ï,ndôgc'n,*isation ,:lf the rni. 1k arnd suçffi1^ shmclow pri.ces i.n m mC. E,r;ppl.y model cl.osely based on moçlern r:nocluct ion bheory" M"rl-r6,, Tavérm, Trochet ( f çeA) nave elso f ul.Iy endoçleneised the daei.ry mncJ suÇeâr shadow prices in ân intennational. msriculturel tnmde mo'Cel f ocussing on EC antl U$" Lau 1,.L976) has charactenized the cc,n'litions unclen which eupplv aend demend rraraem*ter s withcut quanbity constrmints can be d*ducecl from the paraemebers *etimate.,l urnden s']m* input 'rl-cutput fixitv ancJ l'rês showtt l-raw Le t)hmtelier's Enj.ncirrj^e mpç, lieg" Brown aencJ Chrietens*n ( 1^9SJ-) ; Kul.mtilekae { 1"9S5) ; $quines { 1"9871 ; Guyomaerd mnd Vermersch fL9S9) haeve irnplemenLed practicaelIy tl-re procedure proposed by Laeu in order bo derive long*run inrrut denrand eIaesticities from short*run parameber-s estimated under input ancl ,/c,r output fixity" Recerrtly Moschini {1-988) l-rms, fôr thre first time mpp*r'*ntIyn tisecl the duaeI mpproech to estimaete ae multioutput multi.inpr-rL sur:F:lrz model in ae context of supply management pol.ici.es" He raeises the issue of aenalysinç thc comparative statics of proclucrr's respôn$e under supply management Énd, after'stucjyinçi turo sources ,rf .jolntness in input quant it ies I Koht i , 1"9ô1 | $humr,.ray, Porre, Nas:,h " l-984 ) , he states that without â gen*raJ sluj</el jne'., arfrefherâ r' not suË,rly r*6.$fr^j,:f inçt p'c,.I ir:Îes w.i I J tlrrc,^ease ûr cle,cr*aeçe fh{}' sup,ç,Jv of a/,?r*a.s tr'icted autp,ut and the demancl of vari*L'l.e i,*iËtL,â.$ r^tilJ t'e p,ursued at the emp,i,^icaJ .].etr*L.

The purpo$e af the p,r*sent r>aper is to expl.ore vaer'iorJs cases under ulhi.cl^t the cornparaLive statics c"tf supply [:ehaevior urrclen input ancl output rat ioningj can bcl characLerized in mûnô rlebai 1s. " l^le treaet jointly the casss of a quota and a factor fixity a.$ they reae1. ly are mirror imageg c,f the same r:roblem. Tn order tçt cjrr that n the theoretical basis of ll-re approach is laid down in section 2 whe're the use of shadow pri.ces and disequilibriurn geps is i.ntnoduced as a simple wây to car"ry the analysis" Irr section 3o we ? -0.0Ê8 -0.030 _0.

1, Introductlon

In the reçent rreriocl pc'1. icy nraekens haeve b'econre nelucbaent to cut ç,rice support :i.n or'der to re,Jutce tl-re. widespnen,l erxcessi.ve capacity of tl-re farm secton indevel,:rred,:c.runtr'ies" Inter'vention $chemes which,lr:r r:ot disturb the r,,esb*d i.nterests br-rt prevent buclget cc,sts f rom j.ncreasinÇ f urther lrmve become môre p,:puli*n.. As ma[.r.inç tl"re traengf*r aes ôhrsc,çrr* i3s trûss:ih,].e i.s i*Is;,: ae banget of farm r:'ress;ure,.?roups, it,loes nÔt conte *s a.surprj.se thaet product ion qurotns. lan,J set msicle, f ert i l izer rat ioning mnd al I socael led supË,.1 y rfianagernent pol i.cies Frlay aen j.ncreasing nole in f arm Ê,r^ograms " There i.s â çrowi.ng f itenatr:r* ûn r:roducbion quçtaes, aenrJ s;ur>ply r:orrtr*ol policies. c,anticularly in Caenacla where 'bhese type.s of ins,trum*nts haeve beerr implemenbed for sûrne time lÀrcus. 1"978 i Bar'icl-relIo, 1"981^ , 1"98/+ î Veeman, 1.gt:rz ; $chmi.tz., 1,t83 I G,ruin" J-988 ) , Tn Hurc,rre " the ,Jairy quotae has attnactecl frn *:xtensive w,rr*l.r of aenalysiE IHanvey and Hubbard , 1984 ; Perr'aeud ed ,," l-v68)" Mosb stt*tclies deal witl-r bhe er/ôluaetj.,:n c'f the r*êrrt or of tlre braerrsf ens aend welf are .l.ass in 'ù r,ar'tiael *quilibr^iurn f i^amewonk apprôach in the context of mar*kets far qr-rotaes" Br,;t qur:taes haeve aelso become & challenge to model build*r's, since rnodels estimastsd and desiçned in an environment çf c,nice supË'ort pr:.l.icy inetruments have to be usecl ncuJ in the context ctf a sLlË'p1y mmnaegement scheme. The natunal response af the econ,rnr iet in tl^rêl cc'ntext iç, ta fin'J ,:ut the " pr^ice cut equivalent to tli* rruatae c,:ns,tratrrt " " f iris l-ressi been done by $ome aubhon$ [ Tonnicl is, L981. ; Bingi.ev" Buntorr" $tnmk, 1985) " But a real en,loçeneiaation of the shaedor"r pnice equivalent bo bhe quota, which braces the'cros$ effects in the modelo is rarely done. This is l'rouever i.mporbant in multioutput multllnput commcrdity rnodels. l'lunk ( t9A5) hra$ echieved an actuerl clevelop the essenLimls of the conrpanmtive stmtics of supply behavior with respecb to tl-re level of the quote and the f i xed fmctor, Ëmphasis ls put on the compmnison of the supply behevior af unconstrmined quantitles while some other lnput.s ôr oubputs mre netloned, with respect to the $ame behaevior without rationins" Attenbion i$ centered on cross price ef f ecbs. Section /* deals wittr ae dynamic mpproacl-r of the sâme problemo aend stmple aenmlyticml relations betroeen short-run ond long*nun re$pon$es are deriv*qJ" They I.emd to ûn estimable model nf the demmnd for quasi*fixed inputs which i.s J.ess sË.nerml but simpler to specify tlrfrrr the orre of Hpstein (19S1), A numerical lltustrmtion of bhe snadual evolution of supply and derlved demand elaesticitiee ûven the bime Iags afber the inibial prlce chanÇesn i$ finallv provlded, 2. A theonetical framework Lo analyse supply behavion under ratlonlng

In oncler to chanacterize the behavi.or unqJer constraints, w€! make use the knowledçe of supply response without on before the implementmtion of the rationi.ng" Tl-ri.s is made eâsy urnden fairl.y general. ccrndj.tions ms the ûomrranettive statics af unccrnstreli.ned sug'ply behaevi.on i.s b'etter known (e" Ç, $aekmi, Lq7(+) " As thene is an evident symmetry betwee,n introclucinç consbrnints on the one hand and relaxing bhem on the othen, tt*re comparison with the problem of movi.r-rg from shont*run to long*run nespon.se is of some interest " 2^ 1." Ths ef fect af r'atianinç .in pr-odLtcer's t,ehattior lalhen aI l pni.ces ôre immeclj.mtely, bh* familian çiven and producens âre free t,) mdjusb proclucer pnoblerm i.s n (2.1") Max { voq ; q € T } q n' (v) where q is the vector of {n+m) n*tput quantitiesï v' the itranspcsed) vector of corresponqling r:r'ices and ntt(v) the (uncenstrmined) profit function" The feasible seb T is assumecl strictty cionvex so that optimal quanbi.ties ar'e uniquely deternr i.ned and well beheved fr:nction af ririces, Tl-re vector^ q i.s Ë,antibionned j.nto two su.rbvectors of quantiti.es a 1 always variaeble anci quantities ao susceptible of beinç constraeined-A similar subdivision applies to tl're vector of pricee v. Problem (.2"t\ can bhen be wri.bten 6$. nespect tc t1 and vO, tJhen quantitites âne peSSed mt $aev AO bv p,:l.icy instrumenbs (truotae, set aside.., ) Çr mmrkeb risidi.ties aend aedjr-tstment cost (f actor f ixity in short*run), vmriah,le qumntities û t do not behaeve in the $ame way wibh respect bo *xogenous P'r'ices

V to since they ane also a function of ;o, Fotlowing Rarbaerth (1q/u1), rlefine ,o the vector of virtual pnices which eljnsure tl-rmt thel unconsbrained quarrtities oi es funcLions of prices wiIl. stav at level q oo (2.6) u ao (vro ,o) x q oo Tl^ren f rom the knOwledge Ôf (e-.:,J we cmn inf er hoi^, sur:'ply nrârlffiÇÛd gçods witt modify the behavior of the other suppl,ied aend demaended goods and factor's. Followins Sakai's (.L976) decÛrnposition nulq:. ancj if (A"6) Çr,rt be solved for tl-re virtual prices ,o es function nf V 1 and eoo ue cen def ine the retatlon between bhe nestnicted behavional funcblons .rf anU the unconstnain*d functions defitred ag in [2.3), 7 oo)

q v vl 'o- u Qo o 1 by: 6 [2.5) q (vrn oo) R 1 q
Irr" ,o Ivr, cro)l 7 l-les.sian of the urnrestricted pnc,f it f unct ion ,lifferentimbi.Iity i.* aessumed.

with ,o B.s defined by (2"/*)" Res'Lr-icted supplv and demand R functions ol Çan then be aenaeJ"ysed, ê$ thev mrs equivmlent bo the scrlution of tl-re system (e" S m) aend (.2" {,") " In par*ticular the comË'arative. stmtics af Q.S) caen be easily deni.ved from the nt( v r, ,oJ , when t-wice R Ivro PoJ" (ôuo/ôv,) (2"7) *À (v1, oo)/ôv, t2"6) *ri (vr, ôo)/au, = âaiirrr, uo) / ôv + (ati (v The graedient of vj.rtuml price vecton f rom dif f erentiatins (2"/+), takins f 2..31 bl ur, r, t, v 1 is derived into account, The slnict convexity of tl^re prociuction set ensunes thaet nt toVo is r:ositive def inite and inr,tertible (1)" Systern (2" 1n) aellov,rs to Çompletely':haeracterize tire ccmpar'aLive ebatics unc]er constnaints, ûn tl^re basis of tl^re. inf ormat ion of the uncc'nstrni.rred suË,ply anci rlenived c.lemand responses, evaluated at lhe relevmnb Çontr'ained equli.libr'ium (clo, 'ol " There i.s â simitariby -between the system of equaetioris (2,1"Û) which allows to describe the consbraineci behavion on the basie of the unconstraeined one, anci the problem of derivins long run behaevior f r om the shor^t*r'un re$ponses" T+ be ntôr'e specif ic" the ,same, infonmaetiorr ae l.n (2,, 1.û) cc'utd Yte ob'tainecl directtv i.'f the Jaecobian of tl-re nestr'icted Krrofit function 1R{tr, ïo) is knr;wn. nR(vr, âo) ls def ine<J by the pnoducer's problem : I t.

(2 " 11) r,te q ,AppIying functions of constrained at shadow rrrice ,o

(2.12) ar) nR (2" x?) b)

An equation ,Jiffenentietion of f"il ,tu,' oo) x .i {.,,, À"ol

; 1 ÇoQo ïhe equivaeIence between (a" fS) and tA" 1n) c exprored bv using e procec.rure simi ran to a*o *n be f urbher ï:"":::ï:.:ï:;"".:;.::î.'_uï ";#;.:lr, ;:

... ;: Jï;"*nji negntive of the expansi*n " 1'o v ef f ect of *noto '!ot' is iust the e r:roblem of short*run b. ê$ rons-run equiribrium {Mahén Guv*merd ,.:;:î: â Ï n pent i cu r an i t ôpps;rn c. "î h derived demond r-esponse .**"* in equation (2" 1tl th vector v -,.,o"1.,^1,.ï:.ï of sûocJs a r tnritt-r respecr etL sur:r:rv and ' t *s now modif ied" mo"*o,r*", ;.;.;,_::""^*_"t .

