Ending the cat-and-mouse embargos game. Making use of EU funds to steer West the Moldovan agriculture exports. EPC Commentary, 30 October 2014

Agriculture in the Republic of Moldova is an important economic sector, accounting for 41% of Moldovan exports and employing 1.3 million people, a large share of the working population. The EU has surpassed Russia as Moldova’s main commercial partner (54% of its exports go to the EU). It is a paradox that the Soviet inheritance still dictates economic trends: the heavy industrialised Transnistria exports, as a percentage, more into the EU than the rest of Moldova does. The right-bank Moldova was designed by Soviet planners as an agricultural basket while Transnistria, on the left bank of the Dniester River, concentrated the heavy industry. As such, from time to time, Russia strikes Moldova where it hurts, with embargos on food and agricultural products

Supply and Demand Side Limitations Affecting the Structure of Agriculture and the Rural Economy. Factor Markets Working Paper No. 21, February 2012

The paper criticises the neo-classical assumptions of perfect factor markets and of complete information, which constitute central elements in labour market theory. Based on literature review and on economic reports from transition economies, as well as developing countries and more advanced economies, this deliverable focuses on the structural impediments and imperfections which often characterise rural labour markets and which may prevent an efficient allocation of labour. According to empirical studies, transactions costs and rigidities hinder the well-functioning of labour markets and constrain labour adjustments. The paper attempts to classify the various limitations of rural labour markets from both supply and demand side, although the distinction is not always clear-cut as some problems occur on both sides. The identification of these issues is extremely important as it allows us to highlight the inefficiencies and the failures in labour markets and to understand their impact on labour allocation. In this context, market intervention is desirable and the paper provides particular support for rural development policies such as investments in human capital. Lastly, labour institutions can play a key role in promoting the well functioning of labour markets, thus it is fundamental that they are well in place.

Does land fragmentation affect farm performance? A case study from Brittany. Factor Markets Working Paper No. 40, April 2013

Agricultural land fragmentation is widespread and may affect farmers’ decisions and impact farm performance, either negatively or positively. The authors investigated this impact for the western region of Brittany, France, in 2007, regressing a set of performance indicators on a set of fragmentation descriptors. The performance indicators (production costs, yields, revenue, profitability, technical and scale efficiency) were calculated at the farm level using Farm Accountancy Data Network (FADN) data, while the fragmentation descriptors were calculated at the municipality level using data from the cartographic field pattern registry (RPG). The various fragmentation descriptors enabled the authors to account for not only the traditional number and average size of plots, but also their geographical scattering. They found that farms experienced higher costs of production, lower crop yields and lower profitability where land fragmentation (LF) was more pronounced. Total technical efficiency was not found to be significantly related to any of the municipality LF descriptors used, while scale efficiency was lower where the average distance to the nearest neighbouring plot was greater. Pure technical efficiency was found to be negatively related to the average number of plots in the municipality, with the unexpected result that it was also positively related to the average distance to the nearest neighbouring plot. By simulating the impact of hypothetical consolidation programmes on average pre-tax profits and wheat yield, the study also showed that the marginal benefits of reducing fragmentation may differ with respect to the improved LF dimension and the performance indicator considered. The analysis therefore shows that the measures of land fragmentation usually used in the literature do not reveal the full set of significant relationships with farm performance and that, in particular, measures accounting for distance should be considered more systematically.

Influence of Agricultural Support on Sale Prices of French Farmland: A comparison of different subsidies, accounting for the role of environmental and land regulations. Factor Markets Working Document No. 51, June 2013

This paper investigates the determinants of agricultural land price in several regions in France over the period 1994-2011, using individual plot transaction data, with a particular emphasis on agricultural subsidies and nitrate zoning regulations. It found a positive but relatively small capitalisation effect of the total subsidies per hectare. The data revealed that agricultural subsidies capitalised, at least to some extent, but the magnitude of such a capitalisation depends on the region considered, on the type of subsidy considered, and on the location of the plot in a nitrate surplus zone or not. Only land set-aside premiums significantly capitalise into land price, while single farm payments have a significant positive capitalisation impact only for plots located in a nitrate-surplus zone.