28 research outputs found

    Modelling the European Sugar Sector : Incentives to Supply Sugar Beets and Analysis of Reform Options

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    The Common Market Organisation for sugar of the European Union has withstood major reform of any kind over the last three decades while other agricultural markets have been subject to far reaching reforms. Today, this ‘invulnerability’ is over. Reform pressure occurs from many sides. The sugar using industry objects to having to pay prices that lie three times above world market levels for European sugar, and recent global developments have made a reform of the European sugar market inevitable. (1) The Everything but Arms concession granting the Least Developed Countries a quota and duty-free access for all goods but arms into the EU including sugar as of 2009 makes a high-level of sugar imports from these countries likely. (2) Brazil, Australia and Thailand filed complaints against the European Union, arguing that C-sugar exports and re exports of imported sugar have to be considered subsidised exports so that the current quantity limit of 1.3 million tons of subsidised exports is overshot by about 3 million tons. Since the EU lost the following WTO panel, sugar exports are to be reduced considerably in future. Consequently, European sugar production must also be significantly reduced. This study analyses the impacts that a reform of the European sugar sector may have on European farmers. Since such an analysis is only possible if the observed supply behaviour in the past can be explained, this aspect is analysed first. Particular emphasis is given to the question, why European farmers supply sugar quantities considerably beyond their quota endowments for which only world market prices are paid. A number of behavioural hypotheses are introduced and evaluated using data from national statistics, farm data and own estimates of marginal production costs and of single farm quotas. The results from this analysis are then used to modify the agricultural sector model CAPRI with which possible reform options are evaluated. These adjustments help to analyse the supply response of European farmers to changes in the political environment of the sugar sector compared to other model approaches.Modellierung des europĂ€ischen Zuckersektors - Anreize fĂŒr die Produktion von ZuckerrĂŒben und Analyse von Reformoptionen Die Gemeinsame Marktordnung fĂŒr Zucker (ZMO) ist seit 1968 Bestandteil der Gemeinsamen Agrarpolitik (GAP) und enthĂ€lt fast alle bekannten Marktregulierungsinstrumente: Produktionsquoten, Garantiepreise, Intervention, Exportsubventionen (teilweise finanziert ĂŒber Produktionsabgaben), Importzölle, die praktisch prohibitiv wirken, sowie PrĂ€ferenzabkommen mit einigen Staaten ĂŒber den zollfreien oder zollermĂ€ĂŸigten Import von Zucker. Obwohl andere Sektoren der Landwirtschaft in den letzten Jahren weit reichend reformiert worden sind, ist die ZMO bis heute unberĂŒhrt geblieben. Diese „Unantastbarkeit“ scheint nun ein Ende gefunden zu haben, denn eine Reihe globaler Entwicklungen bedrohen diese Marktordnung in ihrer FunktionalitĂ€t: Das „Everything but Arms“-Abkommen (EBA) erlaubt seit 2001 49 EntwicklungslĂ€ndern den zoll- und quotenfreien Export aller Produkte außer Waffen in die EU. Von dieser Regelung sind bisher nur Zucker und frische Bananen ausgenommen worden. Diese werden aber nach einer Übergangsregelung im Jahre 2009 vollstĂ€ndig miteinbezogen, so dass zusĂ€tzliche Zuckerimporte aus den begĂŒnstigten LĂ€ndern sehr wahrscheinlich sind und Teile der heimischen Zuckererzeugung verdrĂ€ngen werden. Im April 2005 hat das WTO-Berufungsgremium („Panel“) anlĂ€sslich einer Beschwerde, die von Australien, Brasilien und Thailand gemeinsam gegen bestimmte Aspekte der EU-Zuckerregelung erhoben wurde, entschieden, dass die EU deutlich mehr subventionierten Zucker exportiert, als es gemĂ€ĂŸ WTO-Abkommen erlaubt ist. Ein wesentliches Instrument der letzten GAP-Reform von 2003 ist die Umstellung von aktivitĂ€tsbezogenen Ausgleichzahlungen auf ein System von entkoppelten PrĂ€mien. Diese Regelung hat generell zur Folge, dass AnbauaktivitĂ€ten, fĂŒr die bisher keine Ausgleichzahlungen gewĂ€hrt worden sind, gegenĂŒber den zuvor auch schon prĂ€mienberechtigten AnbauaktivitĂ€ten, an WettbewerbsfĂ€higkeit gewinnen. Da der ZuckerrĂŒbenanbau zur ersten Gruppe gehört, ist es wahrscheinlich, dass dieser zukĂŒnftig ausgedehnt wird, was erhöhte Exporte von C-Zucker zur Folge hĂ€tte. Aus diesen GrĂŒnden kann eine Reform der ZMO nicht verhindert werden und die Analyse der Auswirkungen möglicher Reformszenarien auf die europĂ€ische Landwirtschaft, wie sie die vorliegende Arbeit leistet, gewinnt zurzeit stark an Bedeutung. Da eine solche Analyse nur in Kenntnis der Produktionsanreize fĂŒr den ZuckerrĂŒbenanbau möglich ist, werden diese zunĂ€chst analysiert. Die C-RĂŒbenproduktion erhĂ€lt in diesem Zusammenhang eine zentrale Bedeutung, denn in Europa werden jĂ€hrlich ĂŒber drei Millionen Tonnen C-Zucker produziert, obwohl einige Analysen zeigen, dass die Erlöse aus der C-RĂŒbenproduktion die von ihr verursachten Kosten nicht decken können. Daher können die beobachteten ZuckerrĂŒbenproduktionsmengen nicht mit der Gewinnmaximierungshypothese erklĂ€rt werden. In der vorliegenden Arbeit werden alternative Verhaltenshypothesen aufgestellt und anhand von INLB-Daten ĂŒberprĂŒft. Die daraus gewonnenen Erkenntnisse werden im Anschluss dafĂŒr verwendet, das Agrarsektormodell CAPRI so zu modifizieren, dass eine Politikwirkungsanalyse von Reformoptionen der ZMO möglich wird. Die detaillierte Abbildung des ZuckerrĂŒbensektors im CAPRI-Modell und die Analyse möglicher BestimmungsgrĂŒnde fĂŒr den ZuckerrĂŒbenanbau bilden einen betrĂ€chtlichen Forschungsbeitrag zu den zurzeit vorhandenen AnsĂ€tzen zur Analyse des ZuckerrĂŒbenanbaus

