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The AT2030 Model

The AT2030 Model. An overview by Josef Schmidhuber, FAO Wolfgang Britz, University of Bonn. A quick overview of the presentation. The background The principal goals and the focus The principal features (supply, demand, price transmission) The main data and parameter sources

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The AT2030 Model

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  1. The AT2030 Model An overview by Josef Schmidhuber, FAO Wolfgang Britz, University of Bonn @2030 - Model Documentation

  2. A quick overview of the presentation • The background • The principal goals and the focus • The principal features (supply, demand, price transmission) • The main data and parameter sources • The first results • The next steps • The technical solution • The feedback - your turn @2030 - Model Documentation

  3. 1. Where do we start from? The Background FAO’s long-term outlook for World Agriculture: “World Agriculture: Towards 2030” • Large accounting framework • Results from a suit of quantitative tools • Inputs from experts (“meta-analysis”) but... • No reproducible baseline • No possibility to undertake scenario analyses @2030 - Model Documentation

  4. 2. What are the principal goals ? • 1st Step: supplement the existing process with a quantitative framework to • generate a reproducible baseline • undertake scenario analyses of fundamental long-term shifts in supply, demand, and policies • 2nd Step: replace the existing framework • but maintain, ease and enhance the inclusion of expert judgement @2030 - Model Documentation

  5. 3. Where do we place the focus on? • The long-term dynamics of change: • in income, population, policies • The perspective issues of particular importance for developing countries: • food security and related global food issues, natural resources, etc. @2030 - Model Documentation

  6. ... and on what not: • Short-term trade policy issues • e.g. changes in Tariff Rate Quotas, in-quota/above-quota rates • or reduction of export subsidies • Short-term domestic policy issues • changes in stock policies, etc. • Short-term supply/demand issues • e.g. the impacts of the recent Food & Mouth Disease outbreak @2030 - Model Documentation

  7. How has the long-term, global focus affected the scope and design of the model? 1. Dynamic parameterisation of food demand @2030 - Model Documentation

  8. How has the long-term, global focus affected the scope and design of the model? 2. PSEm and PSEr as aggregate measures for price and non-price relatedpolicy intervention @2030 - Model Documentation

  9. How has the long-term, global focus affected the scope and design of the model? 2. PSEm and PSEr as aggregate measures for price and non-price relatedpolicy intervention @2030 - Model Documentation

  10. How has the long-term, global focus affected the scope and design of the model? 2. PSEm and PSEr as aggregate measures for price and non-price relatedpolicy intervention @2030 - Model Documentation

  11. How has the long-term, gloabl focus affected the scope and design of the model? 2. PSEm and PSEr as aggregate measures for price and non-price relatedpolicy intervention @2030 - Model Documentation

  12. How has the long-term, global focus affected the scope and design of the model? 3. Distinction between consumer and producer markets @2030 - Model Documentation

  13. How has the long-term, global focus affected the scope and design of the model? 4. Global country coverage • regionalised into 17 country groups but • in a variable geometry and • plans to disaggregate further (regions and large countries) @2030 - Model Documentation

  14. Current country groups @2030 - Model Documentation

  15. How has the long-term, global focus affected the scope and design of the model? 5. Complete coverage of the food and fibre economy • 34 food items, including: • 7 cereals • Oilseeds, vegetable oils • 5 roots and tubers • 3 tropical beverages • 7 other crops (plantains, sugar, pulses, vegetables, bananas, citrus, and other fruits) • 5 meats, milk and dairy products, eggs • Other food products • 4 Non-food commodities: • tobacco, cotton lint, other fibre plants, and rubber. @2030 - Model Documentation

  16. 4. The principal features • Dynamic recursive, non-spatial multi-commodity framework • Trade closure and market clearing • Homogenous product assumption • Law of one price • Consumer and producer markets, prices • Calibrated to the AT2030 baseline(multiplicative shift factors, in line with log-log-specification) @2030 - Model Documentation

  17. 4.1 What supply-side specifics? • Crops: area/yield differentiation • Livestock: herd size/off-take rates/slaughter weights • Multiplicative calibration and shift factors • Elasticities are calibrated to the base year and 2030 • Nerlovian partial adjustment with crop and country-specific adjustment dynamics @2030 - Model Documentation

  18. acreage/herd size scenario shifter general shifter elasticities producerincentive price t-1 4.1 What supply-side specifics? 1. Double-log specification of the desired long-term equilibrium of acreage or herd size Xt*ir with expected prices PI*=Pit-1: @2030 - Model Documentation

  19. Log of desired long termacreage/herd size Log of last year‘sacreage/herd size 4.1 What supply-side specifics? 2.Nerlovian partial adjustment with crop and country-specificadjustment factors , render the following behavioural functions: @2030 - Model Documentation

  20. dynamic price elasticties(to ensure consistency with changing income elasticities and to comply with changes in consumption pattern) dynamic income elasticities(semi-log functions of income levels) 4.2 What demand-side specifics? • Differentiation in food, feed, and other uses • Food:Behavioural double log functions @2030 - Model Documentation

  21. 4.2 What demand-side specifics? • Feed: Behavioural double log functions • derived from a set of sectoral feed substitution elasticities [WFM], for constant energy and protein need • and the consistent set of supply elasticities for livestock activitiescombined with energy/protein conversion factors [WFM] @2030 - Model Documentation

