• The 2003 CAP reform: Do decoupled payments affect agricultural production?

      Howley, Peter; Hanrahan, Kevin; Donnellan, Trevor (Teagasc, Oak Park, Carlow, Ireland, 2009)
      The move from coupled payment policy instruments to payments that are decoupled from production have made estimating future trends in agricultural output much more challenging. Using a dynamic multi product partial equilibrium model, the overall aim of this paper is to examine the potential supply inducing effect of decoupled payments. This issue is important in the context of WTO negotiations, and, in particular, in discussions surrounding the appropriateness of decoupled payments being included as a ‘green box’ policy. The results suggest that farm operators, to a large extent, do not treat these payments as fully decoupled and they do in fact maintain a strong supply inducing effect on agricultural production. Findings suggest, however, that this trade distorting effect is less than previously coupled payments.
    • CAP reform post 2013: Examining the equity dimensions of agricultural support.

      Howley, Peter; Donnellan, Trevor; Hanrahan, Kevin (Teagasc, Oak Park, Carlow, Ireland, 2009)
      Using a dynamic multi-product partial equilibrium model, this paper firstly examines the potential impact of recent policy changes accruing from the mid term review of the Common Agricultural Policy (CAP) in 2003 on the cattle and sheep sectors in Ireland. Secondly, this paper evaluates the potential impact of the implementation of a CAP budget neutral, common EU flat area payment across all Member States. The European Commission has signalled that it will be evaluating current differences in the level of support between Member States as, for example, in the explanatory memorandum accompanying the Commission’s Health Check proposals the Commission argues that it is “increasingly harder to justify the legitimacy of significant individual differences in the support level which are only based on past support” (CEC, 2008; p.18). This paper demonstrates how there are significant differences in the level of CAP payments per hectare across Member States, as generally farmers in more prosperous Western and Nordic countries receive a much higher level of payment per hectare than farmers in relatively poorer Central and Eastern European countries. In relation to Ireland, similar to most other EU-15 countries, farmers benefit from the current inequitable distribution of payments and the results indicate that any move towards equalising the level of payments per hectare will have a significant negative impact on agricultural production and net trade.
    • Cap reform: implications for Ireland

      Howley, Peter; Donnellan, Trevor; Hanrahan, Kevin (Teagasc, Oak Park, Carlow, Ireland, 2009)
      Increasingly farmers can be viewed as multifunctional providers of a range of commodity and non-commodity goods that are valued by society. Changes to the Common Agricultural Policy (CAP) such as the shift towards decoupled payments not only have significant effects on agriculture but also rural areas and society more generally. Given that the CAP is likely to be the most significant driving force for change in the Irish countryside, it will be important to assess the impact of policy changes. Using a dynamic, multi-product, partial equilibrium model, this paper firstly examines the potential impact of recent policy changes accruing from the Mid-Term Review of the Common Agricultural Policy (CAP). In addition, this paper highlights additional potential reforms of the CAP and discusses their implications for the Irish agricultural sector.
    • Developing farm-level sustainability indicators for Ireland using the Teagasc National Farm Survey

      Ryan, Mary; Hennessy, Thia; Buckley, Cathal; Dillon, Emma J.; Donnellan, Trevor; Hanrahan, Kevin; Moran, Brian (Teagasc (Agriculture and Food Development Authority), Ireland, 2016-12-30)
      In the context of an expanding, export-dependent agri-food sector, indicators of sustainable development and intensification are necessary to measure, assess and verify the comparative advantage afforded by Ireland’s natural pastoral-based food production systems. Such indicators are also necessary to ensure that we produce more food with less adverse impacts on the Irish environment, climate and society. This article outlines the development of farm-level indicators that refect the multifaceted nature of sustainability, which is encompassed in economic, environmental and social indicators. The role of innovation in farm sustainability was also examined. A comparison of indicators across Irish farm systems showed that dairy farms, followed by tillage farms, tended to be the most economically and socially sustainable farm systems. In relation to greenhouse gas emissions in particular, the top-performing dairy farms, in an economic sense, also tended to be the best-performing farms from an environmental sustainability perspective. This trend was also evident in relation to the adoption of innovative practices on farm, which was found to be strongly correlated with economic performance.
    • An Econometric Model of Irish Beef Exports

