The market treadmill against sustainable income of European Farmers: How the CAP has struggled with Cochrane's curse

Abstract

Willard Cochrane was the first to introduce the notion that farmers are on a market treadmill, which, in spite of their constant efforts to improve productivity, wears away any profits that might result. Therefore, the essence of the treadmill is that agricultural income does not grow in line with the increase in productivity. Although reasons of this phenomenon are economic in nature, it has caused a serious social problem, i.e., the relative deprivation of farmers' income. Solving this problem is crucial for ensuring sustainable farming in its social dimension. The aim of the article was, firstly, to answer the question to what extent the concept of the market treadmill in agriculture is still valid for European countries; and secondly, to develop a sectoral model of agricultural income that would test whether the Common Agricultural Policy (CAP) has been successfully struggling with the Cochrane's treadmill. The authors carried out panel research in a group of 25 countries over the years 1980-2015 in various subperiods. The main conclusion was that the traditionally understood market treadmill has lost significance in Europe, which might be advocated as a long-term value-added aspect of the Common Agricultural Policy (CAP).