capri eaa workshop on agricultural projection for rains, 8.10.2002, brussels capri background...
TRANSCRIPT
CAPRI
EAA workshop on agricultural projection for RAINS, 8.10.2002, Brussels
CAPRIOutline
• What is CAPRI ?
• Drivers in agricultural markets
• Drivers at farm level
• Effects of the new CAP reform (July 2003)
• Conclusions
CAPRI
EAA workshop on agricultural projection for RAINS, 8.10.2002, Brussels
CAPRIWhat is CAPRI ?
• Common Agricultural Policy Regionalised Impact analysis
• on regionalised level (NUTS II)
• on whole agricultural sector:
all outputs/inputs covered
• based on a quantitative economic modelling system
• developed and maintained
by an independent network of research institutions
• mainly funded by DG-RSRCH framework programs
CAPRI
EAA workshop on agricultural projection for RAINS, 8.10.2002, Brussels
CAPRI.. what is CAPRI ?
• Modelling system consists of
• Regionalised data base
• Supply Module
• Market Module
• Exploitation and Reporting tools
CAPRI
EAA workshop on agricultural projection for RAINS, 8.10.2002, Brussels
CAPRI.. what is CAPRI ?
Market Module
SpatialMulti-Commodity Model11 regional aggregatesplus all EU MS States
Young AnimalMarket Module
Linked MSProgramming Models
Supply Module
200 Regional or1050 Farm Type
Programming Models
Perennial Sub-Module
Policy Modules
CAP Premiums(base areas, ...)
AggregatedSupply &
Feed demand
AggregationHerds
Acreages
PricesPremiums
Exploitation
Env. IndicatorsWelfare analysisFEOGA budget
CAPRI
EAA workshop on agricultural projection for RAINS, 8.10.2002, Brussels
CAPRI.. what is CAPRI ?
• Recent impact analysis (2002/2003) of:
• MTR/July 2003 reform package
• Sugar market reform options
• Tradable permits for GWPs
• Further trade liberalisation steps
CAPRI
EAA workshop on agricultural projection for RAINS, 8.10.2002, Brussels
CAPRI
Microequilibrium
Marketequilibrium
Two fundamentals
Supply Demand=
Prices
Earnings Costs=
CAPRI
EAA workshop on agricultural projection for RAINS, 8.10.2002, Brussels
CAPRIWhat drives the markets ?
• Final demand:
• development of consumption pattern
• population and income growth
Willingnessto pay
MarginalCosts
• Supply:
• development of technology
• prices of inputs
Prices
CAPRI
EAA workshop on agricultural projection for RAINS, 8.10.2002, Brussels
CAPRIWhat drives the markets ?
• Final demand trends lined up with DG-AGRI
outlooks/FAPRI/FAO (currently no own projections)
• Comprise effect of population/income growth
and consumption trends
• .. But price/income dependent in counterfactual scenarios
• Price framework depends on long-term trends in
agricultural world markets
plus effect of domestic and trade policy
• … interplay between these trends and supply model
CAPRI
EAA workshop on agricultural projection for RAINS, 8.10.2002, Brussels
CAPRIWhat drives the meat markets ?
• Total meat demand per capita projected to increase by
+3.5% (1998-2009) to 90 kg pc, beef drops (-5%),
pig (+5%) and poultry (+9%) increase
• In combination with population growth:
+6% higher meat consumption
• Less market interventions in beef markets
(lower administrative prices) => price pressure
• Border protection prevents sizeable imports
CAPRI
EAA workshop on agricultural projection for RAINS, 8.10.2002, Brussels
CAPRIWhat drives the dairy markets ?
• Past consumption trends continue: less butter and cream
consumption, more cheese
• High border protection, but reduced policy intervention
let internal prices drop
• .. But supply still determined by milk quota regime
(quota expansion by 2.4 %)
CAPRI
EAA workshop on agricultural projection for RAINS, 8.10.2002, Brussels
CAPRIWhat drives cereals markets ?
• Cereals yield continue to increase (+15% or 1.2% p.a.),
but price pressure let areas drop (-5%)
• Similar developments in oilseeds
• Food demand for cereals increase by +8%, feed by +5%
=> net exports increase
• Cereal prices drop by 21%
(in real terms, about constant in nominal terms)
due to reduced administrative prices
and long-term trends in world markets
CAPRI
EAA workshop on agricultural projection for RAINS, 8.10.2002, Brussels
CAPRI
Microequilibrium
Marketequilibrium
Remember: Two fundamentals
Supply Demand=
Prices
Earnings Costs=
CAPRI
EAA workshop on agricultural projection for RAINS, 8.10.2002, Brussels
CAPRIWhat drives herds and areas ?
