IMPORTANCE OF CAP REFORMS FOR THE DUTCH AGRICULTURAL SECTOR IN 2000-2020

Since 2000, the two important reforms of The EU Common Agricultural Policy (CAP) took place. The Agenda 2000 Berlin Agreement of March 1999 aimed to increase EU agriculture market orientation and focuses on the grain, oilseed, dairy and the beef sectors. It reduced intervention prices in these sectors and lowered the set-aside requirements for crops and by implementation of non-crop specific compensatory payments. The core of The Luxembourg Agreement from June 2003 was an acceleration of decoupling of farm support initiated by the Agenda 2000 complementary payment. It introduces a system of direct payments (known as single payment scheme - SPS), which are no longer linked to the production (decoupling). This CAP reform also includes commodity specific measures, especially in dairy sector. The Luxemburg Agreement links the direct payments to farmers with farm management practices which maintain environmental and other requirements set at EU and national levels (‘Cross-compliance’). The goal of this paper is twofold. First, we investigate the impact of the CAP reform on the Dutch agricultural sector in 2004 – 2007; second we examine effects of possible future CAP reform decision on the Dutch agriculture till 2020. The study is based on the AGMEMOD econometric model developed within the framework of projects financed by the European Commission. It reflects a sectoral, dynamic, partial equilibrium model, which takes into account the national specificities and is built up of models for the Member States of the EU27. The foundation for AGMEMOD is laid in the establishment of country model templates, which must achieve compatibility of the models to be built and the communality of data. The most important differences between the national models are macroeconomic assumptions, components of policies under the CAP and SAPS (in respect with the new Member States) and assumptions on the impact of direct payments on agricultural production (degree of decoupling). On the country level, commodity templates must encapsulate the modeling system to be used. Many components of these templates are based on the information and guidelines delivered by Hanrahan (2001), but then adapted to country-specific conditions. At least, they must contain issues on market and policy description, flow charts, key market and specification of the functional forms of the commodity model. The AGMEMOD model covers all important CAP commodities: grains, oilseeds, potatoes, sugar and sugar beets, livestock products, milk and dairy products. We will investigate the CAP impact on the Dutch agriculture by mean of policy simulations with the Dutch AGMEMOD model. To isolate policy effect in the historical period 2000 - 2007, counterfactual simulations for 2000 - 2007 will be run. To simulate the response of the Dutch agriculture on different policy changes in 2008 - 2020, the no-policy change baseline scenario will be developed and several policy experiments will be conducted: milk quota abolition, biofuel directive implementation and animal premiums decoupling. To indentify the policy effects the policy scenarios will be compared with the baseline.CAP, CAP Reform, Dutch agriculture, Agricultural and Food Policy, Research Methods/ Statistical Methods, Q10, Q18,

Impact of CAP Animal Premiums on Cattle and Ewe Stock in the Netherlands

This paper examines the influence of animal premiums under the CAP beef and ewe regime on beef and sheep meat farming in the Netherlands concerning instruments like stock density limits, quota on premium rights and premium payments. On the basis of econometric models, equations are estimated for beef cows1, bulls and ewes. Then, the impacts of the different policy instruments on the stocks are decomposed. At last, prospects of Agenda 2000 on the Dutch beef and ewe sector are calculated up to 2010. For policy makers, the study offers information on the effectiveness of animal premium instruments to manipulate beef and sheep meat production. For Dutch farmers, the study offers information to what extent premium instruments might influence the decision to incline or reduce their stocks.Agricultural and Food Policy,

Dutch AG-MEMOD model; A tool to analyse the agri-food sector

Agricultural policies in the European Union (EU) have a history of continuous reform. AG-MEMOD, acronym for Agricultural sector in the Member states and EU: econometric modelling for projections and analysis of EU policies on agriculture, forestry and the environment, provides a system for analysing the impact of policy changes across the EU. Teams from each EU member state have developed models for the specific agri-food sector in their own country, which were reviewed by experts. Country-specific differences with regard to the operation of the agri-food sector and how each responds to external influences such as EU policies and world market prices have been carefully modelled. Not only CAP policy variables, but also economic and biophysical variables have been inserted. As all country models were built on a common format, they could be combined and run as an overall system for the EU. Hence, AG-MEMOD is able to analyse the impact of policy changes on individual member states, in all their diversity, as well as on the EU as a whole. This report describes the construction of the Dutch agri-food sector within the AG-MEMOD framework and summarises the specification, estimation and testing procedures applied to build the Dutch model. An application of the model is provided for a sugar policy reform. Although there is scope for improvements, the current model version can already produce reasonable projections for agricultural commodities in the Netherlands.Agricultural and Food Policy,

