International Agricultural Trade Research Consortium Trade in livestock products

The European Union beef market regulation is largely influenced by the Common Agricultural Policy (CAP). With the 1992 CAP reform, there was a partial shift by the EU from product price support to a more direct form of income support by way of direct payments. For beef there was a move to direct payments on intermediate products which was essentially a direct payment for the possession of various categories of animals and these were linked to a land resource base. The Agenda 2000 reform consists in a further price decrease associated with an increase in direct payments. This contribution focuses on the dynamics of beef supply response in the French beef sector. The objective of this paper is to provide a model of beef supply response within a dynamic microeconomic framework. The aim of this model is the understanding of cattleman decisions and to assess how the behaviour of beef producers is sensitive to changes in production prices and to changes in premiums. In particular, the paper studies how the beef supply response is modified when various exogenous variables like prices or policy instruments are changed.