      Hanrahan, Kevin (Teagasc, 2001-01-01)
      This report summarizes research that the author undertook as part of his doctoral studies in the Department of Agricultural Economics at the University of Missouri- Columbia.† The policy environment within which the Irish beef sector operates is changing such that the demand for Irish beef will increasingly be of a market rather than a policy determined nature. This changing environment makes knowledge concerning the demand for Irish beef important to understanding the economic prospects of the sector. The objectives of this research were thus two fold. The first objective was to investigate the demand for Irish beef in the UK. The second objective relates to how such consumer demand models are econometrically estimated. The empirical results show that the demand for beef in general in the UK is not price elastic and that the demand for Irish beef in the UK is price inelastic. The expenditure elasticity of demand for beef in the UK is also inelastic. The implications of this result for the Irish beef industry are as follows Decreases in the price of beef in the UK will not lead to large increases in British demand for beef. Increases in expenditure on meats will see expenditure on beef increase but to a lesser extent than other meats. Increases in the price of Irish beef relative to the prices of other beef products on the UK market will not lead to a large decrease in the market share of Irish beef. The relative insensitivity of demand for Irish beef in the UK to changes in its relative price also implies that attempts to increase the Irish share of the UK beef market will require very large reductions in the price of Irish beef. Given the current dependence of the Irish beef industry on subsidized exports to non-EU markets, the results of this research imply that attempts to re-orientate the Irish industry more towards servicing EU beef markets will require either large price decreases, with the consequent impacts on the market based revenue of the Irish beef industry and farmers, or alternatively, a movement towards the production of beef products that appeal to the non-price concerns of EU consumers and away from the production of a commodity product.
    • Econometric modelling of the EU agri-food sector through co-operation with partners in the EU-AG-MEMOD Project

      Donnellan, Trevor; Hanrahan, Kevin; Riordan, Brendan (Teagasc, 2005-04-01)
      This research project set out to build an EU agricultural policy modelling system involving participants from right across the enlarged EU. Policy Analysis is conducted at an aggregate commodity level for the main sectors of EU agriculture. The work summarised here took place over the period 2001 to 2004. The implementation of the Luxembourg Agreement and the Enlargement of the EU will lead to significant changes to the way in which agriculture operates in the EU25. Under the reform, direct payments that have been linked to production are to be decoupled to varying degrees across the Union. Enlargement will mean that agriculture in several New Member States (NMS) will come under the EU system of payments, supply constraints and market price supports for the first time. In light of the above, the most common current approach to agriculture commodity modelling and policy analysis - that which treats the entire EU as a single entity - faces a considerable challenge. Given the heterogeneity of EU agriculture and agricultural policy across the enlarged EU, it is increasingly the case that ‘the devil is in the detail’. From a scientific perspective, country level policy analysis is important in order to capture the consequences of this heterogeneity. Moreover, at a political level, policy makers realise that policy proposals either sink or swim on the basis of the perception of their expected future impact at a national level. Hence, it is important to be able to inform and facilitate a debate on the relative merits of particular reform proposals by having national (or even sub-national) level analysis to hand. The case for national level modelling across the EU is easily made, but few practitioners have taken up the challenge it presents.i Key problems include funding constraints, the absence of reliable national data sources, difficulties in agreeing and co-ordinating a consistent modelling approach and, perhaps most importantly, the absence of an integrated network of economists with knowledge of local level agriculture and agricultural policy across the enlarged EU.
    • Economic Analysis of Policy Changes in the Beef and Sheep Sectors.

