Recent reforms of the EC grain sector justify renewed interest in the supply ^alysis of producer policies that include a subsidy and a land reduction requirement. Some supply analysis accounts for simultaneous land control and producer payment (Houck and Ryan, Gallagher). However, econometric methods of supply analysis have limited usefulness when major policy changes occur (Weaver). Major changes have indeed occurred in Europe, 1. CAP reform, introducing producer subsidies, low ?? price and set-aside. 2, Transition from central planning. But land quality is an important dimension of producer's participation decisions (Brooks et al.). And the implications of producers with marginal land on market supply still require discussion. The potential for domestic supply distortions and price stability are relevant if trade agreements include such policies.
Gallagher, Paul, "Supply, Land Quality, and Policy" (1995). Economic Staff Paper Series. 264.