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Ban effects on the farm sector

The analysis of the ban at the farming level links the input/output changes at the farm level with the restructuring of the agricultural sector, i.e., farm enlargement and diversification or specialisation of farm production. According to farm accountancy data, the sources of size economies that drives farm enlargement are labour, building and machinery, and animal feed factors of production. These sources of size economies are not deeply affected by the ban. Only veterinary services are sources of size diseconomies.

However, total veterinary costs usually do not exceed 10% of feed costs. The sources of scope economies that drive on-farm association of productions are mainly land as more land per animal reduces the cost of manure management and optimises the crop fertilisation. Scope economies are enhanced by tighter enforcement of water quality regulations. However labour and labour quality is a source of scope diseconomies as diversified production requires more competences and entails organisational difficulties.

Farm enlargement and farm diversification conflict because labour is a source of size economies and a source of scope diseconomies. Hence the trade-offs between size and scope economies with the AGP ban is an empirical issue. Simulations using a cost-minimising model of the farm sector on French data suggest the potential development of pig production in extensive cattle farms with grassland.

This prediction is only observed in a small extend as it also depends on local contextual factors that are not controlled by the model: manure elimination facilities, manure "market", pig production acceptability. The sanitary conditions in specialised farms compared to diversified farms remain an open question. As alternatives are only imperfect substitutes of in-feed antibiotics and farms with worst breeding and sanitary conditions will have to adapt quickly or disappear.

Reported by

National Institue of Agronomic Research, Dept. of Economics
INRA-ESR, 4 allée A. Bobierre, CS61103
35011 Rennes Cedex
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