Evidence on competitiveness in agriculture and the agro-food sector based on measures other than productivity
Productivity is often used as an indicator of competitiveness but other indicators are also used. Latruffe (2010) reports a number of studies using trade-related measures such as Revealed Comparative Advantage (RCA) index to measure competitiveness,11 while others use strategic management index such as production costs or profitability indicators to measure competitiveness.
Trade measures of competitiveness generally focus on agri-food sectors. Again, many studies make comparisons between EU member states and with a large range of trade partners such as Australia, Canada, the United States, Mercosur countries (notably Brazil), Russia, Ukraine and other European countries that are not members of the European Union. One purpose is to identify sectors in which a country has or is gaining competitive advantage, notably in the context of EU accession. As results can be sensitive to the indicator chosen, many studies base their assessment on several indicators. Some use a large range of trade indicators and cluster analysis to rank countries (Annex Table A.5).
As shown in Annex Table A.6, Domestic Resource Cost (i.e. the ratio of opportunity costs of domestic production over the value added it generates) is widely used to assess the competitiveness of EU new member states, Russia and Ukraine. All studies but one concern the 1990s. They find that crop production is generally more competitive than livestock production, probably because of lower capital requirements in a period where capital was difficult to obtain. For crop production, some of those countries were more competitive than in the European Union and even at world level.
Studies on costs of production reported in Latruffe (2010) are generally outdated.12 For the commodity examined in the studies reported in Annex Table A.7, production costs were generally higher in the European Union than in Brazil, other Mercosur countries and the United States. In the mid-1980s, costs of production were higher in the United States than in Canada.
Latruffe (2010) reports two studies which refer to competitiveness using profitability measures (Annex Table A. 8). These are in fact indicators of farm-level performance which were not the focus of her review, but are regularly monitored in many countries.