Modelling the Dairy Farm Size Distribution in Poland Using an Instrumental Variable Generalized Cross Entropy Markov Approach

The aim of this paper is to analyse the evolution of the dairy farm structure of Poland during the post-socialist period. First the paper focuses on how the farm structure has changed over time and what path it is likely to follow in the coming decade. Second, it is tested whether the evolution of farm size is explained by non-stationary effects. Finally, several statistical indicators are computed on farm mobility and on which farms are likely to survive. An instrumental variable generalised cross entropy Markov chain approach which incorporates prior information is applied for estimation. Prior information included general and plausible information on farm mobility and structural adjustments based on independent literature. The projections show that dairy farm numbers will continue to decline, although accompanied by an increase in the number of medium-sized and large farms. Subsistence dairy farms are expected to slowly leave the sector in the coming decade.dairy, farm size, Poland, Markov chain, generalised cross entropy., Livestock Production/Industries,

THE 'MILK QUOTAS RENT PUZZLE' IN THE EU: ECONOMIC SIGNIFICANCE, REVIEW, AND POLICY RELEVANCE

In the so-called Common Agricultural Policy (CAP) 'Health Check' the European Commission has recently proposed gradual transitional measures to allow a 'soft landing' of the milk sector to quota expiry. The aim of this paper is to support policy makers to get better insights in the implications of some of the most important economic assumptions and empirical choices made in partial equilibrium models focusing on dairy. Three partial equilibrium models are considered: the Agricultural Member states MODeling (AGMEMOD) model, the Common Agricultural Policy SIMulation (CAPSIM) model, and the European Dairy Industry Model (EDIM). The paper analyzes how the most important economic supply components, as they are part of the three key dairy models, affect milk production projections. A main conclusion is that the evaluation of the contribution of a study should not be based on one single characteristic (such as quota rents, supply responses). One isolated characteristic is not able to explain finally obtained model outcomes. Quota rents, supply responses, shifters and the demand side have to be integrated with each other.milk quota rents, supply response, shifters, dairy policy, equilibrium models., Agricultural and Food Policy, Political Economy, Research Methods/ Statistical Methods, C01, C02, Q12, Q13.,

The 'Milk Quotas Rent Puzzle' in the EU: Economic Significance, Review, and Policy Relevance

In the so-called Common Agricultural Policy (CAP) 'Health Check' the European Commission has recently proposed gradual transitional measures to allow a 'soft landing' of the milk sector to quota expiry. The aim of this paper is to help policy makers gain better insights in the implications of some of the most important economic assumptions and empirical choices made in partial equilibrium models focusing on dairy. Three partial equilibrium models are considered: the Agricultural Member states MODeling (AGMEMOD) model, the Common Agricultural Policy SIMulation (CAPSIM) model, and the European Dairy Industry Model (EDIM). This paper analyses how the economic supply components, as they are part of the three analysed key dairy models, affect milk output projections. A main conclusion is that the evaluation of the contribution of a study should not be based on one single characteristic (such as quota rents, supply responses). One isolated characteristic cannot explain finally obtained model outcomes. Quota rents, supply responses, shifters and the demand side have to be integrated with each other.JRC.J.5-Agriculture and Life Sciences in the Econom

Review of Main Methodological Approaches Quantifying the Economic Effects of the European Milk Quota Scheme

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) and the collaboration of the Agricultural Economics Research Institute (LEI, the Netherlands) and the Catholic University of the Sacred Heart (Unicatt, Italy). The report provides a review the most recent studies modelling the European milk quota. The focus is on milk quota rents, which are a central element in carrying out impact analyses on dairy policies. Direct approaches to estimating milk quota rents are the only option for providing empirically gained estimates to be used in equilibrium models. From the reviewed empirical estimates, it appears that differences in magnitude and rankings are present across the considered studies. This poses serious problems when these estimates are used for calibration, because equilibrium models are highly sensitive to the assumptions made on quota rents. Another difficulty lies in the choice of the length of run used when calibrating. As previously mentioned, equilibrium models are sensitive to the assumptions made on quota rents and different lengths of run may lead to different policy conclusions. Given that the micro-econometric estimation of milk quota rents seems to be an ongoing issue and its translation for equilibrium models far from being settled, it is advisable to perform sensitivity analysis using, whenever possible, different sets of estimates in order to assess the robustness of policy analysis.JRC.J.5-Agriculture and Life Sciences in the Econom

A Bayesian Total Factor Productivity Analysis of Tropical Agricultural Systems in Central-Western Africa And South-East Asia

This paper computes and analyses total factor productivity (TFP) growth rates for tropical agricultural systems in Central-Western Africa and South-East Asia. Two regions that despite sharing common agro-ecological conditions, have pursued different adoption rates of green revolution technology and have reported dissimilar yields per hectare. A panel data set is constructed for the period 1987-2007 from the FAOSTAT database. A Bayesian stochastic frontier model with country specific temporal variation in technical efficiency is estimated. Technical efficiency estimates reveal that there is substantial room for improvement in both continental sub-sets and that TFP estimates show on average larger rates of growth for South-East Asian countries as compared to Central-Western African countries. Results indicate that TFP is mostly driven by technical change and countries such as Benin, and Gambia display catch-up.Bayesian Inference, Stochastic Production Frontier, Time Varying Technical Inefficiency, Total Factor Productivity Growth, Tropical Agricultural Systems, Farm Management, Productivity Analysis, C15, D24, O47,