*" il're price chatetien,s principre îs ;".;::::"i, .another application of Le matnix IIu (tl-., -j* r-*n,*oo*"*t't â'$ the diasonal tenms çf the posltive defi.nibe mabrix (IIu )-1 tç;r'tII$ anound the "!oro'

Thenefone output supply I a responses of Llnconstneined qLtont it ies to thein ûwrl ;::ii:: ;j'iJ";:ïîï:: :;";::_-:ïffi.:.:,,":j ;lï.iïj;

iil"ll;-]i:;.:."::;,;.;;.ï:;:."".". ;; Lau,s nesu,r derived rnom

As noted bv t40schini (rçee) whab happens bo crô$s price effects is much ress obvious pônticuranly when one LJ$es bhe r^estricted proff,t function, whene cr.e$s effecbs betwe of the ty'e a R L'çLwssn quentitie* siruaebirn ,. "rt;:l"t."lrtl"' 9o,r' mne nob e&sv ro inrerr:rer" ïhe when ûne sbants with IIuIvr, uo) since il;;r.ï:::ï.ff_" rusb cnos$ prlce erasriciries encJ êre more 4-, e" 1. tne notiôn of ,,fr4?j.r+,,jse simi lrrri ty ,, ïn order to chanaeteniue convenient to introduce the de is poir of fi nespecr ro . i:::ï"J;",*"* e" ao if and ol witn nespecb to vo have notmtions if I the behavion under nmbioning, it is finltion rf ,,paeirwise similaenity,, : will be $eid tô be similar with bhe cross*r:rice elasticities af q, the $eme $ign, bhat i$o with ,"r"i F'rr' ,'lll'pc'çte r-rf cl.atnity, outrrults ui r at ; i. = l, ., a t n ; with F:nices Ë,i anci inputs *h x *" qh î Fr = L, rin, m ; wi.th Frrices 'h âre noh, identified.

rnequai.ity (z,ta) mi:y ,.ren be wni.tten i.n tenms of the second paentiar.erivebives.f the pnoflt function II"(v) and in terms af the cross! r:,nice derivatives ûf the facton demand or outr:'ut suppl'v e.'uati.ons (z)" Taeb1.e 2" 1. $unrmanizes these different exrrnes*ions bv disti.r-rguisr-r ing the r^raetune, output ôn input, of ther netputs taken into account" Iinsert taeh,le Z.I]

As frn example, two inputs *h aencr *k ans sai.d to be similar witr-r respecb to inpub x o if b,<lth âre substitutes f or-, ârs compremenrs ro *o" îwo {iLrrpurs ;-";;'ï 'll. *o t't' ir both Eimirmr wi.th re.q. Éà.* ,-T ,.

-: -*:'l-.t"* Yi aencl " j &rs saeid t. be in bhe o""o,*ilï.:: ::_;""::":::: ;:"::: ::,:ï:;1":"::,J"J:"ï;

'nput *h êncJ saei,J to be similaer wibh nespect r* ,,.or*-îl ,," t:

-"1 u to.rr^ is non negative, thaeb is if inplrt x ic ê,,Frâ_h -rr.o {€ rr rnpuf *o is, sup}*rj.ûn [i.nferj.,:n] in the pnoduction of y . and i.nputs * h and * o âns com'lement: (subsbituable).

Simi.tar ir't*"o"u.tations of i.neqr-.renl.f.ty (;:":s) can be exten,Jed to at L the possible ca$e.s " A paeirutise simitaeri.by of two netpr*rts r^rittr re.spect tc, m thin,J netput is def ined at a given e,ruilib:rium p+int. As a:n exêmtr,.1.e.0 gi'ven pnice vector v' simf.rani.tv is ciefined crn the baesis c,f u^re unconstrained pnofit function" Af ùourse srmilmnj.ty wirh resrrecr ro Qo ar this poinr does ror impl.y simiil,-i;" -iJ "l;

othen equi l ibrium poinb, anc, rfiore generar r^y, cr,]e.s nût i.mpl.v simil'arity slobal'ty" As a conseqLrence, bw' netputs 9, .*r-rcJ e" carl be eimilar uf.th nespect II"(r') ano noL at the pciint E*'conr^esponding to t'(v*)" ït cen be nemdilv verified thet a technorogv which is normaet in the $en.$e af sakai (r974) has alr pairs of inc,uts and outputs simiror" rt mây be called strongly similar. This condition ûf similanrityn r,rhj.ch The main nesulbs of componabive sbabics uill be carried basj.cally ôn system (Z.tû) which assumes (2,ç) known, but in order b.' make the resurbs more tnansparent ând easier to 'ntenpnet (i) inputs end outputs are sepôrfrted agâinn anql ( ii ) , t' keep notmtions hopefulry simple mnd to rrnovide conveni.enb formur^ee for empirîcar sss: the basic equation corrss,,onding to (2.g) is written

'n berms çf price eraesticities, hrith a serf evidenb pentition of the matnix ône gets ; x.3

The \fulr companstive statics of endogenous ver.rabres i.e" shadow pniceer QUôta nent , frxlbv ross end unconsbnained suppry nnd demandr câr. be investlcated by sorving equation (3. 1) " Thrs has been d.ne ersewhene (Hahé mnd Guvomard, lggg) ano wirt not be punsued here (4)" The impacb of quobas and fact'n fixity on cnoss price e'esticities wirl be explcred unden the c.ndition .f painwise similarity introduced ebove. propenties (s) con+erning the ôros$ price unconstneined quanbibies cÉn now be derived, under of similaniby of eech pei.r of sood$ with respect to first examine the one quole on one fixeo factor unembiguous.

effecbs ômong the assumpbion On y and x" ; rre ca$e, which is pnopenty 1 : unden the similmr{ty conditlon s blnding constnalnt T4 on en ôutput or sn mone substltutable, input makes the unnestnicted inputs end outputs rrnopenty Z : unden the simi IanJ,by condition, a binding constnmint on ên output or ân input makes the unrestnicted oubpubs mône negressive and consequently th* unrestnJ.cbed inpubs more Inferlor.

yf only one quoba is implemented, bhe system (J" t^ ) is wnibten wibhout and {ô. S) simplify inbo In thre cfrse crf s O, Lhenefone hi complements ôn ê sim j.Inn f ashion inpubs f.n (J.Sa) is a typicat given by : nat ioned cro$s e,tast icity $imilerity of j.nput quota ao impl ies G.1: E o1 resurrs caen be deriJ:";:i"

t . the 11R
hj< This is as fan ôs similari.ty caen bning unambiguous resurts" As rnentioned before, when one staerbs with the ]ong*nun nor.nrcr. technology af $akai, where similmrity is venifi.ed, implementing qu*tas on fixed fac'tors one aet a bime r^,ri.rr induce m.rs substitution and more inpul inferiority"

Hence. we get awaey fr.om the n.r'ma. technorogv and at sorfie poinb there wi r r be Ê:a'rs of inputs or outputs which mav n.' l.nger be simirar" ït would be convenient bo have mone çene.naI re$ul^ts when srv*rêl outputs on inputs âre constrained in the same time as in exr:ressi.rr (3. 1) r^rrri'ch reads to thie foll0wins reretion between rr]R *n.r -;; r As D is nege*ive, if 0 is non negative, then the tendency toward subsbitution wourd f.r10ç,r. ït is wonth notins first bhet when i' x i' û is now û quadrabic form êround a .$vrnmetric p*sitive def inite maetrix " hence the Le Chatelier, s ef f ect is verif ied" t^Jhen i # j, the simileniby condition can be used bo write e êsà quesi*def înite f orm {e" s. l,lunebae , 1977, p. 6?) , ?:i ô", ôY, for;""

x";t,with<r)0

T7

Let A be thre non.symmslnr".Ç rnatri :.:i * " or'';'*"':. "::;; :J;:

Then if A * A" '^Ïnl"* A'is,-re tnanpose of A, has ê corurnn diagonar r,ominancen then A + A'is positive definite and e is posJ'ti've (Munsxâ, p-É,1) " cor.umn diag.net dominmnce .,f A * A, wourd be ensuner, b'y the existence of positi.ve numbe such t hat : rr is worrh .,ojr,.,n i;J-,J ::j..;.::.. bhaet (3' z) is veriried"

:".':::;, j "..,"i.JJ. ":;; nespect to the price of bhe good unden quotn is equal to the naetio cf bheir sup''y re$ponse bo the fixed fact*ro then the nesult .f more subsbitution on less complementnrity follows" ïhenefone while bhe nesurt does not seem to be cornplebety generaer with the.

ï:;:ï;-J'.":";ffJJ' *,'n* rendencv .";;; il";irurion when conditions *'rrvv+çL'r sesms to be vai'id .lncler faeirry genenal /+. The dynamics of obsenvable technotogy adJustment of fixed quantities and the ïn the prevf'ous section the natune of cno$s effecbs in the belravj.oral equations h,e$ shown lo depen,J on the exbent of bincl irig contrainfs on proçJL.rcen prûfit maexi.mizing decisic_rns" The duaer technafogv which i's un'lertvi'ng is mrso c'rear..Iv <repenqreat ùr1 throse contnaints cif fixity"

As; the producen cënnot ad.just irnmediatery to p'rice changes, the firm is neven.bservecr in frn equirib,rium eithen qrf shorb rurî on ûf r ong nun but s.mewhere i n hret ween on m transitonv rrmth rowand it" îhren the $peed of adiustment is the key f actor j.n intenr:rel j.ng the observe,J technology â$ f on exaempIe in econometric work ç'hene the adiustment pr*ces$ is n.t f'nmalry incrude'J but impliciterv assumed-ïhis section attempbs to built on bhe disequilib'ri'um fnamewonk us€.,J above t. denive a simpre dynmm j.c est imable model Df sur:pl.y behevion in the qL/aesi*fixed figct.ns, rrsvr'vl l"n the l:,nesence of Gi.ven th nebpurs rwo -:.ïi";r';;ïr. ï1.":.:ï;;:"î;:ïr;:: ;;*;:;J:l;: Now, if in l"evel^, then the .saeme mode L whe obsenved pnice v fi:ct ez Çênnot adjust i.mmecliately to the obsenved quât rs vinruar ;:i:::. \,1 2L-7 (/+.2) and (c" s j rw,e get o e system of obsenvable ït is aessumed that outputs can aedju'sb fneefv in absence crf ï::":":'î:ï and rhab onrv inpurs rag behind oprimi:r revers,aes -. u ctual instnuments to neach clesinecj output l"evels Q r t ( r r,.' v zt) " Equabiûn (/'" 3) courd be mede more cornpl.ex t<: account f or en.c'rs in meet ing the quota reve, I wi th the subsequent rrenarby fine which naises a specific probr-em *f nisk be.haevi.or in the presence of guotaes, but this is lef t asi,Je here. Funthermore bhe adiustment pmth is monoronic if cheracterisbic roots *rs remr posttive numbers aend *scillebes *therwise {Nedini aenc, R*sen, 1969), Fn.rn (4.,,5) shorb*run intenim pnice elaslicj.ties ôf qz can be denîved.

Fon obsenved Q 1r, thene i.s m vlrtuaet price vecton ,r, çrhich corne$ponds to the observed veçton azt and which êxplains the opbimol level of unconstrained netput*r"irr*., the quasi fixity of faectors. First, $olvins (4.A b) for obtain r \+' 4 ç) Tor '2, end using (a.a), we ïn (4,") it Çên be checked thmt if A = ï es input constneints f;he finst r:ênt ôf equation (ô.X) and actual mabcFres opb j,maI path. $hort*run, intenim price elasticlties of unc.nsbrained 9.,.,d Qr côn be (4"7) in a simllan ç,,ây to (4.S)" in aebsence of is netrieved and l<rng*run derived fnôm

Equations (a"a) ond ('/+'7) provide anmrvtical fonms which ûre esbimeble with t>nopen specification of the errclr tenms, ïb cen be seen that in ('*'z) tw. varlabres ep,,emr in simurtaneousry, namery the obsenved quantities of the quasi*fixed inputs mnd their menkeb rentar pnices, whlre in most ec.nometric work of estirnetion af rrro'Jucbion technorogy end supprv ne$pon$e b/e f ind erthen pnices ôr quantities of goods but not both. This is neces$erv here a.$ it fip,'eens creanry thab observed guêntities are neither in shont*rLJn non r.ng*run equiribnium but convenging towar"d the ratter, Cleerrly (4"7) shows thmt by fmiling bo specj.fy the netpu.l- interacbl''ns createql bv the quasi-flxi.ties in the estimated niocrer, thene is hardrv a chence to obbain consistent estimmtes of.short on '0ng*nun nesponse ôr of technical change biases" These r)anameters depend genuinely on tl-re speed of adJustment ancj there is no wav to speak ab'ut meçnitude .f eraesticities without a bime fnmme in mf.ncl es j.t is wel. I known. As fon thre technology aend panticutaerl^v for inp'ut*output substituti.on, cr:mpl.ementaeri.tv, nonmality re. Iaetj.,rnsl-r j.ps, ttre.speecl of eiqJjustnr*rrt aend lher^efore the, b ime f rame is e"i.i^so m genuine el.eme.nt r:f inf ,:rmmt i.on bo Lie specified cleaerIy" LJhen thene are sbrict ly exogenous quant ib ie s co.(ou aend/or input quotas) the moder stnucture has to be chaenged in f ollc,wing wây. In fr f irst step, the Hessian matnix j.n (4, 1) modîf ied usins equaebion (e" f n) in order to tmke j.nto erccount neh, consbrainbso i"e,. the optimaet oîr, ola ane """or*ionaet ûn i"evel. of producbion quotas 1o,." the case where A j.n (4"1j.)"