      Binfield, Julian; Hanrahan, Kevin; Henchion, Maeve (Teagasc, 2001-06-01)
      The work reported in this document commenced in 1997 under the auspices of the FAPRI-Ireland Partnership. It documents the development of aggregate commodity level models for the beef and sheep sectors, and their subsequent simulation under different policy and macroeconomic environments. Companion reports document the development of similar models for other commodities, and of farm level models.
    • European Network of Agr & Rural Policy Research (Enarpri)

      Donnellan, Trevor; Hanrahan, Kevin (Teagasc, 2006-12-31)
      The economic impact of trade policy reform receives less attention than the impact of trade policy on the environment. In part this may be due to the secondary importance attributed to environmental issues when economic consequences take centre stage. However, another consideration may be the difficulties of bringing together models which examine the economic impact of trade policy reform and models which can provide measures of environmental indicators. This study combines a partial equilibrium economic commodity model with a model for the estimation of agricultural input usage and GHG emissions. The paper examines one aspect of the relationship between trade policy and the environment, namely that between agricultural trade policy reform and indicators relating to emissions of Greenhouse Gases (GHG) from agriculture. The paper examines the impact of agricultural production levels and production practices on the level of GHG emissions from agriculture in Ireland under a Baseline of the recent reform of EU agricultural policy and an alternate scenario where trade policy reforms resulting from a future World Trade Organisation Doha Development Round agreement to reveal the extent to which there are significant environmental impacts which should be considered in addition to the conventional economic considerations.
    • Impact analysis of the CAP reform on main agricultural commodities

      Donnellan, Trevor; Hanrahan, Kevin (Teagasc, 2007-03-15)
      This study has been carried out for the European Commission's Joint Research Centre to analyze agricultural policies at Member State, EU15 and EU25 levels as well as for Bulgaria and Romania. The modelling tool allows for projections and policy analysis (up to a 10 year horizon) for the enlarged EU.
    • The importance of accounting for unobserved heterogeneity, state-dependence and differences in residual variances across groups: An application to Irish Farmers land market participation decisions

      O'Neill, Stephen; Hanrahan, Kevin (Teagasc, Oak Park, Carlow, Ireland, 2010)
      Land is an essential input into agricultural production. A grwoing literature is concerned with the factors influencing farmers’ land market participation decisions in developing countries, with developed countries largely ignored. Current best-practise in the land market participation literature is exemplified by Holden et al. (2007) who use a dynamic model which allows for state-dependence and unobserved heterogeneity. Much of the literature fails to adequately deal with these features of land market decisions. In addition, a single model is used to represent all farm types. In this paper, we firstly consider the factors influencing land market participation decisions in a developing country, Ireland, while allowing for state-dependence, unobserved heterogeneity and differences across farm tyes. We compare these results to those that are obtained while ignoring state-dependence, unobserved heterogeneity and differences between farm types. Our results suggest that some caution may be warranted when these aspects are ignored when if fact they are present.
    • Long-term Projections for the Beef and Sheep Sectors

      Hanrahan, Kevin (Teagasc, 2002-12-01)
      This study examines the effect of changes in agricultural policy and other important economic factors on the outlook for beef and sheep production in Ireland in future years. The analysis is conducted at an aggregate commodity level for the two sectors. Companion reports provide similar detail on other agriculture sectors (including dairy, pig and cereals) and for related farm level work, see Donnellan (2002), McQuinn and Behan (2002), and Behan and McQuinn (2002). The analysis summarised here took place in 2001 and 2002. The objective of the research reported here was the development and use of econometric models of the beef and sheep sectors, in conjunction with other related commodity models, to produce ten-year projections for the beef and sheep sectors under different policy scenarios. The scenarios analysed related to the second BSE crisis, the reduction and the elimination of export refunds under the auspices of a new WTO agreement, and changes in the regulations relating to the payment of extensification direct payments under the Beef Common Market Organisation (CMO). A series of interlinked economic models capable of projecting key price and output variables were built for the main Irish agricultural commodities, including the beef and sheep sectors, and these in turn were linked with models for the EU and the World. It was thus possible to estimate the implications for the Irish beef and sheep sectors of supply, demand and policy changes at a world and EU level.
    • Measuring the Returns to Agricultural and Food Research and Development in Ireland: An Ex Ante Case Study

