Importance of Agro-food Industry for Small and Medium-sized Towns in EU Countries; An Inter-regional SAM Analysis

This paper examines the importance of the agro-food industry for the local economy of thirty selected small and medium-sized towns in the EU. Calculations are based on interregional SAM analysis, which were constructed for each town. On the whole, it can be said that the higher the degree of integration of the agro-food sector in the local economy, the larger its role for the rural town and its hinterland. In addition, the SAM analyses show the impact of a demand change in the agro-food sector located in one zone of the town on the other zone of the town. It helps policy makers to understand the economic and social strengths and weaknesses of the agro-food industry in their towns.SAM, agro-food industry, EU small and medium-sized towns, Agribusiness,

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,

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,

EU ENLARGEMENT TO TURKEY: POTENTIAL IMPACTS ON AGRICULTURAL MARKETS AND HOW THEY ARE SHAPED BY CHANGES IN MACROECONOMIC CONDITIONS

The potential accession of Turkey to the EU, and the related adoption of the CAP by Turkey, is expected to influence agricultural markets in both the EU and Turkey. The extent of the accession impacts depends on the one hand on the way the CAP will be implemented in Turkey, while on the other hand impacts are expected to be also shaped by macroeconomic conditions (like exchange rates, GDP growth and inflation levels). In this paper we provide a comprehensive model-based assessment of the potential impacts on agricultural markets of a Turkish accession to the EU. We first assess the impacts under the assumption of standard macroeconomic projections, then we analyse how a different TL/Euro exchange rate, a doubling of the Turkish inflation rate or a doubling of the Turkish GDP growth rate would influence the accession impacts. Results of the Turkish EU-membership simulation show that the impacts on agricultural markets in Turkey are significant, while effects on EU markets are rather limited. The main impact on Turkish agriculture is a reduction of producer prices. With market prices and produced quantities declining, and as the coupled Turkish direct payments and the input subsidies will be replaced by lower payments of the CAP, agricultural income is expected to be reduced especially for Turkish crop producers (except for tobacco). In contrast, accession effects on the Turkish livestock sector are projected to be positive, mainly due to lower feed costs. Furthermore, the demand levels of most commodities are projected to increase due to lower prices, thus Turkish consumers are expected to gain from an accession to the EU. The further analysis reveals that in particular a depreciation of the Turkish lira alters the results of the accession scenario.Turkey, EU enlargement, agricultural markets, macro economy, AGMEMOD Zusammenfassung, Türkei, EU Erweiterung, Agrarmärkte, Makroökonomie, AGMEMOD, Agribusiness, Agricultural and Food Policy, Agricultural Finance,

Implications of EU Enlargement for Agricultural Markets in the New Member States

The paper presents an analysis of the impact of the Common Agricultural Policy implementation on the agricultural markets of the eight new EU Member States. The study is based on the AGMEMOD (AGricultural MEmber states MODelling) national econometric models. Two scenarios are simulated for each country. The "Baseline" scenario assumes the implementation of the Single Area Payment Scheme until 2008 and the subsequent introduction of the Single Payment Scheme from 2009 onwards. Complementary national direct payments would remain in force until 2013. The second scenario assumes the full decoupling of direct payments from 2007 and the introduction of modulation from 2013 onwards in the 2004 enlargement new Member States (EU-8). The baseline scenario projections suggest that the introduction of direct payments would expand EU-8 aggregate production, mainly of oilseeds, grains, sheepmeat and cheese, while beef and veal production would also increase. Consumption of more expensive beef and veal meat would be substituted by poultry and pigmeat. Full decoupling of direct payments will have only a moderate impact on the balance of supply and use for crop and animal production.commodity markets, CAP reform, new Member States, econometric model, Marketing,

Agricultural Market Performance in the EU after the 2000 and 2003 CAP Reform An Ex-post Evaluation based on AGMEMOD

