A ‘Beyond WTO’ Scenario for Swiss Agriculture: Consequences for Income Generation and the Provision of Public Goods

Abstract

The future agricultural policy framework seems clear. Even though the present trends do not point in this direction there is a strong probability that in the long run Swiss agriculture will have to forfeit border protection, while domestic support will be restricted to fully Green Box-compatible direct payments. We use a normative mathematical programming model to illustrate possible effects for agricultural production and the corresponding agricultural income in the medium term (2012-2018) under such a ‘beyond WTO’ scenario. We discuss the results with respect to the provision of the public goods stated in Art.104 of the Swiss constitution. The potential effects for agricultural production in Switzerland are considerable. The agricultural sector in the lowlands would be especially affected, with dairy farming remaining the most viable sector. In order to survive commercially, a further drastic reduction in production costs would be unavoidable, and efforts to realize prime premiums would have to be intensified.

Keywords: WTO, sector modelling, Swiss agricultural policy

JEL Classification: Q11, Q17, Q18