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Outlook for Ukraine agriculture: results from AGMEMOD model

Outlook for Ukraine agriculture: results from AGMEMOD model. Guna Salputra (LVAEI) Myrna van Leeuwen (LEI) Oksana Golovnya (KNEU) Serhiy Demyanenko (KNEU) I nternational scientific - methodical conference

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Outlook for Ukraine agriculture: results from AGMEMOD model

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  1. Outlook for Ukraine agriculture: results from AGMEMOD model Guna Salputra (LVAEI) Myrna van Leeuwen (LEI) Oksana Golovnya (KNEU) SerhiyDemyanenko (KNEU) Internationalscientific-methodicalconference ”Legal-organizational Forms of Agri-industrial Formations: Status, Prospects and the Impact on Rural Development” Vadym Hetman Kyiv National Economic University(KNEU) Faculty of Economics of Agri-industrial Comlex, Kyiv, November 11-12, 2011

  2. Table ofcontent • Whatis AGMEMOD • Objectivesand (short) history • Methodologyfromdatahandling to outputanalysis • Dataand variables • Structureofthemodel • Baseline scenarioassumptions • Ukraine agricultural outlook to 2025 forgrains and oilseeds, meat, dairy Vadym Hetman Kyiv National Economic University 11-12November 2011

  3. AGMEMOD AGricultureMEmber States MODelling • Partial equilibrium • Dynamic • Recursive • Econometricallyestimated • Multi-commodity marketsandmulti-countrycombinedmodel Incorporates29 individualcountrymodels– 24 EU countries, Croatia, FYR Macedonia, Turkey, Ukraine, Russia. Vadym Hetman Kyiv National Economic University 11-12November 2011

  4. Objectivesof AGMEMOD To make medium term annual projections and simulations for the main European agricultural sectors in order to • establish a reliable baselineand • evaluate measures, programmes and policies in agriculture at the EUlevel as well as at the stand-alone country (MemberState, AccessionCandidateandindividualneighbouringcountries) levelwithanemphasis on supply, demand, trade and prices. Vadym Hetman Kyiv National Economic University 11-12November 2011

  5. History of AGMEMOD EU15 country models Organisation of project EU funds5th FP Nati-onal funds Part I 2001-2005 EU27 combined model Extension of Partnership Part II 2006-2008 EU funds6th FP Extension with Turkey Part III 2009-2010 IPTS funds Extentionwith Russia, Ukraine Endogeous world price Part III 2010-2011 Extension Kazakhstan Vadym Hetman Kyiv National Economic University 11-12November 2011

  6. From data handling to output analysis • Compile data on commoditysupply/demandbalancesandmacroeconomicand policyassumptions • ModelspecificationforUkrainian agricultural situation taking into account its specific structures and agriculturalandtrade policy • Estimate/calibrate the specified equations with Eviewsandtransfer into the AGMEMOD GAMS framework • Run, solve and validate the model • Generate baseline and scenario analysis Vadym Hetman Kyiv National Economic University 11-12November 2011

  7. From data handling to output analysis Vadym Hetman Kyiv National Economic University 11-12November 2011

  8. Dataand variablesin AGMEMOD Endogenousvariables • Prices • Supply/demandbalances • production, consumption, stocksandtrade Exogenousvariables • Macroeconomicindicators • GDP, population, inflation rate, exchange rates UAH/USD and UAH/EUR • Agriculturalpolicy indicators • intervention prices • payments per ha/animal/production • input subsidies • production quota • Tradepolicy indicators • import andexportduties • Importandexport quotas andtariffs • quota tariff rates Vadym Hetman Kyiv National Economic University 11-12November 2011

  9. AGMEMOD Ukrainemodel structure Vadym Hetman Kyiv National Economic University 11-12November 2011

  10. Baseline narratives forUkraine • Projections based on: • historical trends • taking account of the world market, macroeconomic and agricultural policy environment to 2025 as far as known at this moment • Status-quo situation up to 2025: • macro-economic projections (population, GDP, inflation, exchange rates) for Ukraine • continuation of specific Ukrainian agricultural policy instruments • continuation of trade policyofUkraine • no assumptions on ongoing Doha Development Round of WTO • FAPRI April 2011 world prices incorporated Vadym Hetman Kyiv National Economic University 11-12November 2011