The paper investigates the CAP impacts on the EU agriculture by means of policy simulations conducted with the AGMEMOD model. To isolate the policy effects in the historical period 2000-2005, counterfactual simulations for this period are run. To simulate the response of the EU agriculture on different policy changes in the period 2006-2020, a ‘no-policy change’ baseline scenario is developed and then policy experiments are conducted such as the abolition of milk quota, the implementation of the regional payments and some budget cuts. To identify the policy effects, the policy scenarios are compared with the ‘no-policy change’ baseline.CAP Reform, ex-post evaluation, agricultural sector modelling, Agricultural and Food Policy,

EU Dairy Quota Reform – AGMEMOD Scenario Analysis

This study provides an in-depth model based quantitative analysis of the implications of the dairy policy reform on the milk and dairy market as well as on other agricultural markets in the EU27, EU15, EU12 and the individual MS. The objectives of the study are threefold: 1. to assess the implications of changing policy and market conditions on EU agriculture with special emphasis on milk quota phasing out and export subsidy removal by using a modelling tool; 2. to carry out policy relevant scenarios reflecting deregulation (e.g. quota abolition), changes in quota and price levels, different types and levels of direct payments; and 3. to analyse the implications of policy reform scenarios and to draw appropriate policy recommendations. Based on an overview of the existing approaches used to analyse the dairy market, the necessary adjustments to the AGMEMOD model are developed. Projections are made under a baseline of no policy change for a time horizon of 10 years for selected individual MS, the EU15 in aggregate, EU12 in aggregate (12 MS from May 2004), and the EU27 in aggregate. This baseline is contrasted with a series of scenarios which involve an increase and eventual elimination of the EU milk quota. The increase in EU milk production under the scenarios is smaller than the increase in milk quota. Milk quota rents fall to zero relatively quickly due to rising input costs and falling milk prices. However, the milk price path under the scenarios is not hugely different to that of the baseline, so it can be said that the general international market conditions in dairy and animal feed are the main drivers of the observed outcomes. In some MS, expansion potential is quite strong and in such cases production continues to expand even after quotas are removed in those scenarios which involve a larger milk quota expansion in advance of its elimination.Milk Quota, Policy Analysis, Partial Equilibrium Modelling., Agricultural and Food Policy,

MODELLING IMPACTS OF SOME EUROPEAN BIOFUEL MEASURES

Against the background of increasing concerns regarding the energy supply security as well as environmental concern the interest for renewable energy sources has increased in recent years. The biofuel sector, backed by public policies, experienced a strong increase in and outside Europe. A methodology that allows for the estimation of the impacts of the fulfilment of the proposed biofuel targets in the EU member states is proposed and implemented in the AGMEMOD model for France and Germany. The so called normative approach, based on the use of a logistic function as biofuel demand function allows to perform simulations to assess the impact of the biofuel demand expansion on agricultural markets. The implemented approach and the simulation results indicate that crops production would adjust to the modified demand situation and depending on the proposed scenario the domestic supply would not be enough for the achievement of the biofuel targets in France and Germany.biofuel targets, biodiesel, ethanol, modelling, Crop Production/Industries, Public Economics, Resource /Energy Economics and Policy,

Linking Large Numbers of Individual National Models: The Case of the AGMEMOD Partnership

The AGMEMOD Partnership seeks to capture the inherent heterogeneity of the agricultural systems existing by combining individual country models of 27 EU Member States and several accession countries into one single model while still maintaining analytical consistency. Although this approach facilitates the comparison of the impact of a policy across different Member States, it generates challenges in practical implementation, ranging from high communication and administration requirements to aggregation and consistency issues. This contribution provides insights into the different challenges posed to the scientists and discusses the key issues for maintenance and further development of such a complex system. Specific attention is paid to technical devices and tools as well as to the design of institutional settings for avoiding inconsistencies.Linking Models, Policy Analysis, Partial Equilibrium Modelling, Common Agricultural Policy (CAP), Agricultural and Food Policy,