A numerical ill^ustnation

The pnoduction sbnuctune of the EEc agricu"l"tunmr sector is f insb summanized bv e pnice etasticitv nratni.x, pnesentecr i.n tebte 5'r^" rn .rden to ilrustnate the qumritaetive and QUârrtitiativç rerevaence af the foregoing anarysis, ôonsider the fotrowlng numenicar exampre" These erasticiti.esn corresp.ncr to the l.onçr*"run Manshatliaen equilibrium where alI choice variables, except taend, are penmitted to adjust optimaelIy. $even outputs, five var.iaebIe inputs ancr two quasi*fixed inputs are inclucled: the erasticiti.es ane denived form the Iitenaetune es far as rragnitu.e is Èoncernecl but theoreticar constraints (hc.,mogeneitv of deçree *ero with nespect to priceso svmmebr'v .f the Hessian ma.bni.x i âre imposed to impnove consistencv {Mahé, Tavêra. ïr.chet, r^ggg ) (7). Gross complernenbarity between outputs and between inputs pnevail except for certain peirs of netputs ,; .,rains*G.U ; ,grairts*sLrgar i caekes*sugar anr, cakes ( use,J as an input )other inrruts "

Funbhermor.e negressive nelationships between inputs oncj outputs nre ruled out. TebIe S.Z a) shows the compensêted output .sLlppl.y eresticities which are denived from tebte (5. 1 ) by usins expressi'on (3' 4) where ârt i'npubs êns f ixed aenci erlr output voniable' As exrrecbedr {9r'1d because each pair.of outputs i.s simirar with nesrrect to alI inputs, in the i.ong nLin uncclnstnmined ôase, these Hicksiaen suppIy eIaesticities ane smallen than their long*run Mansharrimn counterpaerts : the conbnactic,n effect i.s ar.ways negative'and range enough so that outputs ane now neb substitutes (see bable S,,2 b) ), $imil.arly, Çompensatecl inrrub dernand elaestici.ties ar.e rrresented in tabl,* S" S ae) ) ; they co.nesponcl tc: the cô$e wh*re aIJ. ,rutrruls frre constneined by pnOcjr-lctj.,rn quotas" $imiraritv pnopenties,f sêc:h pair ûf inputs witr^r n*spect to arl outputs imply bhait the Hickslmn demand elasbiciti.e,s ane Lorger in algebraic value than their Marshallian counberpants" Agai.n, note that the ffagnibude of the conbraction effect (tanre 5.2 b)) is lar'ge enough $o thaeb arr i.nputs aere now rrst substitutes.

Iinsent tab].es S"1o S"? mncj S"Jl Ïhe short*nun Ylarshalliaen price erasticities are pn'vided i.n tabre 5' 4" Thus tebte 5" 4 rrn'vicies inf onrnati.n nbout subsbitutions and comprementarities aemong netr:ut rrairs at the short_run ryanshae1r ian equi l ibrium o that is f on fr vear. Ixemiriing Lhe on*diagonae1 erements of tebre 5. 4 shows tharL the [.e chate.]. ien, s principre appries bub shont*run elaesticities ane nob very different fnom th*in l.ong*run Mansheltian countenpants irr table 5" 1" rL is arso w'rth notit'tg thab some regnessive rerationships nou appeanr tr€r*ticulanly berçreen gnains. cakes anci cerar. substi'tutes considened i's outputs ar ms inputs" Anothren nataebLe point i's th;st $ome outputs fine notiJ subst itutarcr.e ; as an exampre beefo F*nk an'J rroultny anc, mi. lk ane nou gross sl-ro.t*nun sub,st j,tutes with gnaeins. Af cour$e f arm caepibal. aend j abon ôpp,eaer bo be the ress e'astic fact*rs with uncompensmLed sh.rt*run price elasticibies of *û,1tA ancj *O,OgJ nespectively"

Iinsent tab]e S.6l ') a- The simpliff.ed cjynamf.c fnamewor.k r:noposed j.rr sectj.crrr (+ ol^l.ows to constnuct this Marsharrimn pn'ce erasbicitv matnix not onry fon one yean but arso for twcl , thnee, i.,, n fagged ysers. ïhr is dvnamJ'cs is ilrustneted bv figure 5.1 which show thab the expansion effect due to the gnadual md_iusbmenb of the quasi*fixed factors to their Iong*run equilibni.um levels is mone impontant fon cross effects than fon oun effects" or,rn pnice erasticiLi.es, i.n mbsc'lute varue': ô,..r incneasing functir:ns af Lime ê9 ae consequence of bhe Le chaterien's pninci.rrre but the firâsnitude of the ef f ect is smmrl " Tt is wonth menti*nning that tFris f ni.r1y urrnotic,ed nesurL is due to the pattern of evolution ôf cross effects clver the time I'ag sbnuctune" Fon or6rn suppry price elesticities es aen exempre., cnoss price elasticities bebween outp,uts increase a tot unclen similarity, but the cross effects of j.nrrut pnices on outp:ut is cut draesticarrv as werr" Thenef.re Le chaterier,s effect on own price, eraesticities which is the'net effecb.f the bwo crue to h*mogeneity of degree zen€), has to be fainly smaelL cnoss erasticities_ / s'r{)r I compaered to the ef f ecl on CONCLUSICIN Iinsert f isure S" ]"1

The main tmplications af sbnict quotas on input nabioning is to unconstnained supply and derived demand fixibies Iike production alten the behaevj.on of functions bo pnices, in s f airrv F'redi.c'tâbr.e waev" under the riim:-..l.mni.ty concji.t ion wh i.ch i.s weaken then sekeios normarity condition bui: lmpliecj Lrv it, inpt"rts and outputs wiII tend to become consbraints or fixity or "r__r_;_:::: more substiturabre when or outputs, ' I {ar L/ .'r quasi*f ixity are imposed on .some i.nputs

The r:ross comrnoclj.ty relationships i, e, complementanity substitutabilifv, which âre often considersd a$ basic feeltLlres af the undenlying technolosyn cmn therefone be seûrr to depen,J hichly on the econontic envi'nonmettt and crn the tirne per$pecbive wfrere. they ane observe'd" rt rdas shown thaeb uncler th* simi rarit the f irm unden quanrirv consbnainrs and/or in ;;; ;;:"::ïj:-;r;; tend to exl'ribit r'ore subsbitutebiritv b,oth êmcln' inputs anc.l eâmong outputs" t,^en time is alr^.wed fon nesponse) mnqJ when quentity raetj.oning is relaxed, goods tend tc, become mone cc,mplements- ïhe obsenvaeble technology is thenefore aeIways in a ternrrorery staege betr'reen short and l.ang*nun aenr, cannot be cherecterizecl with.ut maeking a cleaer nefenence to ex ist ing stricb on quaesi. fixities crr ta bf-re tinre.ïfrs after the shock affecting exôgerrous v*niables of the firm,s envinonment" ïn that persF:ective, it is crear bhat conce.pb ôf joi.ntrles.s, technical prognesss biases, economies of scope must mlso the looke,J at witl-r a ref erence to â t ime f rern* and to e .egree r:f c.nsrraining environment" ïhe wicrespread u.5e af ftexibre forms fon the technol.gv in emtri'icaer :itudies whene *et ime*t i.on is perf .r.med without dvnmmi'cs' is therefone quit* €.xpc,$ed to capturing i:in undeterminare concept of technoroç,v with resrrect to time frame, r"'rith an unc,efinecl mix of technorcigi.caJ. consbr.aints ôrrd s'eed of adiusbment " The condition embiguc.tus effects least when ib is of similarity whicl_r is usefuj. irr onder to aevoid of rationing, does not seem too demanding at cjefined on bhe long*run unconsbnainecj suppfy svstem' rt shourd be venifled i.n many situations whe.e the aeJgregation sbrucbure QVen outputs and rnputs is canried with a fairly homogenous degnee of detair. creanry, when very. cl*sery neroted outputs êre kepb in pmner tel. with hishry agçnege.ïted gnoup$, lhen substibutability and complementarj.ty among j.nputs on ::::i:;""':,: jrî::: in rhe rons*nun and rhe srmirmrjry Fnom m poli'cv point 0f vi.ew the pneceecji.ng onaeLvsis su,ggests thab the effi.ciency r:f puh,.Ii.c int*r-ventio. wi.r1 be rnor.e l.ikely to run into rribfelrs i'n the pnes4)nc8,,f strict on crl.,aesi*fixi.tv cf qusntities" The effect of consbraints is to "*o,r**'a'nu nesponse of the svstem to bhe tnadit ionnl price incent i.v+s" Bv bhe L,* chateri*r's effect and the tend*ncv towand subsbitutaebi.ritv and i'nf erionitv o unconstnained ôutputs react ress to bhei.n clh,n Dri.ces, l"ess negmtively to the prices of inputs bub less trositively bo the prices 'rf other outpubs" ïr-rs supprv svstem cour-d tr-ren be broaec*v charaectenized by ae small.er neaction to its envinonnernent aencj e3 hishen degree of inter'ar i.nteraecti.on" poricy jnstr.uments r^.rrrich mppry to' savo onry one outpub ûr one input r 8,.€ rnore rikely tc: induce spilr*over ef f ects on other goods. The shi.f t of the bucJget rrroblem of the Hc frc,m the çnain to the oi.l.seed s.ector. in the recenb vaars is ê case in point " ït is the s,eme fûr the impr icab ion 'cf e f mst technicar ,,nogres,s on ae constraeined output i::":^:"ffJ.i:;i:r"" The mbove anarvsis ars. susgests thmt bhe issue of poricy refonm' r'n ts eecton rike ûgricurbune wlth decrinlng .utrets and steady pece of technicml changer adJueting downu/and rrroduetion cepebrrJ'tres nalses .specific pnobrems, becâuse internel cnoss rerations mne exacerbeted by the qua$i*fr.xities of fôctons mnd incneasingly of sôme product$. (2, Simi tari ty i s defined only one expreêBIon i e tf t" _,rts not the case if ot' ll (v).

Natural ly an well with the slopes ra s I opes of t.he pos i t i ve than of the netputs which are on the basi s of the elasticl tles because enough to un one,ourd ".."."."'.iiii JJJ'T,""lnoo".lJiiïil; This comparative statics also shows that ;::;r"".t"oîtr"."

"to outputs are erfective, the bi a s on the on the uncô constrained,l;:l:t""j,.,o "":;Jj".;:: -n nÊt 0,1J9 -0,07e 0 .2t+4 -i . irz 0,0û0 0. û30 0. i6E -'r.215 0,273 -û.387 0.30,r -0, ?4û a .267 -a , fi7 1.027 -0.096 0.267 -0.9û0 0.266 -0.030 0.302 ,0.0i9 0.266 -0.121 0 . t26 -0 . 12tt 0.652 -0.216 0.829 -0.225 -0, Ji0 -d.?58 _i.7i9 -0.J64 -t,?i-9 -0. t61 0,0û0 0, c00 û.0ic -û.418 -0,4i5 -1.079 -0.,19i -c,3E6 _0. i:9 -0.51i -0,556 _1.t?9 -0.179 -0.29i _[. "a9g -0,332 -0, J39 -0,71e -0,266 -0, i06 _0.539 -0.268 -0.302 _0, 5J9 -0.2e7 -û. J02 _a.667 -0,268 -0. i02 _0.5Je -0 , [6[ -0, 302 _0. 5.]9 -0.157 -1.044 _0. J8S -0.!89 -0,431 _1,659 -0,099 -0,161 -0.09{ _0.lei -0.041 -0.043 _0.031 -0.tea 0.005 0.006 0,007 -0.t09 0.006 0.006 0.008 -0.0ôe 0,01ô 0.01ô _0.009 _0.06e -0.6e6 -0.056 0.0{6 _0,065 -0.0s7 -0.813 -0,07e -0.063 0.034 -0.054 _0,399 _0.065 -0.000 -0.00ô _0.011 _0.e6a -0.006 -0.006 -0,008 _0.0{6 -0.003 -0,00{ -0.m{ _0.0e1

  unctions of netputs are c'btainerj f nqm HolelI{ng's Lemmd, (a"s) a) n

  are Lhe çracjients of the profit function with

  and tro wfrerÉ. dro and doo are relatecl b'y equabion (2,,8) which clef ines ,o implicitelv.The complete svstem of supÊ,Iv re:$r)onse can then h:e writben in terms of the Jacobian Of the unconstrairre'J prof it functi,:n. .d ab thq point ,Jan be sç:Ivecl for the acLumL r^r i. t l-r resrrect t ci t Ire rrew set l^rat the cross r:urtiaeI cleri.vertives of (vro oo) j.,E":" (vr, ,o)-Tl^ren (2"9) encl*genous vanimbtes i"*" (.clcr, clpoi of exo(Jenous ene.Ë wl'rich $re tclv r, O" ) , thaet is, clropping the srguments in the prof i.t f unct icn,

  i r nrs the vectons crf pencenteÇe changes in unconsbnaeined output and ^ tnput quênt{bies wlbh vecrors or pnice chanees i r end , t *,..,o ti* ;;j. ;ïriïï"i;: technical pnogness biases expressed in percentege terms ûs wett, ïo keep the analytics .sirnple only one outpub guoto end one f i xed faecton are maintained. io^:* the pencentage chanse of the quotae with shadow price po end * o, "o *.* ** equivarenb notabions for fixed inputs, *o ancJ io ane the rêbe of technical chançe bias on fixed quaentities" t3"s) has to Lre sorved for the vect.r t;r, oo, "7 ^O-x ' o J in berms of rhe vector t;t, "o, "rsbrict convexity of the production seb, hre know thab is non singular and j,ts determinant G F is nesmbive (3).