  22. 4.3 What price transmission mechanism? • For PSE countries:Farm gate pricePF in region ris derived from the uniform international price PW as follows: Producer incentive price PIas farm gate priceplus non-market PSE: @2030 - Model Documentation

  23. 4.3 What price transmission mechanism? • For non-PSE countries: • Consumer prices PCrelate to farm gate prices according to: @2030 - Model Documentation

  24. 4.3 What price transmissionmechanism? • Planned: To comply with the dynamics on the supply side,a partial adjustment specification will replace price transmission for non-PSE countries: • Based on adaptive expectations according to @2030 - Model Documentation

  25. 5. What are the main data sources? • The AT2030 data base (SUAs in primary product equivalents) • Crop and livestock production parameters from FAOSTAT • World Bank GDP levels and projections • UN population estimates and projections • OECD PSE data base • ILO consumer food prices (pending) @2030 - Model Documentation

  26. 6.1 What are the parametersources? • The FAO World Food Model (WFM) • The FAO Food Demand Model (FDM) • Guestimates (e.g. partial adjustment factors are largely derived from product and country-specific production systems) @2030 - Model Documentation

  27. 6.2 How are parameter sources reconciled? All elasticities are calibrated: Penalty function minimises relative squared differences from givenelasticities (eg. World Food Model and Food Demand Model) Homogeneity, symmetry, additivity and full curvatureare imposed in the calibration process Restriction for area expansion on supply side Test to calibrate energy and protein need and devlivieries for feed @2030 - Model Documentation

  28. 7. The first results (multiplier analysis) Elasticities/multipliers with respect to a sustained shift in supply: A sustained 1 % increase in yields in commodity I results in a percentage change inworld market prices of commodity j in 2030 of: @2030 - Model Documentation

  29. 7. The first results (multiplier analysis) Elasticities/multipliers with respect to a sustained shift in supply: A sustained 1 % increase in yields in commodity I results in a percentage change inproduction of commodity j in 2030 of: @2030 - Model Documentation

  30. 7. The first results (multiplier analysis) Elasticities/multipliers with respect to a sustained shift in policy support: A sustained 1 % decrease in PSEs in commodity I results in a percentage change inworld market prices of commodity j in 2030 of: @2030 - Model Documentation

  31. 7. The first results (multiplier analysis) Elasticities/multipliers with respect to a sustained shift in income: A sustained 1 % increase in GDP growth rate in country r results in a percentage change inworld market prices of commodity j in 2030 of: @2030 - Model Documentation

  32. 8. The next steps (1) Inclusion of actual consumer prices for food (ILO) Regional disaggregation, large country disaggregation Better (policy) representation in developing countries A measure for natural protection in developing countries Non-agricultural tariffs through an effective rate of protection Partial adjustment approach for price transmission equations @2030 - Model Documentation

  33. 8. The next steps (2) Income multipliersand weakly endogenous incomefordeveloping countries A feed system basedonphysical conversion rates andintensification measures Potential yields as an asymptote to actual yields Stocks and flows of resources @2030 - Model Documentation

  34. 9. The technical solution PC based system under GAMS Input direct access to AT2030 data base tables of raw WFM, FDM, PSE etc. parameters Processing flexible country and commodity aggregation NLP parameter calibration Solution and integrated scenario analysis Output Browser to display results in a flexible, n-dimensional cube HTML tables Internet based mapping tool (Java) EXCEL tables @2030 - Model Documentation

  35. 10. Your turn ... Need for feedback Errors, omissions, mis-specifications, etc. Proposals for change and further development. Useful but yet untapped sources for parameters and data? ... @2030 - Model Documentation

  36. FINISHED ... Thanks for your attention, questions, and feedback @2030 - Model Documentation

  37. How has the long-term focus affected the scope and design of the model? 3.1. Dynamic parameterisation of food demand @2030 - Model Documentation

  38. 4.2 What demand-side specifics? Dynamic parameterisation of food demand @2030 - Model Documentation

  39. 8. The first results (multiplier analysis) A sustainable 1 percent increase in production ... @2030 - Model Documentation

  40. 8. The first results (multiplier analysis) A sustainable 1 percent decrease in PSEs ... @2030 - Model Documentation

  41. 4.3 What price transmission mechanism? Other issues: Uniform world market price Constant price difference to border captures transport costs, quality differences etc. @2030 - Model Documentation

  42. energy/proteinneed per unit output herd size offtakerate outputcoefficient 4.2 What demand-side specifics? • Feed demand 1. Determination of total feed requirements TFR for energy/protein k: @2030 - Model Documentation

  43. energy/proteincontent normalised Uncorrected energy/protein need per unit output 4.2 What demand-side specifics? where kl is : @2030 - Model Documentation

  44. 4.2 What demand-side specifics? 2. Determination of use of feed stuff z, which is driven by: • its grain or protein equivalents requ • the change of total requirement TFR and • a set of feed substitution elasticities: @2030 - Model Documentation

  45. 4.1 What supply-side specifics? 2. Nerlovian partial adjustment with crop and country-specific adjustment dynamics , ( 0<<1) @2030 - Model Documentation

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