EEC-SUBSIDIES FOR TOMATO PRODUCTS - A POLICY EVALUATION
As is probably known, EEC-producers of fruit and vegetables have some mixed feeling thinking of Greece, Portugal and Spain joining the Common Market. Worried by the expectation of increasing competition, EEC-producers are demanding more protection of their products - as long as these countries are not in the Common Market. They are argueing, that most of the money, the EEC is spending for agriculture, is given for the so-called "northern products" (milk, grain, beef, sugar-beef etc.) and only little is spent for mediterraneum products. Thus there was considerable political pressure from the South, to improve the situation of the so-called southern producers, to adjust the low degree of protection for the southern products to the high degree of protection of the northern products.
For this reason since July, 1st, 1978, EEC-producers of certain processed fruit and vegetables have been granted a production subsidy to improve their competitive position against producers from third countries. In return the processors are obliged to pay the raw product producer a minimum price on a contract basis. At the same time the EEC-import minimum price system, which was applied to tomatoe concentrates since 1975, was abolished. The subsidy is given for a range of products most of them are tomatoe products. In the 1979 budget nearly 25o Mio European Account Units (EAU) are appropriated for this measure.
Table 1 shows the amount of the subsidy and of the minimum prices for different tomatoe products as they are applied in this season.
This paper will discuss
- the possible effects of this subsidy, when it is only applied to EC-countries
- and what might happen, when this EC-policy is extended to Greece, Portugal and Spain, the applicant countries.