Myles Patton

Stochastic Partial Equilibrium Modelling: An Application to Crop Yield Variability

Market volatility is of increasing concern within the agricultural sector of the EU and consequently the FAPRI-UK and EU-GOLD partial equilibrium modelling system is being developed to produce stochastic projections, which reflect underlying uncertainties. This chapter describes the underlying methodology. In the initial simulations, only one source of uncertainty, namely crop yield variability within the EU, is examined. Positive correlations among crop yield deviates amplify variations in crop production. This is supported by our results of the experimental simulations in which correlations among crop yield deviates are taken into account and compared to results where they are not addressed. Variability in output value varies widely depending on the aggregation level under consideration. In particular, at levels below where prices are determined, output value variability is larger than either production variability or price variability alone, supporting the potential need for risk management policy.

Market Impact of Foot-and-Mouth Disease Control Strategies: A UK Case Study

Foot-and-mouth disease (FMD) poses a serious threat to the agricultural sector due to its highly contagious nature. Outbreaks of FMD can lead to substantial disruptions to livestock markets due to loss of production and access to international markets. In a previously FMD-free country, the use of vaccination to augment control of an FMD outbreak is increasingly being recognized as an alternative control strategy to direct slaughtering [stamping-out (SO)]. The choice of control strategy has implications on production, trade, and hence prices of the sector. Specific choice of eradication strategies depends on their costs and benefits. Economic impact assessments are often based on benefit–cost framework, which provide detailed information on the changes in profit for a farm or budget implications for a government (1). However, this framework cannot capture price effects caused by changes in production due to culling of animals; access to international markets; and consumers’ reaction. These three impacts combine to affect equilibrium within commodity markets (2). This paper provides assessment of sectoral level impacts of the eradication choices of FMD outbreaks, which are typically not available from benefit–cost framework, in the context of the UK. The FAPRI-UK model, a partial equilibrium model of the agricultural sector, is utilized to investigate market outcomes of different control strategies (namely SO and vaccinate-to-die) in the case of FMD outbreaks. The outputs from the simulations of the EXODIS epidemiological model (number of animals culled/vaccinated and duration of outbreak) are used as inputs within the economic model to capture the overall price impact of the animal destruction, export ban, and consumers’ response.

Economic Structure and Vulnerability to Recession in Rural Areas

Summary The recent recession had a marked impact on the rural labour market in Northern Ireland, particularly within remote rural areas. The extent to which this reflected the underlying economic structure is explored using shift-share analysis. Remote rural areas suffered from the double impact of the industrial concentration of employment within certain industries and the regional redistribution of employment. They were severely impacted by the contraction in the construction sector and during the early period of the recession the performance of the manufacturing sector. Nevertheless, the labour market within remote rural areas recovered more rapidly compared to urban and accessible rural areas. In particular, the manufacturing sector had a strong positive influence during the recovery period within remote rural areas. The concentration of employment within goods-producing sectors within Northern Ireland means that rural areas tend to respond more quickly to business cycle fluctuations. In order to reduce the susceptibility of rural areas to recessionary falls in demand it is desirable to build on the strengths of specific sectors that build on the asset base of rural areas, e.g. the development of new products and processes within the food and drinks industry that are primarily rural based.