Browsing by Subject "Markov chain"

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    Analysis of the effects of abolishment of planting rights in the European Union on the wine sector in Rheinland-Pfalz, Germany
    (2016) Bogonos, Mariia; Dabbert, Stephan
    The production and marketing of wine in the European Union (EU) are governed by the Common Market Organization (CMO) of the EU Common Agricultural Policy (CAP). Since 1976, a crucial point of the CMO with respect to wine has been the regulation of wine production by the system of the planting rights. Consistent with the goal of increasing the competitiveness of EU wine producers on the world market, the 2008 CAP reform included the liberalization of the planting rights regime by 2018 the latest. As a result of intense discussions on the EU and EU Member states levels, the planting rights system has recently been converted into a scheme of authorizations for vine plantings, which is valid until 2030. This dissertation investigates the effects of abolishment of planting rights on the largest wine-producing region in Germany, Rheinland-Pfalz. For this purpose a comparative static regional partial net-trade equilibrium model that includes the output of a Markov chain projection was used. The model simulates the future distribution of vineyards in Rheinland-Pfalz among wine farm groups according to size classes and area type, the demand for standard and basic quality wine must in Germany and production of standard and basic quality wine must in Rheinland-Pfalz. The policy simulation model was run for scenarios of different levels of market prices of wine must, different land rental prices, restricted and liberalized planting rights, and a scheme of authorizations for vine plantings. The results revealed that the effects of liberalization of planting rights and of a scheme of authorizations for vine plantings depend on profitability of standard and basic quality wine must production. In particular, if standard and basic quality wine must production is profitable for at least one wine farm group, and planting rights are liberalized, production of standard and basic quality wine must and, respectively, acreage of vineyards in Rheinland-Pfalz will increase with respect to the demand for these two types of wine must in Germany and availability of land suitable for vine growing. If production of basic and standard quality wine must is profitable and planting rights regime is retained or converted into a scheme of authorizations for vine plantings, the acreage of vineyards in Rheinland-Pfalz might reach the maximum defined by the policy regime. In addition, newly established vineyards will be used for production of either standard or basic quality wine must depending on which type is more profitable. Movement of vineyards within the wine farm groups will take place only if at least one of the farm groups receives positive economic profits. Land for vine growing will be distributed to the farm groups which are profitable and characterized by positive growth rates in the past. The abolishment of planting rights will have minor or no effects on the wine sector in Rheinland-Pfalz, if production of basic and standard quality wine must is not profitable. Similarly, movement of vineyards within the wine farm groups will not take place, if none of the farm groups receive positive economic profits. This dissertation provided an empirical examination of the effects of restricted and liberalized planting rights, as well as a scheme of authorizations for vine plantings on the wine sector in Rheinland-Pfalz. It has also supplemented the literature on how policy reforms with regard to the limitation of agricultural production input use in order to control the output affect the agricultural production sector.