Modelling Organic Farming at Sector Level An Application to the Reformed CAP in Austria

We analyse whether the 2003 CAP reform and the anticipated new program of rural development will lead to an expansion or a reduction of organic farming. An extended version of the Positive Mathematical Programming (PMP) method is developed in order to differentiate organic farming from conventional and other agri-environmental management practices in a sector model. Austria is chosen for the case study because 8 % of its farmland are managed organically, and detailed data on alternative management practices are available. The results suggest that the recent agricultural policy reforms will make organic farming more attractive for farmers, given the price premiums relative to conventional products will remain at observed levels.Organic farming, Common Agricultural Policy, Program for Rural Development, Agricultural sector modelling, Agricultural and Food Policy, Farm Management, Q11, Q18, Q21,

OPTIONS OF FINANCING THE CAP – CONSEQUENCES FOR THE DISTRIBUTION OF FARM PAYMENTS

The introduction of decoupled direct payments in the EU was a substantial change of the Common Agricultural Policy (CAP) in 2003. After decoupling direct payments from production, it has become evident, that distributional objectives are the major justification of farm payments. There are three facets: the distribution of payments among farmers within member states, the distribution of payments among member states, and the distribution of household incomes within member states. All of them will be affected if the volume and allocation of funds for the CAP will be changed in the new financial framework of the EU. The paper addresses the first distributional aspects. We provide an overview of the development of past and present research and findings on the distributional aspects of direct payments. We use the theory of federal fiscal relations to identify the policy agendas that should be handled at the EU level, at national levels, and at sub-national levels. We analyse how measures of concentration are affected if the criteria of direct payments are changed (e.g. a modified modulation scheme). This allows us to identify potential consequences after changing the way direct payments are distributed within EU member states. The summary of the paper discusses the distributional consequences of scenarios of the coming financial framework as far as agriculture is concerned.Direct Payments, Distribution, Common Agricultural Policy., Agricultural and Food Policy, Political Economy, Q18,

On the Choice of Cost and Effectiveness Indicators in the Context of the European Water Policy

The Water Framework Directive requires EU Member States to analyse economic impacts of the Directive's implementation. To reach a "good status", instruments have to be judged according to their cost-effectiveness. We evaluate costs and effects of measures to reduce nitrate emission of Austrian agriculture. Results are based on a model that integrates production decisions with stochastic environmental outcomes. The Directive's requirement to involve stakeholders may make it necessary to take a large number of indicators into consideration. We find that alternative calculations of the effectiveness criterion give different rankings of the most effective combination of measures.sustainable water management, environmental policy, cost-effectiveness analysis, eco-eco-modelling, Resource /Energy Economics and Policy, Q25, Q28, Q18,

Organic Farming and the New CAP - Results for the Austrian Agricultural Sector

In 2003, the Common Agricultural Policy (CAP) has been reformed and decoupling direct payments from farm output is one of its core elements. We estimate the likely responses in organic product supply due to the reform at regional and sectoral levels. In addition, we analyse how the new programme for rural development, to be implemented in 2007, might affect organic farming. Our results show that organic farming will become more attractive after the 2003 CAP reform in Austria. Our results support the view that interactions among agri-environmental measures affect farmers' choice to maintain, abandon or adopt organic farming practices.agricultural sector modelling, Common Agricultural Policy, organic farming, Agricultural and Food Policy, Research Methods/ Statistical Methods, Q11, Q18, Q21,

Using the Positive Mathematical Programming Method to Calibrate Linear Programming Models

In agricultural economics, several calibration and aggregation approaches have evolved in mathematical programming models. This article combines in a linear programming model features of the Positive Mathematical Programming method with an aggregation approach that is constrained to the production possibility set spanned by a convex combination of observed production activities. The combination is obtained by using a variable separation technique that approximates a non-linear objective function. Therefore, linear programming models can be exactly calibrated to observed production activities. The aggregation of production activities in homogenous production response units assumes that farmers in a region are treated such as they respond in the same way. Both methodologies are embedded in economic reasoning and provide a robust framework to solve large-scale linear programming models in reasonable time

