Hermann


Die Bodenkultur - Journal for Land Management, Food and Environment

R. Hermann, S. Anders und J. Harsche:

Competitive Disadvantages of Agriculture in Remote Areas?

Theoretical Concepts and Empirical Measurement

Summary

It is the main question of this article whether competitive disadvantages of agriculture do exist in remote regions and, if this is the case, whether these disadvantages are compensated by agricultural policy. The analysis focuses on the Hessian Lahn/Dill-Bergland in Germany, which is a rural area with unfavourable natural and structural conditions for agriculture. Two standard hypotheses for competitive disadvantages for the selected region are not confirmed: (i) the factor-immobility hypothesis; (ii) the market-power hypothesis for the processing sector. Agricultural households react as expected to agricultural and non-agricultural incentives. Regional meat markets are integrated in a competitive national meat market. However, disadvantages due to natural conditions and location are strong and induce a substantial share of part-time farming. Governmental support, in particular recent policy changes towards direct transfers, favour agriculture in the regions and slow down structural change.

Key words: Competitive disadvantages, less favoured areas, protectionism, agricultural policy, subsidies.