy.

Within the EU agricultural price policy is largely shaped at the supranational level. Responsibility for agricultural structure policy and agri-environmental policy lies primarily at the national and regional level, but increasingly also at the supranational level, and the federal government is primarily responsible for agricultural social policy in Germany.

7. Financing: Agricultural policy burdens the public budgets in Germany and in the EU to a considerable extent and in different ways.

The budget expenditure for the supranationally designed agricultural policy was up to the funding period 2000-2006 over the European Agricultural Guidance and Guarantee Fund (EAGGF) settled. Since the 2007-2013 funding period, funding has been provided by the Agricultural Guarantee Fund (EGLF) and the European Agricultural Fund for Rural Development (EAFRD). In the new funding period 2014-2020, the direct payments per hectare will gradually be brought closer together, taking into account the existing income differences between Member States. Spending on European agricultural policy has long been more than half of the EU budget and has only been just below that since the beginning of 2000 (around 45 percent). The member states contribute to this according to their funding quota.

In addition, in Germany public aid for the agricultural sectorwhich are mainly borne by the federal government. These “national” expenditures for agricultural policy are predominantly expenditures for agricultural structure policy, agri-environmental policy and agricultural social policy. The agricultural social policy financed by the federal government has a volume of around 3.9 billion euros in 2017.

8. European agricultural policy: Since 1968 there has been an agricultural policy within the framework of the European Community. Until the beginning of the 1990s, the central instruments were a supranational, protectionist agricultural price policy (agricultural market regulations), a limited agricultural structure policy at the supranational and national level and a predominantly national agricultural social policy. It was only with the reform process that began in the early 1990s that agricultural incomes were increasingly supported by direct transfer payments. These were initially linked to production as factor-related transfer payments and have been increasingly used since 2003 as decoupled direct payments paid out (premium). Furthermore, there was a shift from market and price policy to agricultural structure policy, agri-environmental policy and rural development policy. In the funding period 2014-2020, the further reforms of the EU agricultural policy came into force, which focus the funds used more on ecological and social criteria. The direct payments (bonus) are more closely linked to the provision of ecological services (greening) (agri-environmental policy).

9. Special agricultural policy: The special agricultural policy is devoted to questions of agricultural policy that relate to special goals (e.g. agri-environmental policy, rural development policy), instruments (e.g. agricultural price policy) or other special aspects. Often there is also a regional differentiation in the analysis of agricultural policy problems: agricultural policy in industrialized countries, agricultural policy in developing countries.