Analyse von Auswirkungen verschiedener Optionen einer GAP nach 2013 auf biologisch wirtschaftende Betriebe in Österreich

The aim of this study is to analyze alternative options of a Common Agricultural Policy (CAP) after 2013 and their consequences for farms in Austria. Projections about the development of agricultural markets are based on OECD-FAO forecasts. Using these price projections, three alternative policy scenarios have been developed for a period beyond 2013, which are compared with a baseline scenario. The three policy scenarios encompass different assumptions on specific measures in the dairy sector and higher modulation (13% versus the existing rate of 5%) as well as budget cuts in the first pillar of CAP of 30% and 50%, respectively. All the scenarios have been analyzed with the farm optimization system FAMOS, which differentiates among 5.796 typical farms in Austria. FAMOS has been expanded and considers now the law of diminishing costs and labor requirements with respect to farm size. Model results are presented for organic and conventional farms by means of frequency distributions on percentage changes in total gross margins. The results clearly indicate that uniform policy changes can affect farms quite differently. There are winners and losers, which have been identified according to farm characteristics

Integrated assessment of policy and climate change impacts: A case study on protein crop production in Austria

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Climate change and policy impacts on protein crop production: a case study on integrated modeling

This paper addresses protein crop production in Europe. European food and feed industries highly depend on imported protein crops and derived products and climate change is likely to affect domestic protein crop production and thus the import dependency. The recent reform of EU agricultural policy reform aims at promoting climate friendly agricultural practices and stimulating the production of protein crops. We choose three contrasting climate change scenarios as well as specifications of the recent CAP reform in order to investigate how farmers might adapt to changing land use restrictions and climate conditions. Output response, land allocation and nitrogen use are the main variables of interest. Exemplified for Austrian cropland, we apply an integrated modeling framework consisting of a statistical climate change model, a crop rotation model, the bio-physical process model EPIC, and the economic bottom-up land use optimization model BiomAT. This model maximizes total gross margins by optimizing for land use and crop management practices for different scenarios of climate change and market conditions. Results obtained at a 1 km grid are aggregated to the national level. The model results indicate that changes in policy conditions, cropland use, and flexibility in crop management practices may have stronger effects on total protein crop production than climate change in the next decades. An expansion of current protein crop production leads to an increase in marginal opportunity costs, reduces mineral fertilizer input demand, and mainly replaces maize in the crop rotations

Yield potentials and yield gaps in soybean production in Austria - a biophysical and economic assessment

context of analysis:• stakeholders. policy relevance: CC and protein crops• research problem:• how large is the yield gap and what can be done• data• approaches• findings• discussion and outlook yield gap analysis is a daunting task• what can be learned• economics matters: prices of crop and other crops• land expansion: more land becoming more marginal• management matters a lot but – not directly observable in data• significant knowledge gaps still there• way forward:• look at other crops• explore options to improve managemen

Three years of collaboration in TradeM – Agricultural markets and prices

Some farmers may claim that climate change adaptation is easy compared to the difficulties caused by policiesAction based on weather observations only, is insufficient for farmers to respond to climate change. Researchers need support from farmers in understanding the responses in practice.Policies might be too slow to respond to needs for change in agriculture. Winners and losers seem to be observed everywhere.The impacts of climate change is heterogeneous among farm types and regionsEffects beyond 2050 remain largely unclear, mainly because the effects of extreme events are not consideredVariability of yields is important to farm incomes, but most studies only consider average changesFarmers are ready to design their site-specific adaptation response providing that new knowledge and learning spaces are available. A learning process based on integrated models, assessment of short- and long-term effects, is needed for farmers to adapt to climate change, price fluctuations and policy change.