Market revenues
Premiums
Fixedfactorscosts
Variable input costs
Earnings
Costs
CAPRI
EAA workshop on agricultural projection for RAINS, 8.10.2002, Brussels
CAPRIDevelopment of earningsOutputs
Meat/Milk Young animal Manure
Prices
Market revenues
Earnings
Premiums
• Milk yield increase by 1.8% p.a. (technical progress)
• Beef slaughter weights increase slightly (less calves)
• More piglets per sow (+14% or 1.1% pa)
• Manure output per head depends on live weight/milk yield
Outputs
Meat/Milk Young animal Manure
CAPRI
EAA workshop on agricultural projection for RAINS, 8.10.2002, Brussels
CAPRIDevelopment of earningsOutputs
Meat/Milk Young animal Manure
Market revenues
Earnings
Premiums
• Milk (-12%) and meat prices (-20%) drop in real terms
following cuts in administrative prices (dairy, beef)
• ... But milk quotas remain binding
• Young animal prices follow meat price trends
PricesPrices
CAPRI
EAA workshop on agricultural projection for RAINS, 8.10.2002, Brussels
CAPRIDevelopment of earningsOutputs
Meat/Milk Young animal Manure
Market revenues
Earnings
Premiums
• New dairy premiums help to keep quota bindings
• Premiums are devaluated by inflation
• Especially important for suckler cows
=> past herd expansion for suckler cow trends flattened
Prices Premiums
CAPRI
EAA workshop on agricultural projection for RAINS, 8.10.2002, Brussels
CAPRIDevelopment of costs
Inputs
Feed Remonte Other inputs
Prices
Fixedfactorscosts
Costs
Variable input costs
Inputs
Feed Remonte Other inputs
• Lower feed costs: cereals prices drop, smaller herds
reduce fodder input (grass, silage) per unit of output
• Piglet prices drop (-20%), young cattle price constant
• Input saving technical progress for other inputs
CAPRI
EAA workshop on agricultural projection for RAINS, 8.10.2002, Brussels
CAPRIDevelopment of fixed factor costs
Inputs
Feed Remonte Other inputs
Prices
Fixedfactorscosts
Costs
Variable input costs
• Only implicitly in the model
(econometric dual cost function approach)
• “shadows” structural change and part of technical progress
• sizeable t.p. in pig and poultry (1,5 % p.a.)
Fixedfactorscosts
CAPRI
EAA workshop on agricultural projection for RAINS, 8.10.2002, Brussels
CAPRIWhat drives a herd size ?Outputs
Inputs
Meat/Milk Young animal Manure
Prices
Market revenues
Earnings
Premiums
Feed Remonte Other inputs
Prices
Fixedfactorscosts
Costs
Variable input costs
CAPRI
EAA workshop on agricultural projection for RAINS, 8.10.2002, Brussels
CAPRIFertilisers
• Supply models comprise N/P/K balance
• Crop need derived from export of nutrient
by harvested material
• ... covered by
• Anorganic fertiliser, can be bought at fixed prices
• and/or manure
• Losses of ammonia handled according to IPCC standards
• .. “availability” factors for N,P,K
lined up with fertiliser use expost
CAPRI
EAA workshop on agricultural projection for RAINS, 8.10.2002, Brussels
CAPRIThe new CAP (July 2003)
• „Decoupled income support“ by farm premium
• Before: premiums linked to production
(per slaughtered head, per ha ..)
• Now: premiums paid (almost) independent of production,
as long as sufficient hectares are kept in „good agricultural
conditions“ (farmed or correctly idled)
• However:
• Member States can keep part of the coupled schemes
• Not all crops are “eligible”
CAPRI
EAA workshop on agricultural projection for RAINS, 8.10.2002, Brussels
CAPRIImpact of July reform package I
• Assumption: Member State use full decoupling
• Main effect: farmers who had to use coupled premiums to
cover variable costs will now produce less, but earn more
• Activities most affected: Suckler cows, beef fattening,
durum wheat
• Reduced supply raises market prices (cereals, beef)
• Higher beef price increases demand for pig and poultry
• Higher feed prices increase prices for pig and poultry
• More idling land, extensification of crop production
CAPRI
EAA workshop on agricultural projection for RAINS, 8.10.2002, Brussels
CAPRIImpact of July reform package II
• Reduced fertiliser input <= lower yields, idling land
• lower GWP from fertiliser production
• lower background emission from soils
• Lower herd size of beef cattle and suckler cow,
somewhat higher milk yield (pressure from calves markets)
• methane output drops
• Estimated impact on agricultural GWP (direct and indirect)
-2.1 %
• But remember: exact implementation not yet known ..
CAPRI
EAA workshop on agricultural projection for RAINS, 8.10.2002, Brussels
CAPRISummary
• High border protection in meat markets
links consumption and supply trends
• For cattle, milk quota regime and young animal availability
are other important drivers
• Revision of base line will become necessary
to capture the effect of CAP reform package
• ... But implementation strategy of Member States
yet unknown, but probably decisive
CAPRI
EAA workshop on agricultural projection for RAINS, 8.10.2002, Brussels
CAPRI
Thanks for your attention !
CAPRI
EAA workshop on agricultural projection for RAINS, 8.10.2002, Brussels
CAPRIMain drivers beef
Calvesborn
Dairy cowsMilk yields
Milk quotasSuckler cows
Premiums
Heifers fattening
Oxs & Bulls
Calves fattening
Calves raisingYoung
heifers/bulls
Heifers raising