    Impacts of European Biofuel Policies on Agricultural Markets and Environment under Consideration of 2nd Generation Technologies and international Trade

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    Even though recent discussions on food prices and indirect land use change point at potential conflicts associated with the production of biofuels the appraisal of biofuels as an effective instrument to slow down climate change and reduce energy dependency still prevails. The EU Renewable Energy Directive (EUROPEAN COMMISSION, 2009) underlines this trend by setting a target of 10% share of energy from renewable sources in the transport sector by 2020. As economic competitiveness of biofuel production is still not given in most European countries, support policies are essential to achieve this target. Second generation technologies have still not attained marketability, wherefore biofuel consumption will continue to significantly affect agricultural markets. Furthermore, biofuel trade receives more attention. Apart from Brazil the USA has evolved to one of the key biofuel producer in recent years replacing the EU as the dominant biodiesel exporter. Those developments in regions outside the EU have to be considered within the evolution of biofuel markets. The primary objective of this paper is to analyse in detail impacts of future biofuel developments on agricultural markets under several assumptions regarding the availability of 2nd generation technologies, the EU support policy framework and the EU trade policy regime. Therefore, we developed an extended version of the comparative static agricultural sector model CAPRI which covers global biofuel markets with a detailed focus on Europe. The results supplement already existing model-based impact assessments while focussing on EU Member State level and introducing global bilateral trade of biofuels based on the Armington approach. The results of our scenario analysis presented in this paper indicate that the European 2020 biofuel target will significantly affect global and European biofuel- as well as agricultural markets. Thereby, global biofuel trade will notably increase, especially flows of biodiesel from the USA and Argentina and of ethanol from Brazil into the EU will increase accentuating the net-importing position of the EU by 2020. On the agricultural markets, we can observe that additional demand caused by European biofuel production will be, on the one hand, partially compensated by substitution effects on the feed market and, on the other hand, mainly filled by increasing imports. Thus, effects on agricultural product prices will also be significant, while effects on EU agricultural production will only be marginal. This leads consequently to only marginal environmental impacts within Europe and confirm the assumption that notable environmental effects caused by EU biofuel production and consumption will mainly take place outside Europe, especially in those countries which are important producers of biofuel feedstoc

    Methodology to assess EU Biofuel Policies: The CAPRI Approach

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    This report is based on the outcome of a study carried out by the European Commission's Joint Research Centre - Institute for Prospective Technological Studies (JRC-IPTS, Spain) in cooperation with EuroCARE (Bonn, Germany). The report provides a detailed description of the methodology developed to assess the implications of the European Renewable Energy Directive on the agricultural sector, with an explicit focus on regional effects of biofuel targets in the EU. For the analysis, the spatial agricultural sector model CAPRI has been extended to include a global representation of biofuel markets (with endogenous supply, demand and trade flows for biofuels and biofuel feedstocks) while keeping the focus on regional impacts in the EU. The model is capable to simulate the impacts of EU biofuel policies on food production and prices, the potential use of by-products in the feed chain, the increasing pressure on marginal and idle land and the share of imported biofuels (self-sufficiency indicators). CAPRI is now able to jointly assess biofuel and agricultural policies, including policy instruments defined at the Member State level. The CAPRI biofuel module allows for a detailed analysis of most relevant biofuel support instruments like consumer tax exemptions, quota obligations, import tariffs and other trade measures. Additionally, the model allows for analysing scenarios regarding technical progress in 2nd generation technologies for biofuels