The Common Agricultural Policy SIMulation (CAPSIM) Model: Dairy Reform and Western Balkan Countries Accession Scenarios

The aim of this study is to provide and describe a multicommodity analysis able to focus and investigate two EU relevant agricultural policy aspects: the dairy reform and the enlargement to Western Balkan countries. The analysis is carried out using the Common Agricultural Policy SIMulation (CAPSIM) model developed in the early 1980s by EuroCARE and the University of Bonn on behalf of DG ESTAT. The model is further upgraded for this study in order to analyse the effects of the Health Check decisions on the EU dairy market as well as the impact of the EU enlargement towards Western Balkans countries. Key results of the main quota expiry scenario for 2020 are that milk production would increase by 3.1% in the EU-27 whereas milk prices would drop by 7.3%. Accession effects in the Western Balkan countries would originate in some convergence to EU prices, in technology transfer which would increase yields, and in CAP components introduced on the Western Balkan like milk quotas or decoupled payments.JRC.J.5-Agriculture and Life Sciences in the Econom

A Bayesian Total Factor Productivity Analysis of Tropical Agricultural Systems in Central-Western Africa And South-East Asia

This paper computes and analyses total factor productivity (TFP) growth rates for tropical agricultural systems in Central-Western Africa and South-East Asia. Two regions that despite sharing common agro-ecological conditions, have pursued different adoption rates of green revolution technology and have reported dissimilar yields per hectare. A panel data set is constructed for the period 1987-2007 from the FAOSTAT database. A Bayesian stochastic frontier model with country specific temporal variation in technical efficiency is estimated. Technical efficiency estimates reveal that there is substantial room for improvement in both continental sub-sets and that TFP estimates show on average larger rates of growth for South-East Asian countries as compared to Central-Western African countries. Results indicate that TFP is mostly driven by technical change and countries such as Benin, and Gambia display catch-up. Keywords: Bayesian Inference, Stochastic Production Frontier, Time Varying Technical Inefficiency, Total Factor Productivity Growth, Tropical Agricultural Systems JEL Classification: C15, D24, O47JRC.J.4-Agriculture and Life Sciences in the Econom

EU Dairy Sector: Impact of Luxemburg Reform, EU Enlargement and Trade Negotiations

The EU dairy sector is facing a period of significant changes that are due to three major decisions: the EU enlargement, the Luxembourg reform and on-going WTO negotiations. To evaluate the impact of such changes we developed a model of the EU and world dairy industry. The model is composed of two modules that interact: a milk and beef supply module and a dairy industry module. In this paper we present the model and focus on elements that are crucial for a better understanding of the impact of reforms: quota rents in the EU, evolution of production in the new member states and trade policy.agricultural policy, dairy industry, partial equilibrium model, International Relations/Trade, C21, Q13, Q18,

Impacts of the EU Biofuel Target on Agricultural Markets and Land Use - A Comparative Modelling Assessment

The Renewable Energy Directive (2009/28/EC) requires that 20% of the EU's energy needs should come from renewable sources by 2020, and includes a target for the transport sector of 10% from biofuels. This report analyses and discusses the global impacts of this biofuel target on agricultural production, markets and land use, as simulated by three agricultural sector models, AGLINK-COSIMO, ESIM and CAPRI. The impacts identified include higher EU production of ethanol and biodiesel, and of the crops used to produce them, as well as more imports of both biofuels. Trade flows of biofuel feedstocks also change to reflect greater EU demand, including a significant increase in vegetable oil imports. However, as the extra demand is small in world market terms, the impact on world market prices is limited. With the EU biofuel target, global use of land for crop cultivation is higher by 5.2 million hectares. About one quarter is area within the EU, some of which would otherwise have left agriculture

Impacts of the EU Biofuel Target on Agricultural Markets and Land Use - A Comparative Modelling Assessment

The Renewable Energy Directive (2009/28/EC) requires that 20% of the EU's energy needs should come from renewable sources by 2020, and includes a target for the transport sector of 10% from biofuels. This report analyses and discusses the global impacts of this biofuel target on agricultural production, markets and land use, as simulated by three agricultural sector models, AGLINK-COSIMO, ESIM and CAPRI. The impacts identified include higher EU production of ethanol and biodiesel, and of the crops used to produce them, as well as more imports of both biofuels. Trade flows of biofuel feedstocks also change to reflect greater EU demand, including a significant increase in vegetable oil imports. However, as the extra demand is small in world market terms, the impact on world market prices is limited. With the EU biofuel target, global use of land for crop cultivation is higher by 5.2 million hectares. About one quarter is area within the EU, some of which would otherwise have left agriculture.JRC.DDG.J.5-Agriculture and Life Sciences in the Econom