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Agriculture and Food in the 21 st Century

Economic, Environmental and Social Challenges- Festschrift on the Occasion of Prof. Dr. Dr. h.c. P. Michael Schmitz 65 th Birthday

Edited By Monika Hartmann and Joachim Hesse

This Festschrift in honour of Professor Dr. Dr. h.c. P. Michael Schmitz covers theoretical as well as empirical works on challenges prevailing in the food and agricultural sector. Discussions of conflicts between social and ecological requests of citizens and market outcomes are provided. The contributors discuss options of policy interventions as well as their limitations. Empirical facts that can contribute to a more evidence based policy formation are also presented. The book itself consists of two parts: «agri-food markets and policies» and «agriculture, trade and development». Topics covered are moral, markets and policies, farm animal welfare, fat taxes, agricultural derivatives markets, future food value chains, free trade agreements, food security, food waste and climate change.
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Agri-food Markets and Policies

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Ulrich KOESTER

Abstract

Morality and markets are widely held to be two unrelated concepts or, if related, then their interaction is considered more negative than positive. This perception has contributed to the bad esteem of economists. This long-term tradition of neoclassical economics – which is still the mainstream in economics – posits that economic agents, although they may be highly selfish, nevertheless offer society significant benefits. Agricultural markets’ functionality is often in the centre of criticism and food scandals seem to support the view that economic agents do not serve the common interest.

The goal of this article is to clarify the relationship between morality and the outcome of market forces under specific conditions on the one hand and real world conditions on the other. It emphasizes that a clear definition of morality is essential to the accurate assessment of market functions from a moral point of view. Moreover, a positive relationship will prevail only under specific market functioning conditions which do not exist in most markets, and are particularly absent in agricultural markets. Based on these findings, we explain why agricultural markets are exceptional and not always in line with commonly held moral understanding.

Because agricultural markets require specific governmental interventions to provide for incentive compatibility of private agents, the government must create an environment in which selfish actions are considered acceptable from a society’s point of view. The second last section of the paper proposes a design for EU agricultural policy which...

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