      Brew, Mary; Hanrahan, Kevin (Teagasc, 2004-01-01)
      Research provides many of the innovations that are essential to Irish agriculture’s ability to sustain and expand economic growth and maintain competitiveness. The agricultural and food research agenda in Ireland and internationally has broadened beyond seeking to just augment conventional productivity and now seeks to provide the means of enhancing the agri-food sector’s competitiveness by improving the quality of inputs and outputs, the efficiency of production systems and the development of new products. Recently there has been an increased emphasis on developing Ireland as a ‘knowledge based society’ and most recently Ireland and more specifically the Irish agri-food sector’s development as a “knowledge base bio-economy” has been advocated (Teagasc, 2008). With science, technology and innovation now a major focus of Irish public policy, Ireland is committed to increasing research spending to 3 percent of Gross Domestic Product (GDP) per annum by 2011. Accompanying this greater emphasis on the importance of research there has been significant injections of public funds into the public research systems. With increased funding arise questions of accountability, i.e. how to prioritise expenditure and measure and evaluate the outcomes of research projects. This project sets out to address what we identified as a key gap in the Irish literature - the evaluation of returns to agriculture and food research that improves the quality of a product, what we have termed demand lifting research. The project sought to address this by evaluating, as a case study, the impact of agricultural research that improves the quality of Irish lamb. If consumers are willing to pay higher prices for what they believe to be a better quality or healthier product then an evaluation of the returns to demand lifting research should be incorporated into the general assessment of the benefits that flow from investment in agricultural and food research. To date the focus of the evaluation of research benefits in Ireland has been on the returns to supply shifting research (that is to cost reducing research). In general agricultural economists have to date avoided jointly modelling technological improvement and associated changes in product quality. The key features of the comparative static partial equilibrium model developed in this project are linear supply and demand function specifications, parallel shifts of supply and demand schedules, and the use of the economic surplus methodology to evaluate the costs and benefits of innovations. With the model developed, and using the economic surplus methodology, we can allocate costs and benefits of demand lifting research between producers and consumers. We use the comparative static partial equilibrium model developed in this project to provide an assessment of the gains to Irish producers and Irish consumers of research that leads to a quality improvement in lamb. This evaluation has been based on a set of assumptions regarding, functional form, elasticity of demand and supply, and the nature of the demand and supply shift related to the demand lifting research innovation. A series of scenarios were analysed and the results used to assess the impact of demand shifting sheep research. In the first scenario the research based improvement in the quality of Irish lamb was assumed not to be associated with associated any change in the costs of production; in the second scenario the assumed increase in production cost equalled the per kilo premium associated with the improved quality of the lamb produced product. In the third scenario the increase in costs of production were assumed to equal 50% of the premium resulting from the improvement in product quality. For the purpose of this study the first two scenarios analysed set the upper and lower bounds for the change in economic surplus in the Irish lamb market, we consider the third scenario to be a conservative estimate of the returns to research. In this third scenario the innovations leading to higher quality lamb leads to a gain in economic surplus of €6.405 million per annum. Given that a large proportion of the improvements in quality will flow from improved genetics it is sensible to consider the surplus as a permanent addition and thus to consider the discounted present value of the additional economic surplus that is attributable to the research induced improvement in lamb quality. The present value of the total sum of benefits over a period of 20 years was estimated to be €79.8205 million.It was, not possible to estimate the costs involved in research that can be specifically linked to improving the quality of lamb, as this research is not a stand alone project and would have evolved over many years from work at the research centre in Athenry (and earlier work at Belclare). The values for the gains in total economic surplus and the present value of the future stream of benefits from such research can be interpreted as the maximum amount that should be spent in order to achieve the quality improvement.
    • Modelling the Gross Cost of Transporting Pig Slurry to Tillage Spread Lands in a Post Transition Arrangement within the Nitrates Directive.