  nvest isaet e only the o o crôss pr i ce ef f ect s r v/ê x O" Then bhe percentage be expnessed a$ follows : -Glo (*uoo Eol* + Hlo (*roo oo1 + Goo + [Hlt* G10 (*noo Fol* + Hlo (-Ëoo F.tot ,"

  t"thich emounts bhe I mst r*oçr, to aessuming e x r:re ss i on.s bhat (.b, 4 ) (3" 6.a) (3. sa) "t = lrtt * '-ro (Eoo)*r *orl ir L*J + [rtt -Elo (Eoo) *t FrJ;,

  p(J$ l^ E l. Ve numbers d , and d, n*i' -;ï ,î.'::::.::î;_:;.:":|*ï**** bhe own price ef f ecr is exisr so rhab I 3.]l , i-il| ""*'d': 1"/a and d, x Ll(a+p)

  equilibrium model which corresponc,s to costless aend imme.c,iobe ad.iustment to neç\, pnices, Assuming linearity, ustanding for the intencepb, ând a random ennor tenm" îhe Ë/artitionnecl the Hessian of the unconstnaine,J pnûfit ," i r, $ € ( j", Z) I 1 nefens to â veriable r netpubn Z to â quflsi *fixed netpub.1.9

  ixed' i.ng:ut. The octuml levels of quasi*f ixed weighbed nverffige of the optimal levels fit time t and Ievels at time t*1, t^rhene the edJustment metrices $erve ê$ weishts" Through substitution, we +ôn see (a"a) cmn h:e rewritten ê$ ; of bhe adjusbment scheme nequires thaeb chanecberlstic no*ts *f the metrix (ï fu be within the circre'

  step equêb j.ons similen to {(+. (+) and (tn.Z) ere observed ezL, using the nelevant partial derivabives such fi wçy that stnict quotae ôre noh, êne now the nesult of a pnocess genenaeted ës in expression (&.2), $olvins (a. fn) aend the matrix equablon (4" S) f or DzL, usi.ng {a.10) (.4-g) sives bhe genenml equebion for qrbserved ert quotas {. "no quasi*fixed feclons ez.,

  Longr-run Marshallian price el-asticities for EEc 6RA CAK GsU BET P&P I1IK SUG ROA CTR CAK GsU OTH OIC

  Figure 5 grains

  in Ec is likery ro show due ro rhe c{uorae c\n

	pol i cy soj"ve them, asriculture problems of more IikeIy	refonms will tend to shift probrems nather bhan to if they ,Jo not tackle the whole sector ot once. ïn whe.n exi.sting distonsions ane Ierçe and wicJespreaed, ;ï:"j.-.t rimitabions çr panbiar por.icy nerorms ane

Table thi .

 thi nd $imi. larnity of tt^ro netputs alternat ive f onmr_rl.at ions " al ternative formulatione of end I, wi.th nErs.Ë)ect to a

	ct
	Qo
	the pairwlse	sinilarity
	r{.r.t.

à ! Tabl_e 5.2. Lo and " ";JJo";iiI;::"il:::, ;;TFl:::"" u . supply price elasticities u, d e rn a n d p r i c e e I a s r i c i r i e s -0.07s 0.000 -0.110 -0.003 -0.069 -0.002 -0.10P -0.003 -0.eô8 -0.000 -0.1?9 -0.003 -0.045 -0.001 -0.0{4 -0.001 -0.0{7 -0.001 -0.0e9 -0.001 0.066 0.00e 0.0e8 0.001 0,0ae 0.001 -0.060 -0.e3ô 0.0e8 -0.063 -0. t09 0.019 0.000 0.000 0.000 . -0.0e4 -0.eoe _0.054 -0.016 -0.154 -0.6ôe -0.0e0 -0.3e8 _0.05? 0.895 -0.1ô{ 0.019 -0.0e1 0.6e0 0.0e1 -0.007 -0.060 -0.t04 -0.007 -0.059 0.065 -0.00ô -0,063 0.066 -0.007 -0.059 _0.0e6 0.01{ û.101 -0.0e9 0.006 0.065 -0.oee 0.006 0.0{l -0.011 -0.0e7 -0,036 -0.0eô -0,0{3 0.000 0.000 -0.0{e -0.05,1 -0.039 -0.0J6 -0.056 -0.05,,1 -0.0e9 -0.0{5 -0.031 -0.0J6 -0.031 -0.0e? -0.030 -0,0e? -0.030 -0.03e -0.030 -0.0e7 -0,030 -0.0a7 -0.101 -0.03!l -0.0eÊ -0.0t3 0.008 0.008 0.006 _0.toe 0.005 0.006 0.007 _0.103 0.000 0.000 0.000 0.000


Introduction

.h" ";o":::iÏ^i: Greek ravthol0gv Europr es of Asia and serrr-, -î -lrePe ldas a phenicia nice srorx carries .r" ";i;j;: ::::esrern peninsulan princess kidnapped on nirv. First rhere is the îÏl:":: ff':ro Èhe history Jt.;n;.ïïï;#" fasclnaÈ1 a r e " ", o"l" j""ji:'ïjïÏî ",1Ï" î' " di e s'È rre "' t'iï"ï "'". #l cian, and as ls well urror, ot the contin"' *"n regard to'"tttu beauty 'r even the He re i s r he s e c o na "y,uo r 1,,ï ï.. ".,;J ;î: ::ii;Ïlif ::"'ï"îjJ:iir," the earry enthousienr ," an.",.-:=r_:',:. merchants have take gain or lo 'tre €Vsflday concerns , "e from anv actitreaten bv tn" ":-ttÏ"t:"";Ji;n over Europe' so that i s rrorr any acËion to be taken in rhe comm.p o"ri"oiï. who is going ro .Ihe present circonstances moL^ r _ ill: ï:ï,::.ïï":;;;' ";:: i:ï""urarlY in'ûere reforning rhe cAp has been 6tate of affalr,tt"" for chan'"''"':tl:ïîÏ:ï:

:J: ï,H ffi ï:: " J:" :*#"'* i:". :ï î * ï ï" ï"':-, *: " " should evolve in accord"o". îlir: ï"re-Is no wonder whv Ee of timesr feeding prosrans and econonic policrtttn a changint ";;; ï:: farm policies ï,:Jî ;:;;î:: *.,;ïï;"-,.*;ïï ïï:*"n, i farm lAp adiusrnenrs umstances' *; ;"";t:i*;ï::"

In the comnupig, circles cornerstone of the Europu", "' lt is custonary to talk about t ir is nor a ";":;;,-":'::"": conmunitv, but sone .;;" î *TkTîï',11;:,'iï:;:Tj *x1ine analvs,s have wondered w,re,rrer rn secrlon rr , orher ,,* o.ir'";:"{::iïii'ï:::dand problems which developner." ";":;"Ïfftrï the present dtffrcr will 0""' *t'weaknesses of the :ïïï".nll'" sec'Èion "" î"ïïÏi Ïï ï':; ;lir'tt"#"'ï:""' rhe nain drlving i::ïî:ï:,-t" rerrns or rons'Ï"Tr;Ï.ri"ïï'" nade ar rhe tlkery ro be. The naln rhen" n"'t try to guess n"r *',n"i.;rFlnally recarllng r want to thank p' Ralnellt for hrs co'npents and 2.

In this paper I an supposed to reflect a French polnt of vlew. Such an ;::;Jff."i;lrî:;ï;:"*.'î'" nor easv to ae*,,e.';;';;,| """"" tr," rnterest. Nevertheress, there ,"u" t believe, turned agal'st it re reaaons behlnd ;":r":^:^-:--"" own long run France ar sone major srases or the EEc lire, ,r:Jïiïr"rïJï:'ïJ"r".::"" * modernlzation of French agriculture and its pervasive heterogenelty.

I. The CÂp at the Cross Roads ?

Although the adjustment of the cAp has been a continuing process over time, there is little doubt that current circumstances are special rn the sense they nake signlficant changes inevitable. the flrst pressure ls the budget, a synthetic indicator of the adverse effects of changlng env{ronnnenr. or "o.rrl"""r"":.::-", ot. ill adapted previous policies ro a the heart of the farm probr.rt"u structural adjustrnent to economic growËh is at ::::::: îi . J-ïl*i",ï'# 'r i# *î: ï.ïÏ* : ï: : ::1 l+'.;., r H: ;::i";ï:'J"":.J:".n" difficult to reach, because interests of social at the EEc level where rhey becor. ;;r;^--;':lt groups find a nationar vehlcre than anv orher policy, """ n"roif,"r::j*_"ï."ttttts. No wonder rhar cAp, less even solve with economjc ratlonale nany of the probrems imbedded in its features when ec work turn the slgnals on the red. tlon.

Spendlng on narket reglmes has been lncreasing sreadlly over tLme. Between L974 -1979 the average annual-growth rare rras 27 i(, tt feLL sharply to 4 j( Ln 1980 and 1'981, but rose faster agaln tn 1982 and 1983 (LL % and 28 Z). Acrually the relief on the budget tn 1980/81 was due to world market prlces boom, to whlch the council of mlnisters reacted quickJ.y by relaxing the downward pre6sure on prices. After an average decrease Ln real terns of 2 "l fron 1977 /78 to 1980/81 they were raised by 0.9, 3.2, 0.6 7. In the rhree following crop years (1). After the soaring expenditures of 1982 and 1983 where the ceillng on the burdget vas hit, price fixation return to the "prudent" doctrine with -2rB and -3,2 in the crop-year 1984/tgBS and t9B5/86.

These developnents lllustrate two main points (t) that price increases do not wait long before bearl.ng on the expenditures, (ii) that council of ministers tend to react rnainly to the budget pressure when it. eomes to deciding on prices. llany forces have contributed over the past ten years to worsen the budget situatlon' First EEC agriculture has been so successfull on the technological side that It has become a structural net exporter of staple connodlties (grain, nilk, beef, poultry, sugar...). While protection used to bring funds through the Levies when the EEC was essentially an importer, now there i6 a cost to the budget to be added to the consumer cost whLch existed before, Naturally it ls not random lf (wlth the exceptlon of poultry) the conmoditles whlch EEC has ln surplus, are also those hlghly protected with respect to world prl.ces, and therefore the most costly too ln export reÊtitutlons or Lntenentlon buying. Table 2 shows that the share of tarlfs recelpts Ln the flnanclal reeources has been reduced to "la peau de chagrin". Lack of denand due to Èhe econonlc slow down has reduced the export demand and depressed I'orld market priees. After the oil crisis the strong dollar has made this problem worse through the debt situation of nany developing countries who are stlll najor lmporters of staple temperate zone conmodities.

The overvalued dollar had however a counteracting effect by weakening the conpetltiveness of US agricultural exports and the consequent low world and domestic US prices in dollars. Converted into ecus world prices have turned high enough to brlng restituÈions to a very low level on grains.

The trade poticy has also steadily cont,ributed to the deterioration of the budget situation through the prollferation of exception rules to Èhe Coromon tariff i.e the principle of "Communlty preference". The high protection on major teuperate agricultural products installed in the early 60rs has Put the CAP rules under pressure fron Èhe outside and fron the inside of an evol-ving EC, particularly with the first enlargement. Discontent with the high protection, countries have obtained special rights of entry at lohter tarlff rates or sogetimes without protection (ACP sugar quoÈa, beef quotast new Zealand butter and sheep exports to Britain, consolidated zero tarif on soja and cornfeed, low tariff on cassava etc). All these exceptions to the conmon rules have aggravated the financlal situation by choking the resources and by substituting for domestic products on the internal mrrket and therefore requlring an equivalent auount of funding for exPorts.

The econornic slack also contributed to the budget shortage by the poor tax yield, ad the corapetltion for public funds needed to alleviate adjustment costs or pay gnemployruent compensatlon ln the overall economy. Agriculture has an increasingly dlfflcult tlne extractln8 an lncreelng share of public rêsourcês. on the budget slde we can draw two lessons and a questlon (i) there is now a atructural export sltuatlon whlch will naintaln the Pressure ; (ff) councll of l,linlEters aeen to be sensltlve rnalnly to the budget contraLntsr the more Êo as sor1e countriee use thls devlce as a IJay to Pronote changes ln the dlrection they want rhe CAp to move (e.g.uK), Now, ls lt llkely thet thls pressure wtLl be able to lnltlate reforros with lastlng effects ln terms of adju8tlng to underlylng economlc forces ? In "Docunent, 500*r the commlsslon mekes lt clear that "the adaptation of the CAP should not be made according to exclusive budgetary crlteria, but rather with the ain of ful-filling the fundamental- objectives in the nost cost-effective rday". The intention is farslghted but the decision oaking process of the EEC does noÈ aeem to be so fond of economic rat ionale.