  11. UA baseline outlook Grains and oilseeds Vadym Hetman Kyiv National Economic University 11-12November 2011

  12. Soft wheat: competitive UA price compared to world and EU price Soft wheat price (€/100kg) Vadym Hetman Kyiv National Economic University 11-12November 2011

  13. Rapeseeds:UA price below world and EU price Rapeseeds price (€/100 kg) Vadym Hetman Kyiv National Economic University 11-12November 2011

  14. UA baseline: grains and oilseeds • Area harvested: • total grains area harvested projected to show moderate increase • 80% of grains area is allocated to soft wheat, barley and maize • total oilseeds area harvested projected to grow in reaction on • UA is becoming an important rapeseeds producer and exporter to EU countries due to increasing biodiesel demand • soybeans area would grow: UA is a protein-deficient country and soybean meals demand is expected to grow in answer on the actual rise of investments into meat and dairy sectors Vadym Hetman Kyiv National Economic University 11-12November 2011

  15. Soft wheat: production mainly driven by yield grow, slightly increase of wheat area harvested Soft wheat (mio tons) Vadym Hetman Kyiv National Economic University 11-12November 2011

  16. Barley: UA belongs to main barley exporters (80% to Middle East); higher feed use demand from increasing beef and poultry sectors Barley (mio tons) Vadym Hetman Kyiv National Economic University 11-12November 2011

  17. Rapeseeds: higher production expected as answer on higher demand for biodiesel (eg from EU); increasing net-export position Rapeseeds (mio tons) Vadym Hetman Kyiv National Economic University 11-12November 2011

  18. UA baseline outlook Livestock and meat

  19. Beef: UA price follows the world price; it is slightly declining due to increasing self-sufficiency rate; UA is net-exporter Beef price (€/100kg)

  20. Pork:UA price close to EU price and significantly above world price; import tariffs; UA is net-importer of pork AGMEMOD workshop, Brussels, 13/14 September 2011

  21. Poultry:UA price follows the world price; UA price is below the world and EU prices; UA has turned into a net-exporter of poultry Vadym Hetman Kyiv National Economic University 11-12November 2011

  22. Beef: increaseofbeef production, importantfactor -increasing slaughter weight Beef (1000 tons) Vadym Hetman Kyiv National Economic University 11-12November 2011

  23. Pork:import tariffs prevent influence from ROW; UA expected to remain net-importer • con Pork (1000 tons) Vadym Hetman Kyiv National Economic University 11-12November 2011

  24. Poultry: 70% of production is concentrated into 2 vertically integrated companies; significant investments in more integration expected; UA was net-importer to 2008, but has turned into a net-exporter Poultry (1000 tons)

  25. UA baseline outlook Milk and dairy

  26. Milk: pricelower than EU price Milk price (€/100kg)

  27. Butter: domestic price follows same patterns as world and EU prices, but at lower level

  28. Cheese: UA price lower than world and EU prices; slightly increasing due to increasing demand Vadym Hetman Kyiv National Economic University 11-12November 2011

  29. Butter: stable production and domestic use projected; declining domestic use due to stable cons/head, but decreasingpopulation; this enforces UA net-export position • Butter (1000 tons) Vadym Hetman Kyiv National Economic University 11-12November 2011

  30. Cheese: projected production increase (1%/year) linked to projected higher milk production; yearly 1.7% rise in cheese cons/cap; UA keeps net-export position but withdeclining tendency • Cheese (1000 tons) Vadym Hetman Kyiv National Economic University 11-12November 2011

  31. Conclusionsonbaselineoutlook • UA is competitive partner on world crop marketsandunderbaselineisprojected to remainnet-exporter of grains and oilseeds • UA milk production expected to increase, which leads to higher beef production as well • UA is projected to remainnet-importer of pork; relatively high domestic price compared to other meats • UA is projected to remain a net-exporter of dairy productswith a movement towards productionofcheese and fresh products (higher value products) Vadym Hetman Kyiv National Economic University 11-12November 2011

  32. Thankyoufor attention More information: www.agmemod.eu , Vadym Hetman Kyiv National Economic University 11-12November 2011

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