      Fealy, Reamonn; O'Donoghue, Cathal; Hanrahan, Kevin; Martin, Michael; Shulte, Rogier P. (Teagasc, Oak Park, Carlow, Ireland, 2012)
      The context of this paper is in the phasing out of the transitional arrangement under the Nitrates Directive. As there is relatively little grassland capable of taking significant amounts of pig slurry available in the vicinity of the main pig production areas, in this paper we attempt to quantify the cost of transporting this slurry to the nearest available tillage land. The approach taken was to examine the geographic structure underlying the pig sector in Ireland using Geographic Information Systems (GIS) technology. The study highlighted the differential cost with, amounting to 10% of gross margin on average and as high in major pig producing areas as 21.5% in Longford and 16.6% in Cavan, while lower at 7-9% in South Tipperary and Cork. Thus while the problem is significant, the impact is not constant across the country, highlighting the value of a spatial analytical approach. Future work should assess the existing cost of spreading manure in order to be able to ascertain the net cost of spreading on tillage lands. The robustness of the results also need to be tested to assess the implications of changes in the prices of fossil fuels and fertilisers, both in terms of the cost function and in terms of the cost of substitutable mineral fertiliser
    • Modelling the impact of the recession on greenhouse gases from agriculture in Ireland

      Gillespie, Patrick R.; Donnellan, Trevor; Hanrahan, Kevin (Teagasc, Oak Park, Carlow, Ireland, 2010)
      The effects of the recession of 2009 have been felt across the economy of Ireland. The rapid contraction in economic activity has had its effect on greenhouse gas (GHG) emissions as well. It is possible to model the recession’s effect on agricultural GHG in the FAPRI-Ireland GHG model using the latest international commodity price projections from Food and Agricultural Policy Research Institute (FAPRI). The FAPRI-Ireland GHG model creates projections of future levels of Irish agricultural activity and then uses a mix of national and default emissions factors to convert this activity to estimates of annual GHG emissions from now to 2020. Our model is shocked using post-downturn commodity price projections for a selection of exogenous prices. The changes to these international commodity prices reflect the international market response to the downturn, and as such they have an impact on the level of GHG emitted by the agricultural sector in Ireland. This analysis finds that, despite the depth and breadth of the recession, the impact on GHG emissions from Irish agriculture has been muted. The impact of the shock is to reduce the projected annual emissions from the sector by only 0.14 Mt by 2020. This compares to the 2.97 Mt reduction in annual emissions which the sector would have to achieve if, for example, a reduction target of 20 percent on 2005 levels were to be imposed.
    • Situation and Outlook in Agriculture 2008/09

      Breen, James; Connolly, L.; Donnellan, Trevor; Hanrahan, Kevin; Hennessy, Thia; Kinsella, Anne; Martin, M.; Ryan, Michael; Thorne, Fiona (Teagasc Rural Economy Research Centre, 2008-12)
      CONTENTS: (1)Farm Incomes 2007; (2) Investment in Agriculture 2008/09: Dairying, Cattle, Sheep, Pigs, Tillage, Forestry
    • Study on the Functioning of Land Markets in the EU Member states under the Influence of Measures applied under the Common Agricultural Policy

      Donnellan, Trevor; Hanrahan, Kevin; Hennessy, Thia (Teagasc, 2008-07-21)
      Study on the Functioning of Land Markets in the EU Member states under the Influence of Measures applied under the Common Agricultural Policy
    • WEMAC Project

      Donnellan, Trevor; Hanrahan, Kevin (Teagasc, 2009-01-01)
      The WEMAC (World Econometric Model of Agricultural Crops) model is a model which has its origins at the French Research Institute INRA. Over the period 2006 to 2009 INRA, Teagasc and other partners worked on further developing the model as part of an EU Framework Project. This report details some of the project main results.