The farn problen

A sluggish economy does not have on farm pollcy the only adverse effect of naking funds more scarce, it.s main impact is probably elsewhere. It lies in the too suall attraetion of resources out of the farm sector and in the adverse âvolution of the internal terms of trade between agriculture and the industrial inputs which it. uses more and more. The history of economic growth involves the classical outmlgraÈion of farm labor to!ûards urban jobs. Clearly, in the recent decade the job market in western Europe has been so bad as to slow down signlficantl-y the decrease of farro population. In the sixties the average annual rate in France was 4r2 7", in the late seventies it was less than 3 Z. On the other hand the sensitivity of farm incomes to the industrial level of activity and prices has now increased drasticly. Internediate inPuts used to aecount for barely 20 7. of the gross income farn in the lates 50rs in France it ls now about half. Rapid inflation has occured after 1975 in several member states (Francet Itaty...) and has badly hurt agrlcultural incomes (fig'l) The average farm situation has deteriorated considerably ln relative terms and is characterized by a J.ong period of absolute stagnatlon. CAP itself has contributed to aS,gravate the sltuation in Eome caÊes through the MCA sy6teu. France for example has conslstentty held back lts own prLce increases whtch would have normally followed the nany devaluatlons slnce L969. In such macroeconomic circumstances, which have hurt agriculture in most lrestern countries earlier or later, through external monetary effects (US) or through Lnternal terms of trade, it i6 not easy for the poliey makers to state freely that Eeasures should be taken to solve the long run Problems disregarding the danaging short run effects on the farm sêctor. It would be erroneous to sttck to a vlers of the nlnist,ers of agrlculture forgeting about economlc forces and leaning weakly under the weight of the farm lobby. Of course there is some of that but the Eolution of the farn problen is noÈ that easy.

Here one rnay rrant to sort out trdo kinds of reasons for the dtfftculties' First is the economic and sociaL sltuation of farmers, second is the publlc oplnlon and the political game. In most lte8tern countries lncone Per labor uoit Ls usually lower Èhan what conparable Jobs provlde' Besides there is a tremendous inequallty between Personsr reglons, nations' So the lmage of the farmers J-iving ln sparsely populated area, without alternatlve Job opportunltles, sometLmes on snall farn size is a wldespread reality' The drana ls that farrn pollcy tools are not able to solve the problems of poor reglons' whlle two x0uch ls expected fron then slnce other (reglonaL) po11c1e8 are usually under-d evelopped . / roo Under these circumstances lowering prices ls going to hurt badly the snall poor farmer who cannot really move to another job. But because agriculture is so heterogeneous in Dost countries, large farmers and better skilled farmersr maÏ mnke a lot of rnoney and buy more eguipment to increase yields in the most productive areas. Price discrimination is not easy to enforce and has been barred ln EEC when France mnde some proposals in that dlrection. Then one is left with so called EÈructural aids, direct income paylnents or various less favored regions premiums (beef caËtle, sheep...), but direct aids are well known to be more costly than are price pollcies since the burden is shifted away fron the consumer to the budget. Under the present circuostances this does not appear as an attractive avenue to solve farm problems. In any case farmers dontt like direct paynents and one would have to find other justlficatlons like landscape keeping to appropriate more money for the poor agricultural regions. Moreover, there is more talk about the so .called Êtructural policy neasures than funds in the orientatlon section of the European budget (less than 5 Z in 1985)' so it may not come as a surprise that due to heterogeneous sector and unlform prieing, CAp ls viewed by nany as increaslng the income disparitles between farms and regions, without solving the poor farmer problem. In many cases the same could be said about most farm programs which strive to suPPort incomes ln developped countries.

The objective nqedlocre position of many fanners ls not enough to explain why a sector with a snall and decreaslng share of enployment and production can attract such a large share of publlc funds. First the period of food shortage, particularLy the last war have left deeply rooted bad memories in many European countries. This is partlculaly Èrue for Gernany. The need for food security is therefore vLewed as an important reason to provide farmers with protection froro world market which are known to be lnstable and more or less unreliable. Even ln Brltain traditlonnally free trade nLnded, auPPort was provided to agrlculture before jolning the Common market, of course to a lesser extent than on the contlnent. In Frarlce, there ls a Etrong traditlon for protectlonnism ever el'nce the ntddle of the ISth century. The tradltlon of agrlcultural protectlon shared by Gernany and France will lnevltably domlnate the constructlon of the CAP and soon be at the heart of the dtfftcut tles of the cuetoms unlon'

The European Problen

The CAP ls not Just another farn policy ln a particular developped country or region. Ifs supranational nature lnplies 6ome specific features which are at the core of the present problems. There seema to be a fragile balance between integrating and nat,ionalistic driving forces' Three aspects are worth euphasizing here : (f) the lnpllcation of financial responsibility (ii) ttre institutional framework of the decision making process' (iii) the noonetary issue and its consequences' -The principle of flnancial responsibllity Thecustomsunionandcommunitypreferenceprinciplescouldnothave survlved long (if they actually did so) lf the financial resources and spending had been kept at the national levels. The reason is that, under national financing, an lmporting country would have been better off buying on the world market and keeping the tariff proceeds within the national budget' than buy the same collmodities ln the partner country at a higher price' Through the custom union and the financial responsabllity, intra communlty trade has developped and signiflcant balance of payments transfers have taken place. The financial transfers appearlng in the accounts were lDore or less recognized from the beginning but the issue has been studied more in depth over the last ten years particularly in countries who are significant losers (Koester, Rollo, Buckwell and al' "')' TheveryspecificnatureofCAPhasproducedadivergencebetweennational interests and community int'erests. Because farm prices in EC are slgnificantly above world prices, the shadow price of agrlcultural products is the world price for the cornmunity as a whole, but nearly the conmon EEC price for a particular country. This is an advantage for a net exPorterr it is a burden for a net lmporter. Therefore the CAP provides a device for an exportlng country to externali ze patt of the budget and soclal costs of lts farnn programs on the partner countrles. The incentLve to refraln from too Senerous price increases ls therefore wealaened at the connunity Ievel. As an exanple lt ls unllkely that France, a large graln exporter could have supported graln prlces as the Ec dld' slnce the budget cost would have qulckly appeared unbearable ' Due to the relatlvely large dlscrepancy between world and EEC prLces for maJor comodltles large exporters can galn a lot (France) but the J.argest galners ln relatlve terms are the small countrleÊ wlth a large exportlng aector (e'g' IRL' NL' DK)' As an lllustratlon the economlc advantage that lreland has been able to extract fron the CAp has been,so large (8 i( of. the GNP in 1984 -Buckwell et al.r) most of the tlme, that not surprisingly 11ttle conplalnt about the "often mentlonned cAP lnefflclencies and absurdities" comes frorn Ëhat side. Table 3. Marginal balance of paynents transfers between states resulting frorn increase of I % of all guaranteed prlces (rnillions eeus, base year Source : I,i0REDDU (1984, p.37), Product lncluded: grains, oilseeds, ltranioc' nilk, beef, pork and poultry, sugar, overall' FEOGA spending increases bY 129 rnillion êcu.

Quite different is the wind cornlng frorn a sinllar but a bit northern direction. Britain was about half self sufficient when she joined the common markeÈ and one may understand Èhat wlth such a huge cost in terms of the brdget and the balance of paynents, she could not quite heartedly accept the rules of the gane, even if she had to 8ay so in order to get in. As ls well knom after a long lasting struggle, Britaints comPensation probLen trtas eventually solved in the Fontalnebleau summit last year. The British have been good at keeping a pressure on their Partners by blocking as far as IJas seen politically aeceptable the working of the CAP, while "taking the picking" when they could (1)' This is just one example of the natural tendancy for countrl'es who considered they did not receive a fair return fron the budget to take advantage of a particular deal to reaP sone benefits through various derogations to the conmon principles. "The cAP has been cluttered with nunerous derogations and with a variety of special aids which now accounts for a large Part of the cost of t,he cAP" (ÎRACT, 1984). From the reduced J-evy on malze long granted to Italy or the New Zealand butter quota' to the most recent VAT rebate provlded to the German farmers and the generous rnilk quota given to Ireland, the CAP has taken an overdose of complex and costly regulatlons and speclal regimes for some conntrles. The reinforcement of suPPort for Mediterranean produets and the recent pll,l (Integrated Medlterranean Prograns) have slgnlficantly reetored the balance of the CAp towards the "South" of Europe whlch had prevlously tnore to lose than galn fron the better regines provlded to northern commodltle6' Italy ls no longer a net flnanclal contrlbutor to the budget and France has become (1) ..wltness the "peart" slaughter premlum for beef, which unleashed a eerles of other epeclal premise ln the beef sector" (Tracy, 1984' P'6)' 10.

one. This ls how the budget has been lnflatlng through a serles of conpromises and packages, that the council of ninisters had to agree upon if declsions to be reached.

-EC decision roaking Process since the basic price suPport mechanism resulÈs in transfers which are not easily accepted, co!ÛPensations are requested on other products or policies and the CAP has a tendancy to spread and to become Inore comPlex and sometimes inconsistent.

Besides this, the working of the council of mlnisters seelDs to have an upward bias in price fixing, so that prices would be on average higher than what any country could afford within a national policy context' Price increases which cope out of the nârathons are usually higher than the commission ProPosals(1)' This outcome does noÈ come uP as such a surprise given the externallzation possibility of costs mentionned above. But there is rnore into Èhat' Since arbttrage takes place at a suPra national level, agriculture ministers tend to conslder their national farmers as theLr constituency, so that grouP interests become national lnterests and the eventual compromise is made on the back of the EC consumer or tax payer who is gtlLl-a rather theoretical concept in the European polittcal Iife. Faru miniSters can therefore externalize as well the political cost of the prlce decisions rshich they would have to bear to some extenÈ ln a national policy context. This view is consistent with the little influence that the COPA (Agricultural union rePreÊentatives) has in Brussels' where the divergence of interests between produeers of different countries is an Lncent.lve to carry the political pressure through natlonal channels l'e' the lllnlsters (Brunter,1.985). In that llght the prlce lncrease requests by the CoPA sound l"lke an lndlcatlon rather than a csrnml issnt from the part of national fannersr organlsatlons (table 4)' 1. M. rRl\CY (1984) shows that the cumulatlve average nomlnal I'ncreaees ln comnon prlces ln ecus since Lg73/74 Ls 202 z conpared to the coromlsslon proPosals tthlch add up to 178 Z (see also 15 "/. LO.6 7. 9.6 "/. 7.7 7. 37, 7.4 7" 3.9 "l 27, 5"1 2.L "/" o% 2.47" 4 "/" 7.9 7" L.3 71 4.8 "l 8r9 7" 15.3 "/. 9.4 "/. 9 "/. : It :has been suggested (e.g. Sienna meuorandun) that the p..ressure should be removed fron the ministers of agricul-ture and that inportant decisions on price guidel-ines or reforn should be dealt with in a wider representation of the interests of the whole soclety. rhis idea is somewhat appealing if the analyses proposed before have some relevance ; sinilarly it could rnnke sense to free ministers from the year to year decision process which forces them away from principles and back to short run intereÊÈs' One could assume that a wider represenÈation of the countries dealing \rith a p1-uriannuaL "agricultural act" could enlarge the space for compromislng to other fields than just the farn Problems. 9i( L2.

Doubts are expressed about the improvemenË that such proposals could brlng about. They were in fact tried ln the European sunnit in Athens in december 1983. Although the agricultural dossier was handed over to a speclal conmittee at the level of Foreign ministers (CoREPER) the outcome r{a6 not a success ; on nilk quota, decisions ldere not made in Athens but by the agrlculture minlsters in the price session of spring 1984, and the British contribution problem had to wait untiL June to get solved in the European Councll of Fontalnebleau. As for pluriannual connitments' the prospect is not so good slnce ministers do take advantage of any opportunlty to pull back fron earlier agreements : the graln guarantee thresholds deeided in 1982/83 did not prevent the German delegation to block a cut back in graln prices at the lasÈ prlce fixlng session tn 1985' May be no such opPortunitytofixpriceeveryyearshouldbeprovidedandtheactual conduct of the markets coul-d be handed over to the conmission, under guidelines provided every three or four years by the council ? But according to M. Tracy a well Positioned observer. "It is not uncomlnon to hear those who are familiar with existing practices adrnit that the council cannot be reformed".

-The green money system trends to favor price increases' Another supranational factor worklng for hlgher prices and spending' arl.ses fron the lnteraction between the European monetary Systern (El"lS) and the CAP. Parity between currencies have changed quite often over Èhe last 15 years due to dlfferent rates of inflatlon between countries' As prlces were set ln a conmon unit of account (now the ECU) natlonal prices should have been adJusted lnnedlately l. ê. upwards (downwards) in weak (strong) currency countries. As lt ls well' known countrles have resLsted and delayed such charrges by resortl.ng to ao caLled "green raÈes" whlch were cl-oser to the ones prevalllng before readJustnent. llonetary conpensatory Amounts (MCAra) were created to malntaln lower prlces ln devaluln8 countrt'es 13.

