Policymakers rely on predictive models. An EU initiative has developed a comprehensive, tailor-made modelling platform for agriculture that provides a clearer picture of the effects of agricultural policies and uncertainty on farmers and their decisions.
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.
With EU funding, the
FADNTOOL (Integrating econometric and mathematical programming models into an amendable policy and market analysis tool using FADN Database) project set out to enhance current models to deliver state-of-the-art, custom-built economic models tailored to the FADN database. The FADNTOOL includes all aspects of farmers' production decisions and the effects of uncertainty and risk on farmers' behaviours. It also covers all levels from single farm through to the EU, and across all EU regions and markets.
Project partners 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.
New data envelopment analysis models were also designed to analyse the efficiency of agricultural farms in the EU based on FADN data. The models assist policymakers in evaluating the possible impact of EU agricultural sector policies at various levels.
Additional models were created to analyse the impact of EU policies on land prices, farm income and policy reforms. Lastly, the team set up a user-friendly interface enabling the use of all developed modelling tools.
FADNTOOL presented policymakers with simplified, state-of-the-art economic models to better assess the impact of EU policy changes and market developments on farmers and the economy overall. Given the challenges facing current agricultural markets, effective and tailored CAP measures will contribute to a sustainable and productive agriculture sector.
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