HORTICULTURE IN THE EEC: POLICY FROM FIRST PRINCIPLES

The twin objectives of (a) a reasonable standard of living for producers and (b) a level of prices involving no social transfer payments to producers, are unlikely to be realized without intervention by government. This is the long-term aspect of policy; its short-term aspects tend to show political expediency.

Welfare and price instruments of policy are separate: governments tend to confuse long-term issues by using price as a welfare instrument, for short-term advantage. Sooner or later welfare instruments applied to holdings become paramount. Price-and structure-policies have only indirect effect upon efficiency in the industry, but an ideal distribution of efficiency has not yet been formulated.

In the EEC, the traditional over-response to price by producers is in evidence, although at different stages in the ornamentals, the vegetables and the top fruit sectors separately. The nub of the problem is a marketing convention which keeps prices in line with supply. Producers would benefit most from a framework constraining them to regulate supply. This is the general case. In its present state the top fruit sector is a special case; and appropriate action on the holdings has been slow.

The extra protection to be anticipated from the new regulations proposed for horticulture as a whole in the EEC will serve a good economic producer's net income.