(negative l'lcAf s) and higher prices in revaluing countrles' Since it was easier pollticalj.y for countries to reduce negatlve l'lCAts whieh meant hlgher prices than for strong currency countries to lower their prices (through small-er positive MCA|s), it has been argued Èhat the flexibil-ity provided by the green rates has lead to a bias for price iucreases in the communiËy' (Tangermann, 1985 ). This bias is quite well documented by the decLslons nade last year at the price fixing session (narch 1984). Although prlces ln ECU were lowered on average by 0.5 percent, when converted into naÈional currencies they $ere up by 3.3 7[ . T:he trick was that, in order to avoid hurting Gernan faruers by lower prices in DM'which would result frou revaluating the DM against the ECU, posiÈive I"lCArs of Gernany Itere converted lnto negative MCArs for all other member countries' This'is equivalent Èo creating a neld greenrDoney revalued by 3.4 % teLative to the old one' Since alt the negative IlCAts lvere immediately canceled, prices uoved uP by the same amount' For the future (the rule is set for three years) thts will force the EEC to rise farn prlces according to thé degree of the strongest currency revaluation' Here is a built-ln mechanisn which works for higher prices and increased expend i tures.

AlI these supra naÈional elements lncluded in the cAP seen to joln their forces toward hlgh level of support and explain to a large extent why it is so dlfficult for the councll' to come uP with a more "Prudent" prlce policyi The conflicts of national int.ere6ts withln the green Europe come on top of the farn problem of severaL mernber countries and explain why it is so hard for the cAP to be reformed ln a way that would sult economic rationale' Rather, Larne political compromises are the likely outcome of forces worklng at alle-viatlng shorÈ run PreBsures whlch are themselves rooted ln delaying adJu8tnents needed ln the Past' 14, II. lbe patnfull lntegration of Europeaa agrl.culture s tbe rlee of natlonallera.

The recent develoPmenÈs in the cAP show how little margin of rnenoeuver decision makers have and how small the possible changes are' The current situation is quite constraining, the more so as the structure of agriculture is qutte different from one country to another' Clearly, this heterogeneity has deep historlcal roots which still fuel the European farm problen in the 2Oth century.

1. Historieal developuent of European Agriculture' Even regarding siiople lndicators like the share of agriculture in the GNP, and in the active population, the member countries in EC appear quite different. only Brit,ain, the Netherlands, Belgiun and to a lesser extent Denmark seem to have a farm sector where labor productivity is similar to the average observed in the overall economy' 6. This situaÈion ls far from belng new and refers back to the economic history of the ISth and 19th century. In 1951 the share of agriculÈure in total employment i8 8ti1L 29 "/" in Francer more than what it was a century before in Britain (22 "/.). The explanation lies in the early developnents of the industriat revolution in Britain in the niddle of the ISth century and the parallel movement of enclosures and farming modernization hthich pronoted a rapid grordth of labor productivity (90 7. over the 18th century, Nlveau)' By that tine French agrlculture was still guite backward and auÈarkic' I'Jeak transportaÈion lnfrastructure and trade restricËions did not stimulate regional specialization and farming meËhods were stagnant' Amovementtowardsfreetradetookplacelntherniddleofthel9th century when the urban-industrial interests in Brltain succeeded in the repeal of the corn Law ( 1846) and when Napoleon III signed the 1860 Anglo French Treaty of commerce ; Napoléon III had to resort to an international treaty (not subjecÈ to parlianent aPProval) to overcome the oppositlon of the parliament to trade liberalization' A sirailar evolution occured for a while in Germany with the treaty between the zollvereln and France en 1862 which was followed by treatles with other countries' overseascoropetltiondevelopedrapidlyoverthesecondhalfofthe century. cheap grains froro the us and to some extent from Russla were increaeingly inported. Rapld Progress took place in transPortation, both ground (The ratlway reached the Great Plains by the 1850ts) and water (with the increaed use of steel in larger ships powered by stean)' so competion became quite threatening for european farmersr ParÈicutarly of arable land'

The European countrLes reacted qulte dlfferently to thls new situatlon' but, everywhere long and flerce battles kept lndustrlal and farn I'nterests grouPs and also parllaments, guite busy. The cont'rast le quite stronS between the defensl.ve reactlon obeenred ln France and Germany, whlle Brltaln, Netherlands and Dennark were mnlnt-y stlcklnS to Free Trade' In Brltaln Èhe urban-industrial interest lras politicall'y more powerfull and kept trade free. At first Britalnrs farm sector suffered from contractlon and the adverse social effects of labor migration which went along' But later on, the large BrlÈish farms were able Èo iuprove labor productivity in a way comparable with other seetors. Denmark responded actively to competition by undertakLng an inport,ant agrarian reforn leading to the rise of a class of lndependent farmers, who speclalized ln livestoek products' A slnilar react.ion occured in Netherlands where duties on grains were rejected as doing no good for agriculÈure; farners reacËed by creating associations Èoimprovethemarketingandprocessingoftheirproductsandt'ook advantages of the training instltutes set uP by go1ennqnt' ln contrast wlth that trend, Germany under Blsnark lncreased protectlon Ln the 18B0rs. After his dlsroissal in 1890 the stream lras reverted to more free trade aE a way to get outLets for industrial exPorts' The violent opposition of the prusslan Junkers led to a considerable debate about relative protectionprovidedtoindusÈryandagriculture.Thefarmlnterests eventually obtained satisfactlon with the tariffs of 1902' In France' the coalitlon betseen the bourgeoisie who wanted protection for industry and the largefarrn-landownersorganlsations(IaSociêtédesAgriculteursde France)r.culminated in the MêIine tariff of 1892 increasing the proteetion for both industry and agrlculture'

Thlsperiodisquitecrucialinthehistoryofeuropeanagriculture'as nuchofthecurrentheterogeneit'yseemstoberootedthere(Tab1e6). whether the main reason for agrlcultural stagnation in France is the protectionnist shelter, the lack of parallel incentive to modernize farningt orthetooslowdevelopmentofindustry,andtheweakpopulationgrowEhwlth the correlatlve sluggish food denoand (RUTTAN), is still an open questlon' This period is in contrast with the 1960r s where atructural pollcles (Pisani laws)andaboomingindustrlallsation,leadtofastehangesinthefann Eect'or. But a lot remains to be done, and even taklng lnto conslderation the soclalhardshlpoffarmlaborerswhichoccuredinbritainoverthe lndustrlal revolution and the 19Èh centuryt many countries whose agrieulture isstil.].tobemodernized,wouldratherhaveltasabadmemoryÈhana6a perpectivetobefacednow,Partlcularlyinaperiodofdepressedeconomy. recalls the fallure of the Green Pool and of the EDC (European Defense Conmunity) and the reluctant attitude of Britain, but the overall inpression stillisthatthemoodwasclear1yinfavoroffairamountof supranationallËy ln Èhe European construction' The founders of the EEC had in nind the eventual objective of a federallEÈ construction' When one looks more closely at the successlve steps leading to the Rome Treaty and the organization of the cAP, the strength of nationalisItr was still qulte vigorous ln the actual cornmunlty life' During the transitional period the Germans who had the highest prices already tried to delay the agreed opening of their food narkeËs to French ancl Dutch produets' although this was the c'ounterpart of the deal made, whieh opened French and other '.

european narket to the strong german industry, In 196]-this conflict prevented a LO "l tariff cuÈ on industrial products which was part of the agreement to "accelerate" narket uniflcatlon, to take place' Clearly the so called "wedding contract" between France and Gernany whLch involved reciprocaL opening of frontiers to trade on industrial products fron Germany to France and on agricultural conmodities ln the other directiont llas hardly viable right from its birth. of course public opinlon ln Germany was ln favor of agricultural suPport for food security, after the painful shortages of the two world wars, which lasted until the ftfttes' Th€ German farmers union have had a rather easy tlme keeping Pressure on polltlcians and minist,ers to get high prices. In France the farners ltere also able to get strong pol-itical support, using the argument' of the poor situation of snall farmers needlng good price to reach reasonnable incones' Agaln the lack of efficlency and the Poor farm structure in both countries rnade diffieult any ÊtrucÈural adJustment, therefore conmon prLces were 6et a level clo6er to the german than to Dutch level. Here is aleo the starting polnt of the coming problens of EEC agriculture' Ln the late slxties dtfflcultles are already there and vlce Presldent ltransholt analysed then ln a famous rePort. He nalnly enphaslzed the need for r-i:i 19.

Etructural adjustDent as the only uay to give sone flexibility to the prlce policy.UnderpoorandheLerogeneousatructurespriceBupPortdidnotsolve theincomeproblenofpoorfarnersbutmadeitimpossibletobalance markets. Surpluses Ltere already seen as Permanent in some products (Wheatt mllkr sugar irls trument t stated.

... ) and the lnPossibilitY to reach both economic and for price PolicY as a unique social objectives, rras elearlY But telling the truÈh to someone who has to die roay not be psychologicallywise.Farmersunionsopposedthe}lansholtplanfronwhich they retained only the need to shrink the resources employed in Èhe sector' Although the French youth branch of farners union (CNJA) had accepted this perspectiveinthesixtiestheydidnotsuPPorttheplanvhentheyhad acquired a doninant role wiÈhin the elder union (the FNSEA)' Debré' prlme minister at the tlme, made the polnt that roay be the analysis was correct' buÈ that it was "politically lrresponsable"' To announce Èo a social grouP thatitsfutureistovitherordesappearisjust..golngbeyondthe threshold of social tolerance" (Petit, 1985)' The plan was dropped as sueh but is was at the origin of the EC socio-structural directives lssued in L972 and L975 ; but the quite scarce resources of the orientation part of the European Fund kept the strucÈural policy probLen.

short from the dimension of the Ifitwasnotposibletoacceleratefarmmodernizationinthebuoyant slxtles wlÈh fast growth, easy money and low unmemploynent' hoç would it be poslble after the oil crisis ? on could argue it seems to me' that a country likeFrancewhoclaimshavirrgnaturalcomparativeadvanÈageandan agricultural vocatlon ("Green ol1") has mlssed the oPportunity that the Europeanconstructionwasofferingtoher.Bybacklngmostofthetinethe Ge:manPressureforhlgherPrlces,particularlyforgralns,insteadof supPortingtheDutchvlewe,Francehasslowlybutsafelycloseddurableand profltabl.e outlets for tts agrlcultural products and rnalnly for crops' zo.

Keeplng grain prlces high looked like a good windfall for a ]-arge exporting country, (it actually provided most of the positlve flnanclal transfert accruingtothiscountry).Butindoingsoitfosteredproductionln supposedly less well endowed partners and' even r^torse' it induced food industry and anlmal feed industry to look for subsËitutes noÈ bound by the generallyhighgrainprotectlon.Thosedidnoth'aitÈoolongtoappearand have now reached quantities of a similar magnitude to EC grain net exports' Thls has been aggravated by the shortsightedness of our negoclators in Èhe GATT who conceeded free entry of soja beans and cakes to get variable levies ongrainsaccept'edbytheUnltedstates.Nowacombinationofcakesand manioc is abre to replace grains in animal feed. oÈher by-products of the food industry have also been able to take advantage of this poor tarlff structure which leads t,o distorsions and clearly is a huge cost on the budget (l"lahé, 1984). This has also created an artifical eornpetitlve advantage in livestock and rnilk production to counEries who have an easy aecess to world rnarkets and an efficient anlnal feed lndustry i'e' the Netherlands and to a lesser extent Gerrnany'

The situation is probabl-y going to get worse for France in the long since renationalizating forces seem to have taken strength over the seventies, first through the treatment given to the Donetary problen and through the ftrst enlargement and its afternath' run The mechanisn of the "green money" ls in fact one more mistake nade by Franee in the european construction, in order to help solving short run problenos, but opening the door to long run drawbacks. The creation of the llCArs rras seen as a mean to deLay adjustnent in farn and food prices ln France in order to refrain from fueling lnflatlonary forces whlch were already at work according to a long-Ilved disease of the french economy' It dld not turn out to be an efficient pollcy to fight lnflation over the ,,roarlng" seventles, but lt provlded a way for strong currency countries tofollowahtghpricepolicy,whlchGernanyandtheNet'herlandshavedone most of the tine. Not only was it a balance of paynents loss for France because net exPorts were taxed, but it a].lowed our comPetitors to maintain or increase their production eapacity. This was a najor tltist of the vedding contract. some people have argued that without the MCArs the cAP could noÊ havesurvlvedandothersthat'thel"lCA|shavejustcomPensatedthe over-evaluaÈion of the D. l"lark. The first in debatable and as for the second,ltlsclearthatamericanfarmerswhohavebeensufferlngsomuch from the dollar overvaluation (more than frorn the cAP as they usually infer), would have loved such a device as posttive MCA|s to imProve their termsoftrade.AgainandoncelDore'ameanshasbeenprovidedtoplug agricult.ure out of the rest of the econorny and to Protect specific social groups fron the adverse effects of international speeializatiOn' which other lndustries have to face with in other menber countries' SomecloudsalsowereâpPearingbythesametineonadifferenÈfront and have turned into rain since: i.e. the enlargement and the financial contrl.butionproblem.Atypicalreactionofl.rancetothe..British coruplaint" was to stick to the golden rules of the cAP and to refer to the agreedaccePtanceofcommonprinclpl-es.Countrles,likeasmokerwhowants toquit,havetoagreeeverydaytowhatwasdecidedbefore;Eothatan importantnegaÈivetransferastheonesufferedbyBriÈainwasnottobe durably accepted. After conslderable struggle and sometimes trade battLe particularty at France (like the nice case of the Newcastle disease argument to blockade french poultry) Britain eventually got satisfaction' But Germany also suddenly discovered it was the usual financial nilk cow of the cAP' showed lncreased dlscontent with her budget contributlon' so that France and other member counÈrles have even to bear a share of the Britlsh compensatlon larger than their VAT key would tmpl'y' Those are two strong case6 where national lnterests have shaken a blt the 60 called pllLars of the cAp (conroon prlees, cornmunlty preference and 22. financial responsibllty). But there are dozens of other examples of special reglmes and aids which have accumulated over the various price packages' A recent example of political compromise which lllustrares the strength of renationalization forces is the milk quota' The cost of dairy surpluses had to be reduced or stabilized since under past price policies supply and conslllnPtlonl'eredivergingatafastpace.Theonlylùaytonaintain ,,interets acguis" of individuals and nations Iùas to freeze produetion without deereasing prices two much. countrles whlch had nodern efficient large dairy farms did not want the quota (UKt NL)' but France and Gerroany felt they could not adjust to price cuts because of the lnportance of snall producers and of the heterogeneity of the ttairy sector' French socialist ,gri",rrt,rral minlsters came with a nice proposal to pay less the large farmers. Thls was obviously barred by partners w'ith l-arge and efficient dairy herds. Ïherefore, the quota provided'a shelter from competing partner countries.

