Import Shares of Food Markets in Austria

Given that Austria is a small open economy and tightly integrated in international markets the influence of foreign markets on the Austrian food market is evident. But alternatives are possible as shown by the Swiss example – a small open economy like Austria but having imposed strict trade impediments on agricultural and food market. A comparison of price levels shows that Austrian consumers benefit considerably by open food markets since the accession to the EU in 1995. Several different approaches were used to quantify the spillovers of international markets. Special attention is given to the development of prices. The analysis shows that in many cases price signals on international markets have an influence on price changes in Austria. Another aspect is that consumer preferences towards high quality products with higher prices lead to an increase of average expenditures. The analysis of Austrian supply balances shows that Austrian agricultural production is exposed considerably to foreign developments due to the fact that livestock production depends heavily on imported feed. The importance of external markets is corroborated by results derived from the Austrian input-output tables. Consumer expenditures for food spent in super markets and groceries induce value added in the retailing sector, agriculture and other sectors. The share of domestic sectors is 71 percent, the share of foreign markets is 29 percent.