Stane Kavcic

Outlook for CEEC Agricultural Markets After EU Accession

This paper describes the development of modeling tools to simulate the effects of agricultural policy changes in new member states (NMSs) of the European Union and presents results of a modeling exercise. Partial equilibrium models simulate policy change scenarios, such as accession to the European Union, as well as other policy developments and external conditions, such as changes in exchange or economic growth rates. Results show the effects of policy change on the main agricultural product markets for a ten-year horizon. In particular, NMSs gain from higher prices and budgetary support. Projections for most sectors show real improvements on recent production levels, but less so when compared with the production of the late 1980s and early 1990s. Accession supports orientation toward crop production, for which Central and East European countries (CEECs) become important net exporters. Livestock production would also benefit from accession, with beef and pork most likely to exhibit appreciable growth, driven by higher, postaccession prices. Production growth in the dairy sector is more limited under the accession scenario than under the baseline, due to milk quota introduction. Scenario results indicate that, in the aggregate, CEEC agriculture has less favorable growth potential if it remains outside the European Union and retains the policy instruments in place before accession.

Multi-step beef ration optimisation: application of linear and weighted goal programming with a penalty function

The aim of this paper is to present the method and tool for optimisation of beef-fattening diets. Changes in policy environment and changes in costs of feed pose challenges for farm efficiency. We construct a spreadsheet from two modules based on mathematical deterministic programming techniques. In order to obtain an estimate of the magnitude of costs that may be incurred, the first module utilizes a linear program for least-cost ration formulation. The resulting value is then targeted as a cost goal in the second module. This is supported by weighted goal programming with a penalty function system. The approach presented here is an example of how a combination of mathematical programming techniques might be applied to prepare a user-friendly tool for ‘optimal’ ration formulations. We report results that confirm this approach as useful, since one is able to formulate a least-cost ration without risking a decrease in the ration’s nutritive value or affecting the balance between nutrients.

Complementary CAP Direct Payments from the National Budget and the Farm Income Issue in Slovenia

The estimation of gross value added (GVA), applying the extended economic account for agriculture (EAA) model and the partial equilibrium APAS-PAM model, is carried out to emphasize the importance of complementing the Common Agricultural Policy (CAP) direct payments from the national budget for farm incomes in Slovenia after its accession to the European Union (EU). Adopting the EU position of complementing direct payments up to the 40 percent level, a significant decline of farm incomes at the aggregate level could be expected as a result of depressed price levels. Complementary direct payments up to the 100 percent level would not result in significant improvement of agricultural income, but would drastically change the support hierarchy of agricultural commodities in Slovenia.