Alastexampleunderl'ayl[aybeworthmentionnlngwhichBaythe forerunning prenisses of the extreme evolution -the sugar regiue is currently under review and there is discussion about how to raise new funds to lower the cost of exports. The proposal of the conmission which agrees low production countries, is to increase the levy on the B quota i'e' on the exporting countries. Now we are at the cross roads if countries who export have to finance their own exPort cost' what is left from the basic principles ? From the Polnt of France who is more dependent on agricultural exportsmorethanthelargermemberEtates'theperspectlveoffinancial renationarization would be quite serious ? one uay wonder if it would not have been better to keep a less protected but more long lastlng outlet' on Èhe European market ? 23.

Concluding comments

According to llaelbroeck "success of future experimenËs in integratlon 6eems to depend on the abtlity of their ProPonents to devise ways of cancelling their effeets on the distribution of income" ' But integration means free trade withtn the custom union, and freer trade does alter factor reward and therefore incone distribution both between social groups and countries. No wonder then that given the lnterests at sÈake, the road of the CAP is paved ltith backsteps from the common principles'

The recent developments'of'Èhe CAP ill-ustrates the reluctance of nenber states to accept regional specializatlon in european agriculture (MCArs' quotas....)andmajorincoruetransfersbetweencountries.Butthese transfers are made inevitable by the "common" level-of...proteetion relative to third countries. Since countries llke France and Germaqy -wtro have long delayed structural adjustnent have a heterogeneous agriculture with a slzeable small peasanÈry, the protection is bound to be substantial, potitically hard to reduce and costly to compensate by direct Payments' Achieving economic lntegratlon lead by a declining and protected sector like agriculture must cause problems partlcularly when the heritage of the past does not help. In that sense the alternatives proposed in the Green Paper,andtheinplleitpreferenceforlesspriceÊupPortandmore structural changes may well have the same fate as llansholtrs plan' The more Bo as the sout.hern enLarg!0ent I'ncreases the structural diversity of European agriculture and therefore the needs for more funds to heLp the moderni- zation. The larger northern countriea are not likel-y to folLow that trend slnce they will have to bear the cost' Arenrt we golng towards a more natlonallzed CAP where quota and natlonal flnanclal responsabtlty will be nore used ? clearly rleh lndustrlal countrle8 wtIl be under Pressure to EuPport thelr own agrlculture and )' 24.

they have the money to do that. They will not accept so easily international financial transfers and specialization within the European Community' So France may well be more and more faced with less €uropean outlets while her agricultural exPorÈÊ are cruclal to the external balanee' This nay be the prlce to pay for having glven prlority to short run interesËs' But was it really posslble to follow a different path given the heterogenlty of the fatm sector ?

The rise of nationalisru seems to get more Inomentun over the last decade "Nationalisms cause our political leaders to squabble over pluses and minuses and to neglect the really.vital unlty of western European democracles" (Tracy,L984). May be the member countrles of EEC do not see ao clearly any more the economic and polltlcalbenefits of a united Europe' It would be too bad if the merchants kill the princess. Do they need economic or political threaÈ from the outslde to make progress towards uniflcation ?

Figure 1 .

 1 Figure 1. Incomes ln agriculture and in the over all econony (per head) (Green Europe n"245

L6

  2.. The CAP under natlonalistic pressurea LooklngbackattheperlodafterthesecondworldwarwhenEuropean lntegratlonl'assetforth,thememoryofconmentator8seemstoselect nalnl.y the enthousiam and the strength of the European movement' clearly one l r8.

Table 2 .

 2 EEC financlal resources and degree of self sufficiency (EUR-g) : 30 jours dtEurope supplénent dêc. L982 and Agricultural Report 1984.

	t97L 19 8r L97L 1 981	FINANCIAL RESOURCES VAT tariff agriculr (roillions écus ) levies 0.924 0.582 0.713 10.309 6.274 2.473 (percentage) .40 .25 .31 .53 .32 .13	L973/4 LgBL /2 L973/4 LgBL /2	SELF SI]FFICIENCY cereals sugar nilk powder 92 L37 9r 109 r42 L44 butter Eeat 101 95 L23 LO2

Source

table 4 )

 4 ' 11.

Table 4 .

 4 Annual agricultural price lncreases in ecu'

Table 5 .

 5 Heterogeneity of European AgricuLture in the 1980rs.

		Share of	riculture in 1		Intensit of fanui	2
	D FR I1 NL BE UK I.RL DK	2.2 4.3 6.3 4.5 2.6 2.3 5.5 10.5	5.4 8.1 1.2. I 4.9 2.9 2.7 17. l. 8.4	.41 .53 .52 .92 .89 .85 .65 .61	6. L7. 7. 24. 11. 7. 37. 32.	11. 4. 5. 8. 7. 2. 2.	L22 140 48 266 140 228 185 61

Table 6 .

 6 BrittÊh and French Agricultural Development

	180r r851 1891 1951	I I	Share of agriculture in ActivePopulation GDP FR UK FR UK I 2 3 4 75 64 45 29 36 zz 10 5 42 36 27 15 32 2L 8.6 4.7	Index of relative ProductivitY I.K FR 4 2 / I .56 ,60 .52 .90 .95 .8r .94
	Source : Niveau (1966' P' 41)


ou non, émanant des établissements d'enseignement et de recherche français ou étrangers, des laboratoires publics ou privés.


niveau recherche, publiés ou non, émanant des établissements d'enseignement et de recherche français ou étrangers, des laboratoires publics ou privés.

The optimism •, 1hich reigned at the beginnini of the first "decade o: development'' concerning the possibilities of 5 rowth ;:,ossessed by Third :;Jor-11 countr-ies , ,;as !"'eplaced, :.ittls by little, by a much more circu::ispect: attitude, j~stified by the numer-ous disappointments sustained by attemps at developme~~-In the agri:::ul tu!"'al field, in particular, i t ;.,as a gradually undar-stood that ~ better com;:irehension of thesl! count7:ies' realities 1o1as necessary . It •.;as a matter of better observing their farming, and of order to ;:,rovide an ans•;1er \olhich •,1a'!;i •.~ell adapted to th-. problems which ;,.ere faced.

-)ne oft~n •,1ond:!rs •;1hat ' "'J.s th'! role p!.ayed C'.;' t~e resea.:-ch ccnd.:c-:e-:: in agricul tural economy in this developrnent of atti ':uèes. T':-,e :!.::.:n of :::-.:.s ar:icle is to ans..,er this question : it is oased on research co~duc': in ~.:-anchs;ieakir.g Af:-ica, the Ivory Coast in parti c ular . '.!Je ..,ould like t':l ::esc:-:.~e 'r'.0•11 the idea fo r-?search devoteè to t:ie agricult:ural economy of cow:1t:-:.es in t:,e ;rocess of de'lelopment • . ~u conceive-:1 and the dif!icul :ies of caryini out ":his research. In adài tion, •,1e •,1ould like to show , ..,hy the auconomy of :his researcr. is ~encefo~~h an indispensable condition of its impact on dev elop~ent.

THE EMERGENCE OF RESEARCH IN AGRICULTURAL ECONOMY ADAPTED TO THE ~ROBLEMS Of

DEV'ELOPMENT

After Worl 1 /Jar II, the sudden a•;1arene• ss of •.mder-de•1elo9:'.".en:: ,.;as accor:lpained ~Y great confidence in the technical capacities of -::he :'T\Odern ':o sur~ount the handicap of feeble agricultural pro~uction in ~nder~developed cou~tries. The spectacular successes of agricultural ~odernization, i~ the economi!s of countries underaoi~g reconstruction. It seems that one ..,onèere= • li-::tle aoou': the real reasons behind this success. Was it the result of the di!f~sion of gcod • technical ~odels of develop~ent available to eurcpean far~~rs, or , rather, t~e react:ion of these farmer3 to powerful incitations created oy a reality of food scarcity, or perhaps 1 ,1as it the consequence of actions taken oy ~he governments concerned., Sooner confident in the !"ole of tech:11:::al ;,rogress, a model .-,f develop~ent oased largely on the po~ularization of new technics ~as diffuseè in Thi.:-d ',t1orld countries. T-his movernent r-esulted in setting 1 .1p an i.r:ipressive nur:ibe?." of agrioultural develcpme:,t ;,rojects at all levels. !t: is no• .~ :-:ecessa.:-y to recognize ':hat a lar 6 e n 1 .1;;iber among them ended in complete or se~:.-fail:.tre, an:: it was necessar-y to ex;ilain ~he cause of these f~11~res.

For example, i t was necessary the ex;lain the va.:-:.a~~on ~e':~een ':~e :-esul ts obtained ou agr-i c ~l tural researches ar.d those ob':ai~ed :,y .:ne fa:-::ie::-:s who had been proposed correspo nding innolfat:i ::: r.s. : 11orse. these -:ev ia-::ions , .,. This sta,:e of a.ffai:-s '"as inte:-preted as -:he r~sult of a it"'!,i':

r~ticence on the ;)a!"~ of the :u:ne:-s r-egarding the innova-cions '"'hich •;1e:-e imposed upon them, a.-i.d exposed t:!'le cor.flicts on interest ' Alhich existed oet• .ie~n the different ?articipents i:i ::ie agriculcural development : the farme~s, t:~e sta-:a and its related associations, and ex~erio~ financiers.

It took time to respond adequa-cely to these difficul,;ies. They necessi tated the for:nation and iradual ;nobilization of specific competences in rur•l economy.

In effect, i t is the need for a more cornplete understanding of the mechanism ~hich aovern economic and social phenomenons Mhich is a-c the core of an impor1:ant development in the ac1:ivi ty of the agricul tural economy i;'l and around developing cout\tries. This new activi ty is !llan1.fested 'oy a summons f or ex1:erior a.id, in the form of experts, t~e forma-cion of national experts, and -che progressive organization of research o rien~ed to~ards a bett$r unders~anding . of production sys-cems .

... Until a relatively recent period, the group of qualified agricul-,;ural economists in the developing countries , .. as found at ,;he level of nacional decision-making, notably in planning.

At the sarne ti:;:e, experts oelong;ing 1:0 finar.cial or ganiz:ations or to departments of specializeè s~udies compleced diagnosis anà s~uàies concerning t he realiz:ati on oÎ operat:.ons :!.nd de velopmen~al ;:::ro jec cs during rela-::. •rely sho rt :iin~ periods.

? o r at least a dozen years, :he airo-economisc has been fi.xed in the function of èecision-maki::1~ or f o accomp anying :st:..èi e s , r-elated ::o or :!Ven centereè on operations o f developme::1t. In a coun1:rr like the I •ror y Coast, for e xam-ple, t here existed ;:,ra t:i. cally no ag!"icult"..:ral ec o nom i s~s in t he st:-,.ictures of èevelopments intac~ in 1974, ~hereas they numbered ~o re thari ~~en:y in 1982.

Another type of r-esponse to the need for agro-economist:s in developing countries ' "as furn i shed oy foundations_ (principally Ford and ~ockefel.ler) ' "hich favored t :i.e for:nation of national so.ec ialist under the conài t:ons tha-c they élttend uni versi t ies in -che !èeveloç:ii~g co1.mt:-ies 3.nd that ,:hey :-:elp to create education apl=)ropri ate t o the countries .::hemselves. In Sast A.::-ic a, for example, the ci ted foundations v~5o rousl y aided the univer-s i ty departmencs of social s c iences and permi .:ted the number of di;Jlomas c on:fer:-ed t.:i incr-ease appriciably. ' .i/i t h the pass ing of a dozen years, one can observe an analogous phenomenon in French speaking Africa.

