Axel Tonini

Regional Economic Analysis of Milk Quota Reform in the EU

This report is based on the outcome of a study carried out by the European Commissions Joint Research Centre - Institute for Prospective Technological Studies (JRC-IPTS, Spain) in cooperation with EuroCARE (Bonn, Germany) and the collaboration of the Agricultural Economics Research Institute (LEI, the Netherlands) and the Catholic University of the Sacred Heart (Unicatt, Italy). The report provides an economic impact assessment of possible implications of the Health Check of the Common Agricultural Policy (CAP), with an explicit focus on regional effects of a milk quota abolition in the EU-27 in the year 2015. For the analysis the CAPRI model was updated with econometric estimates of milk quota rents at regional level and simulation results are presented for the year 2020. The detailed spatial resolution allows identifying regions where economic changes are larger than visible from aggregated impacts at Member State or European level.

Is the collapse of agricultural output in the CEECs a good indicator of economic performance? A total factor productivity analysis

This paper analyzes total factor productivity (TFP) growth in agriculture for the ten Central and East European countries (CEECs) that began formal negotiations for EU accession in September 1998. A panel data set is constructed consisting of pooled time series data for the ten CEECs from 1993 to 2002, and it is used to estimate a time-varying stochastic production frontier. A Malmquist index of TFP growth is estimated and decomposed into efficiency change and technical change. The results show that despite the fall in output, TFP growth rates were positive for all ten CEECs. This suggests that the collapse of agricultural output in the CEECs is not necessarily a good indicator of agricultural performance. An analysis that only focuses on output decline provides a partial and misleading interpretation of the success of agricultural reforms. Also, estimates of technical efficiency confirm the hypothesis that large-scale farming performs better than small-scale farming when markets are missing and economic conditions are uncertain.

Review of Main Methodological Approaches Quantifying the Economic Effects of the European Milk Quota Scheme

This report is based on the outcome of a study carried out by the European Commissions Joint Research Centre - Institute for Prospective Technological Studies (JRC-IPTS, Spain) in cooperation with EuroCARE (Bonn, Germany) and the collaboration of the Agricultural Economics Research Institute (LEI, the Netherlands) and the Catholic University of the Sacred Heart (Unicatt, Italy). The report provides a review the most recent studies modelling the European milk quota. The focus is on milk quota rents, which are a central element in carrying out impact analyses on dairy policies. Direct approaches to estimating milk quota rents are the only option for providing empirically gained estimates to be used in equilibrium models. From the reviewed empirical estimates, it appears that differences in magnitude and rankings are present across the considered studies. This poses serious problems when these estimates are used for calibration, because equilibrium models are highly sensitive to the assumptions made on quota rents. Another difficulty lies in the choice of the length of run used when calibrating. As previously mentioned, equilibrium models are sensitive to the assumptions made on quota rents and different lengths of run may lead to different policy conclusions. Given that the micro-econometric estimation of milk quota rents seems to be an ongoing issue and its translation for equilibrium models far from being settled, it is advisable to perform sensitivity analysis using, whenever possible, different sets of estimates in order to assess the robustness of policy analysis.

The Common Agricultural Policy SIMulation (CAPSIM) Model: Dairy Reform and Western Balkan Countries Accession Scenarios

The aim of this study is to provide and describe a multicommodity analysis able to focus and investigate two EU relevant agricultural policy aspects: the dairy reform and the enlargement to Western Balkan countries. The analysis is carried out using the Common Agricultural Policy SIMulation (CAPSIM) model developed in the early 1980s by EuroCARE and the University of Bonn on behalf of DG ESTAT. The model is further upgraded for this study in order to analyse the effects of the Health Check decisions on the EU dairy market as well as the impact of the EU enlargement towards Western Balkans countries. Key results of the main quota expiry scenario for 2020 are that milk production would increase by 3.1% in the EU-27 whereas milk prices would drop by 7.3%. Accession effects in the Western Balkan countries would originate in some convergence to EU prices, in technology transfer which would increase yields, and in CAP components introduced on the Western Balkan like milk quotas or decoupled payments.