The Grain Sector of the European Community: Policy Formation, Price Determination, and Implications for Trade

A coresponsibility levy was added to high domestic prices and export subsidies in the EC. Levels for policy instruments could result from negotiations which favor producers but are acceptable to the public. Higher domestic prices and levies but lower export subsidies would occur if levy exemptions cover domestic marketings. If exemptions are excluded, low domestic prices, producer subsidies, and export taxes would occur. With exemptions, improved farm income and treasury surpluses would be achieved without injury to the public. Exemptions might be excluded because producers are better off and public cost is about the same with either program but producer subsidies require expanded public financing. Export reductions would occur under either program, given prevailing market conditions.