T'he c ontrio u1: ion of fore1.gn '.!ni vers1 t:!.es , ( espec i ally Ame:-:.can) , . .,,as cons ~ar.tly i~creased, improving ~c che same c i~e the qualifications of ~:i.e cor?s oî ?rofessors brou&ht ~o &ain a oet:er undestanàing of t:i.e reali~y of t ~e Third-Worlè. Europe is not absent in this movement but its means a re relatively feeble and ?e:-haps ~he speci fic s o f a ce~tain number-of i.:s s~ruc::ures orie:1ted towa~ds the dp•,e ) o pi n g countries ~ave .iot al,•ays per-:ni tted 3 sa,:isfy i ~g :-es;:,ori.se i.:1 :-elat i o n t o c~e importance o f t~e d emand . -• ~_._ ___ . -.

3.

At the same t:.:ne, in the rest:-ucturing or '.:he develo,:ment '.)f 3.~:; :•_-:-atus for national r-esearch there is also noted a ter.èar.cy -:o ini:egr:ite r..:::: l ~conomy. This integration occu:-s generall.y by che creation of 3. central -::e:i.m :harged ••i th following and, if ;:,ossi~le, antici ;Jating -::he economi: evolution :n ':he agricultural sector, and, finally, aiding i:he orientation of researc:-:, ':hroush the or 3 anization of regional mul-::idisci;:,linary teams centered on :::e analys is oi systems of ;iroduction. Senegal, in French-speai<ing Afr-ica, offe!"s a jeautiful example of the .ecen-:: creation of such a device.

Through this brief view of the evolution of the growing place t~at rural economy takes in decision-making, up to and including the orientation of agronomie .esearch, i t can be orbser-ved that the required competences depend entirely on aid which commes from the exterior of those countries concerned.

The place of the natuve researchers is st i ll very weak and , in the majori ty of the cases thir formation, like those of foreign experts, sti lle depends on the base of knowledge axquired by experience or scientific investigation completed outs ide of their -0 1 11n countries. In this demain, as in many others, the dependence of almost all the developing countries is quasi-total. Even taking the considerable role of .North-American Universities in this ;:,rocess into consideration, one can speak 1 of a pre!)onderant de;,endence on American education.

Sriefly, theories, methods, knowledge, ideologies, all corne from the exterior. ! t can be imagined, i t should even be admi tted, tha t there •11i ll only be real development 1 11i th the existance of an auto nomous capaci ty for analys is and reflection on rural development . This capacity fo r .eflection in our contempory •,m rld is manifested by the existence of an acti v e research in ':he social sciences.

DIFFICULTIES IN SETTING UP AUTONOMUS RESEARCH

The attemps to help construct the potential for national research have been mul tiplied in the recent past, but the coll ide • ..iith numerous difficulties related to their methods of insertion into the society. Having• participating in• one of these attemps, we would like to try to characterise the circumstances and expose this which, according tous, still opposes full-development.

On the Ivory Coast, the birth of research in rural economy was incontestably favored by the existence of dynamic agricul ture and agronomie research. But the research organized in this demain is essentially the result of poli tical will, expressed at the time ( 1972-78) through 3 rnovement toward planning by the Minister of Scientific Research who had wagered on the development of a national structure.

Entering into a general processus o f :-eorganization and of :Jr:>gress ive control over all research, the creation and development of CIRES benefitted the developm~nt of a regulated research ~orker and a national finance put temporarely out of ~anger of exter ior excesses. T~e choice of programs had been facilited by a procedure . of confrontatibn with the ;Jrinciple partici;,ant s i n the development, and their prsparation exposed , ,,i thou.: a doubt the necess i ty to educate nat ional :-esearchers. Recourse to exterior existence for personnal had been voluntarily reduced to a ~inimum, bue the coordination with the 9otent i al exi s ting in other s tructures had been l argeiy favore d . The :-egular publication of research results i n the notebooks of CIRES pl3yed a determining r o l e in t he val orisat i on and the diffusion of kno•,i ledge. ~~:ially CIRES used all 4.

av,ülable ressources to educate the maximum nUr.tber of r-esearcheirs i.n the shcrt:est s;::ace of time, and system atically suppor":ed students in •1arious ty;:,es ~f economy, put"Cing t:heir studi:!s to ,.,orl< on t:he land. îen years la ter, CIRES has abo•.it t• ... en ty researchers of •.ihom half are rural economists and ~a~ ... f ::.ree-duca-'!et"'S. In 9artic'..llar, CIRES sup;::,orr.s the creation of education at the doctoral Level for all of ~est Africa.

no""ever , dependence still exists. !t ce~te:-s essentially on the difficul ties faced in adapc:ini the research to the :-eali ties of èevelo;:,ment, often, they are ag&ravated by inadap tion to the manner of in cernal administration of research and the multiplicity of forms of ex~erior intervention in developing countries, ai.ronomic research and particu.la.rly, research i.n rural economy benefi t from the i.ncessent :novement of ideas ' "'hich are :nanifested bet,...een the researchers and the many organizations •..-hich animate the agricultural ~orld. The translation from perceiv ed needs into r-esearch ap9arat~s at :he different levels of decision making is facili ted by :he existence of nUr.terous occasions for confrontations bet""een researchers and productors and an irnproved education ~hich fu.rnishes the basis for communication. finally, the multiplicity of interlocutors garantees free expression, a principle source of effiency.

by 3Il social cutors

In develo?ing countries, the situation is principally char~cterised Lnegual ca;iaci.ty for exJ'.)ression on the ;,arc :::;f those 9a:-tici;,ating in and economic activity . The r-esearcher often .1as, as his only interlothe state and its diverse branches to 9repare • :ieveloJ'.)mental plans.

In the bes t of cases, such as that which c an be observed i:1 the Ivory C::iast, the systematic organization of dialo~ue bet•"een the ~i:~ferent decision-,nai<ing levels of :he s t ate and the resear-:hes ::if differenc jisciplines has ~een able ta considerably improve the possibilities for oriencation. aut in almosc all cases, the absence of OJ'.)portunities for the farmers co express chemselv es makes it difficult to c:ake Lnto account fundamental questicns of de•1elo9ment. I:i the social sciences, there is no :-eally obJ eccive sc i entific a;::proach. T~e researcher i.s, himself, a ;,art of the ,,..or ld ' "hich he observes, and a sci.entif"ic verification can only ~e astablished ~y examining the var i ety of aehaviours exhibited by the different members of a society. Unèer these conditions the scaging of :-esearch in :-ura.l economy in a large nurnber of developini countries is confronted by a major handic ap ; the expression ~f inegalities ,elaced 1:v :!evelopment.

In the majority of cases, this situation is aggravated oy che ;,recarious status of the researchers and ~y insuffient means for resea...-ch, • .;hich ex? Lain the feeble recognition of the researchers soc!.al utili cy , and, unfon:u-:-ia cely, a c er'.:ain mist:-ust •.11hich exists. In fac;:, ':~,.:-ou 5 h his ,,..or~,<, the !"esearcher exposes social and economic , ;,echanism • . .-hase explanai:ions can :-ef:.ec-;: :.egatively on the i.nterests of :ne state or on ,:!1ose of indivijuals and 5 :-ou~s ,,..ith ~hom he is aligned. Thus, it i s necessary co examine ~ro~lems conce~~i~i liberty of exp:-ession. ~hen the ;:,ublic 9owers :-ecognize the val~e =f ef~or~s maje by :hase who have actem;:,ted ta =cnst~uc~ a national poten~ial f~~ ,esearch, and ~hen ~~e cor.t;,r-~her1sion of farei~ :non~y t:r .. dsrs Sl!ffices -:~ =.•..!:~or!.ze a ::on~i~'.Ja-:ion ~f f~nds, ot~e~ =b s~acles re ma i~ to be coniuered.

5.

:n fact, i:-this :-esearch ';)ecomes cr-edible, :. ': is l"'.ighly probabl~ that sollicitations for staèies to be completed •,1ould ':Je m..:;nerous ans more al:..uringly accompanied 'oy comfortable fir.anci:1i, The oemar.d can come from <:he ir.terior, but still cornes :nore often fr--:>m the exterior. !'~e ycung researchers or ~rofessers flattered by 5uch a consideratio~, are t~ai~ed i~ a ra~id sucessien of diso:-ganized operations. 1 ,'ihich often only give an :..!.lusory understanèing of the reali ~Y of the coutr-y. T':1e your~g researchers 3.nd ;:,rofessors in these oç,erations are only •,110:-kers in the service of analysis • ,1hich are ex"terior to them. Very rare are the situations which permit a study to realize a scient1fic accumulation •.ihich is •.!seful to t he development of a program ,:nanaged by the institution who employs these researchers.

On the other hand, fearing such compromises, or not at all enjoying the necessary estime on the part of public powers, a young :-esearcher can rightly consider that his actions should be oriented toward exterior education : the research should support the education, but another danger threatens him, concerning faul ty articulation in development, which extends ta a veri table isolation. Isolation •,11hich unfortunatly characterizes numerous universi ties in the Third-World . Isolation which favors the simple repeti tion, by the native researchers themselves, of precepts c9nceived by received from the exterior.

The autonomy of research in developing countries, in rural economy in particular, is therefore very difficult to construct. It demands on the part of its promoters a great clearness of priorities, a great firmness in its management. As in all sucessful developmental actions, it experts some great human qualities. It is necessary ta define programs which are ~ell articulated to the priorities of development such that they are desired "oy the country, to construct or develop superior educ:ation 'Alhose principle priori ty is to establish this education on an effective knowl edge of the country's agriculture, torespond, without letting itself be inundated, to exte~ior sollicitations, •A1ith the danger of isolation. Before these difficulties, international cooperation contents itself with punctual but Limited aid. It could be more effective if it undertook longterm, the support of a defined program and recognized as having priori ty in. !ne country receivin §: aid, and if i t was careful to favor relations Îrom team • to team between nothern and southern countries and between • the countries of the South themselves.

What are the faults of international cooperation as it is generally practiced ? 'Me expose bJO principal weaknesses which consti tute the obstacles faced by the development of self reliant and efficient ::-esearch in developing countries.

First , it seems to us that the brevity and the inconsistancy of support is opposed to the construction of potential for effec~ive r-esearch which requires long-term commitment. At l east 10 years are necessary to construct an autonomous researc!i team, in a strongly developed country as well as in the wo~st of conditions. But it is rare that support to re-~a ch programs in rural economy lasts longer than two, three, at best five years ~ithout severe modificati ons in source , aim, and orientation of research.

  The oee:1 ':a k e r-. i.r.-:o t ior.a l c e~:e:-s, economic and sac ial ~:-o blems of rural dev el=~men:: 3ccount in :he organ iza t ion of the :-esearc~ it self. such as :he I:r.-i. :i:-':~e ! C~:SA::' , ::: 1 : :.:-!g onlJ ~a,,e ::i,,al.:. y ::1 i.:'.::e,:1a-:~ose i,1i"'. 1 : h analys1s o f t ~e systems of ~=-=~~c ti:in as a f:-ame of :-efe:-ence for-: ~e ~~: :-oduc-::.or: •Ji :n:--\o\t a :ions . r~ ot:;1er-:: er::e~s, ::le cor:.::-:.Ou,: :?..on ot !"''~:"3.l :co:!omy -:o t~e for~a tion of agronomists i s ccns:derab l e .

~ainteneè t~r-oughout t:ie :/ears and even a ugmentec!. th~s s~o•. -J i ï'. g that

	2.
	~~e
	pr6posed ;;iodel was ill-a~apted to the l ogic of the farr:lers.
	the authors are researchers at tre National Agricultural Research LïStitute

•e,e . -

5.

The inaèequacy of education given to -::he .iative researchers ~oses other complex problems. I t is necessary to develop an educatL:>n '-'lh::.ch be-::~er respond to the real need of the country concer!'1.ed. Holv to const:-uct i::his •.;hen the 1 .mderstanding of these count:::-ies is still so ,ieai< ? On ~he coni::::-~ry,all is ready for i::he development of veritably extraverted research ~hen education, its progr3.JTis 311d i ts financini., is defined by the exteri, .Jr and often, i:i spi te of the good ~ill of foreign supporters, used to benefit t~e ex~erior . . . .. . .

CONCLUSION

The ex9eriences of the last C\vo decades show chat research in agri-cul~.u-al economy can make a considerable contribution ta a country's development îhis fact ~ecame progressively apparent 311d necessitai::ed an important evolution in the demand for economic studies in order that it be c l early established.

The development of autonomous research is necessary. This alone can conveniently integrate the actions of various economic agents. 3ut the develop-;nent of such a research in rural economy i s yet confronted •,1ith many difficulties. Some are of internal oriiin. They • ..iill be overcome when rural economics is recognized as necessar:r for development. Other difficul ties are of externa.l o.::-i 6 in. !hey • .iill be resolved ,ihen the differeni: international contribut:-s of aid ~,derstand that their interest is .. o support the development and expansion of a native team of autonomous researchers.