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.

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 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.

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.

Study on the Functioning of Land Markets in the EU Member states under the Influence of Measures applied under the Common Agricultural Policy

CONTENTS: (1)Farm Incomes 2007; (2) Investment in Agriculture 2008/09: Dairying, Cattle, Sheep, Pigs, Tillage, Forestry

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

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.

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.

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.