Competing claims on land use for food and biodiversity

Land Economics/Use, Resource /Energy Economics and Policy,

Assessing spatial uncertainties of land allocation using the scenario approach and sensitivity analysis

The paper assess uncertainty of future spatial allocation of agricultural land in Europe. To assess the possible future development of agricultural production and land for the period 2000 – 2030, two contrasting scenarios are constructed. The scenarios storylines lead to different measurable assumptions concerning scenario specific drivers (variables) and parameters. Many of them are estimations and thus include a certain level of uncertainty regarding their true values. This leads to uncertainty of the scenario outcomes. In this study we use sensitivity analysis to estimate the uncertainty of agricultural land use.spatial uncertainty, scenario approach, sensitivity analysis., Agribusiness, Agricultural and Food Policy, Community/Rural/Urban Development, Food Consumption/Nutrition/Food Safety, Labor and Human Capital,

Cattle Trade and the Risk of Importing Animal Diseases into the Netherlands

Projections of live cattle trade in the EU-25 assist to reduce the uncertainty on the risk of importing animal diseases in the Netherlands. The accession of 10 member states to the European Union has a potentially large impact on livestock trade in the EU as it liberalized in one stroke a trade that was administered by the Management Committee for Beef until May 1, 2004. The approach combines AG-Memod partial equilibrium with GTAP general equilibrium modelling in order to estimate the impact of quota liberalization. Quota removal will substantially alter the regional structure of livestock imports, as the share of new EU member states in the east triples to 25%. The risk outlook indicates a need for enhanced animal health services in the new member states.livestock, animal disease, trade, projections, quota, EU-enlargement, Risk and Uncertainty, F17, I18, Q17,

Agricultural Incomes Development in EU till 2030: Scenario Analysis of Main Driving Factors

Europe’s rural areas are expected to witness rapid changes due to developments in demography, (agricultural) policies, global trade, climate change, technology and enlargement of the European Union. These changes will affect farmers’ production and income level and make the final outcome of this process uncertain. This paper tries to assess this uncertainty by analyzing the results of 34 scenarios of the EURURALIS project. The scenario outcomes were used to investigate agricultural income development and to analyze the impact of different combinations of macroeconomic and policy factors on agricultural income. The results of these scenarios were achieved in a modeling framework consisting of a modified version of the Global Trade Analysis Project model (GTAP) and the more ecological-environmental oriented Integrated Model to Assess the Global Environment (IMAGE).Agricultural incomes and production, agricultural policy, long-term scenarios,

Impact of EU Biofuel Policies on World Agricultural and Food Markets

This paper assesses the global and sectoral implications of the EU biofuels directive in a multi-region computable general equilibrium framework. Our results show that without mandatory blending or subsidies to stimulate the use of biofuel crops in the petroleum sector the targets of the EU Biofuel directive will not the reached in 2010. With mandatory blending the enhanced demand for biofuel crops has a strong impact on agriculture at the global and European level. The additional demand from the energy sector might slow down or reverse the long term process of declining agricultural prices.Biofuels, EU biofuel directive, agricultural markets, Computable General Equilibrium modeling, Agribusiness, International Relations/Trade, Research and Development/Tech Change/Emerging Technologies, Resource /Energy Economics and Policy,

Modelling the Consequences of Increasing Bioenergy Demand on Land and Feed Use

Bioenergy Production, CGE modeling, Land Demand, Feed Demand, Agricultural and Food Policy, Farm Management, Land Economics/Use,

Impact of the EU Biofuels Directive on the EU food supply chain

The paper investigates the impact of the EU Biofuels Directive (BFD) on the EU agri-food supply chain using the computable general equilibrium model of the world economy named LEITAP. LEITAP is an extended version of the Global Trade Analysis Project (GTAP) model including an improved land market modeling, substitution possibilities between capital and energy as well as between different energy sources including biofuels, feed byproducts of the biofuel production process and substitution between different feed components and feed byproducts. The simulation results shows that the implementation of the EU BFD has a pronounced impact on the markets of cereals, oilseeds and sugar and shows only a limited impact on production and consumption of other agrifood commodities which are not directly affected by biofuel production. The harvested area and production of biofuel crops (grains, oilseeds) is expected to increase by 17% and 25% respectively and sugar production by 12% as a direct result the BFD. The EU-imports of these commodities are expected to rise more than twice. The increasing demand for biofuel crops and sugar will lift domestic prices of these commodities by 25% and 19% respectively but overall agri-food price inflation will be limited to 3% in the EU and to less than 1% at world market level.EU Biofuels Directive, food supply chain, indirect land use changes, computable general equilibrium model., Agricultural and Food Policy,