FADNTOOL

Integrating Econometric and Mathematical Programming Models into an Amendable Policy and Market Analysis Tool using FADN Database

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 Obiettivo del progetto (Objective)

'The design of effective and targeted CAP measures relies on a proper assessment of the impacts of EU policy changes and market developments on farmers and the whole economy. Uncertainty, instability and price volatility that relentlessly reshape agricultural markets today, call upon the development of new modelling tools able to scrutinise all relevant dynamics while also remaining easy to use and amend. The project improves and extends existing economic models that make use of the FADN informatics environment by developing a unique modelling framework that (i) encompasses all aspects of farmers’ production decisions (ii) targets the single farm but also consistently aggregates to regional, national and the EU level (iii) takes into consideration the effects of uncertainty and risk on farmers’ behaviour (iv) can be employed in different market environments, i.e. throughout the EU-27 and (v) can be amended and/or fine-tuned by EU and national FADN units. The project draws upon two major modelling tools (econometric and mathematical programming), while the validity of the employed theoretical models will be verified by their empirical application in each EU-27 country. The project’s final outcome is the construction of a methodological framework comprised of state-of-the-art economic models custom-built for the FADN database that will provide to policy makers an inclusive impact analysis of the effects of alternative policy and market developments scenarios under a real-life, dynamic context. Given the complexity of this framework, a simplified version of the models will be developed, all consistently and operatively joined into an amendable interface that will be user-friendly and easy to operate and still allow for a concise replication of our policy simulation results, capable to target at the efficiency of CAP measures, i.e. the single farm payment, although the whole framework will be also applicable providing some acquaintance with modelling parameterisation.'

Introduzione (Teaser)

Policymakers rely on predictive models. A comprehensive tailor-made modelling platform for agriculture will soon provide a clearer picture of the effects of agriculture policies and uncertainty on farmers and their decisions.

Descrizione progetto (Article)

The Farm Accountancy Data Network (FADN) has been an important instrument for evaluating the EU's Common Agricultural Policy (CAP) and its effects on farming income. However, uncertainty, instability and price volatility are dynamic variables that are not currently integrated in existing economic models relying on the FADN informatics environment.

The EU-funded project FADNTOOL is enhancing current models to deliver state-of-the-art custom-built economic models tailored to the FADN database. The FADENTOOL will include all aspects of farmers' production decisions and the effects of uncertainty and risk on farmers' behaviours. It will cover all levels from single farm through to the EU, and across all EU regions and markets. Finally, despite its comprehensive nature, it will be easy to use and amend.

During the first project period, scientists made impressive headway toward the final version of the tool with numerous models completed or in progress. They developed a model of individual farm decision making for a producer of multiple products in an environment of price volatility including rules for risk-averse farmers with invariant preferences. Farm optimisation models were developed to analyse farmers' economic behaviour in relation to CAP payment schemes. Models are also analysing the effect of CAP payment changes on land prices, again using individual farm data from FADN. Data indicate that rental and ownership values of land are directly linked to a farm's specialisation in terms of products as well as to its profitability.

Data Envelopment Analysis (DEA) is a management tool evaluating the efficiency of decision making or, perhaps more concretely, of a given producer relative to the best producer (in contrast to other methods that typically compare to an average producer). Scientists evaluated existing DEA models and their ability to assess the efficiency of farms and are creating tailor-made DEA tools.

These and other models will form a comprehensive and easy-to-use platform for policymakers and others to make knowledge-based decisions regarding CAP. http://www.fadntool.eu/ (FADENTOOL) will thus contribute to a sustainable and productive agriculture sector and overall EU economy.