    Farm level policy scenario analysis

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    This study presents a quantitative policy impact analysis of alternative policy and macroeconomic assumptions in the agricultural farming sector. Three scenarios are considered: direct payment scenario, macroeconomic environment scenario and WTO scenario. We apply the CAPRI-Farm model, an extension of CAPRI which disaggregates the standard Nuts2 regional resolution of the supply models in CAPRI further to farm type models, capturing farm heterogeneity in terms of farm specialization and farm size across all EU regions and MS. The advantage of the CAPRI-Farm model compared to other similar models is that it represents comprehensively all major farm types in the EU and it links farm level behaviour with output and input market price responses. The direct payment scenario assumes equalisation of decoupled payments - a regional flat-rate scheme - at the Nuts1, MS and EU levels. According to simulation results, the value of re-distributed payments vary strongly between the three flat-rate systems. The value of payments reallocated between farms in the EU increases from 9% (3.7 billion Eur) of the total CAP budget in the Nuts1 scenario to 19% (8.2 billion Eur) in the EU flat-rate scenario. Particularly negatively affected are large- and medium-sized farms and dairies, mixed crops and livestock, general field and mixed cropping, olives, cereals and oilseeds and permanent crops. Small farms tend to be less affected. However, sheep, goats and grazing, the residual farm category and mixed livestock farms realise higher premiums and incomes. The study shows relatively minor allocative market responses and thus small price effects for all three scenarios. The WTO scenario aims to quantify the impact of trade liberalization on farming sector. More precisely, the scenario considers the impact of the proposal made by the chair of the WTO's agriculture negotiations, Ambassador Crawford Falconer. The simulation results show that tariff reduction increases consumer welfare in the EU by 8.5 billion Eur, whereas agricultural income decreases by 6.8 billion Eur (-3%), mainly driven by losses realised in the animal sector. The analyses show sizable impacts on farm income for different farm types. Generally, farm types specialised in livestock production lose the most. The largest negative income effects were observed for cattle, dairying, rearing and fattening, dairy, mixed crops and livestock; and sheep and goat farms. The macroeconomic environment scenario simulates the farm-level effects of a hypothetical economic recovery scenario that may lead to higher GDP growth and higher oil prices. Two shocks are assumed: an increase in the crude oil price by 50% and an annual world GDP growth rate increase by 1% relative to the baseline level. The results indicate that a higher GDP growth causes stronger price and market effects than does the increase in the oil price. With the oil price shock, farmers are affected by two opposing effects: an increase in production costs and an increase in revenues. In most cases, increasing costs dominate such that the overall farm income declines. The effect of higher GDP on income across farm types is generally positive due to the rising demand for agricultural products, which generates an increase in the prices of agricultural commodities. Farmers react to the new macro environment with adjustments of their production leading to an increase in arable land and intensification of crop and animal production activities. Further, a tendency to substitute grassland for arable land can be observed.JRC.DDG.J.5-Agriculture and Life Sciences in the Econom

    Implications of biofuel support policies in Europe - a quantitative analysis in an open economy

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    EU biofuels support Biofuels modelling with CAPRI Scenario setting Main results Concluding remarks Biofuels production and use will remain mainly driven by public support Strong links of biofuels to agricultural markets Development of second generation technologies would ease food-fuel link

    Modelling of Energy-Crops in Agricultural Sector Models - A Review of Existing Methodologies

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    The present report provides an overview of the different methodologies applied in partial and general equilibrium models used to analyse biofuel policies in Europe, as well as their methodological pros and cons. While the LEITAP model is included as a general equilibrium model covering biofuel demand, partial equilibrium models are represented by ESIM, FAPRI, AGLINK/COSIMO, RAUMIS, AGMEMOD (agricultural models); POLES and PRIMES (energy sector); and EUFASOM/ENFA (forestry sector). The study is highly relevant for the current modelling work at IPTS, where models such as ESIM and AGLINK play an important role in the Integrated Modelling Platform for Agro-economic Commodity and Policy Analysis (iMAP) of the AGRILIFE Unit. Additionally, the POLES model is currently part of the model portfolio used by the Competitiveness & Sustainability Unit in several studies analysing possible technological pathways of energy production and demand for bioenergy in Europe, a result of implementing the biofuel directive. This compilation of information is also important since the implicit and explicit treatment of bioenergy, either as a demand shock to the processing of oilseeds or feedstock for bioethanol and biodiesel, or as the introduction of a biofuel-sector into a computational general equilibrium (CGE) is foreseen in the short-term by other economic models used at IPTS.JRC.J.5-Agriculture and Life Sciences in the Econom
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