Lesson 5.1: CAPRI

Icône de l'outil pédagogique Author

Marcel Adenauer

Icône de l'outil pédagogique CAPRI – Common Agricultural Policy Regionalised Impact analysis

The CAPRI modelling system consists of specific databases, a methodology, its software implementation and the researchers involved in their development, maintenance and applications.

The databases exploit wherever possible well-documented, official and harmonised data sources, especially data from EUROSTAT, FAOSTAT, OECD and extractions from the Farm Accounting Data Network (FADN)[1]. Specific modules ensure that the data used in CAPRI are mutually compatible and complete in time and space. They cover about 50 agricultural primary and processed products for the EU (see Britz et al., 2008 in the Annex), from farm type to global scale including input and output coefficients.

The economic model builds on a philosophy of model templates which are structurally identical so that instances for products and regions are generated by populating the template with specific parameter sets. This approach ensures comparability of results across products, activities and regions, allows for low cost system maintenance and enables its integration within a large modelling network such as SEAMLESS. At the same time, the approach opens up the chance for complementary approaches at different levels, which may shed light on different aspects not covered by CAPRI or help to learn about possibility aggregation errors in CAPRI.

[1] FADN data are used in the context of so-called study contracts with DG‑AGRI, which define explicitly the scope for which the data can be used, who has access to the data and ensure the data are destroyed after the lifetime of the contract.

Icône de l'outil pédagogique The economic model

The economic model is split into two major modules.

The supply module consists of independent aggregate non‑linear programming models representing activities of all farmers at regional or farm type level captured by the Economic Accounts for Agriculture (EAA). The programming models are a kind of hybrid approach, as they combine a Leontief-technology for variable costs covering a low and high yield variant for the different production activities with a non‑linear cost function which captures the effects of labour and capital on farmers’ decisions. The non‑linear cost function allows for perfect calibration of the models and a smooth simulation response rooted in observed behaviour. The models capture in high detail the premiums paid under CAP, include NPK balances and a module with feeding activities covering nutrient requirements of animals. Main constraints outside the feed block are arable and grassland, set-aside obligations and milk quotas. The complex sugar quota regime is captured by a component maximising expected utility from stochastic revenues. Prices are exogenous in the supply module and provided by the market module. Grass, silage and manure are assumed to be non‑tradable and receive internal prices based on their substitution value and opportunity costs.

The market module consists of two sub‑modules. The sub‑module for marketable agricultural outputs is a spatial, non-stochastic global multi-commodity model for about 40 primary and processed agricultural products, covering about 40 countries or country blocks in 27 trading blocks. Bi‑lateral trade flows and attached prices are modelled based on the Armington assumptions. The behavioural functions for supply, feed, processing and human consumption apply flexible functional forms where calibration algorithms ensure full compliance with micro‑economic theory including curvature. The parameters are synthetic, i.e. to a large extent taken from the literature and other modelling systems. Policy instruments cover Product Support Equivalents and Consumer Support Equivalents (PSE/CSE) from the OECD, (bi‑lateral) tariffs, the Tariff Rate Quota (TRQ) mechanism and, for the EU, intervention stocks and subsidized exports. This sub‑module delivers prices used in the supply module and allows for market analysis at global, EU and national scale, including a welfare analysis. A second sub‑module deals with prices for young animals.

As the supply models are solved independently at fixed prices, the link between the supply and market modules is based on an iterative procedure. After each iteration, during which the supply module works with fixed prices, the constant terms of the behavioural functions for supply and feed demand are calibrated to the results of the regional aggregate programming models aggregated to Member State level. Solving the market modules then delivers new prices. A weighted average of the prices from past iterations then defines the prices used in the next iteration of the supply module. Equally, in between iterations, CAP premiums are re‑calculated to ensure compliance with national ceilings.

Icône de l'outil pédagogique Post-model analysis

Post-model analysis includes the calculation of different income indicators as variable costs, revenues, gross margins, etc., both for individual production activities as for regions, according to the methodology of the EAA. A welfare analysis at Member State level, or globally, at country or country block level, covers agricultural profits, tariff revenues, outlays for domestic supports and the money metric measure to capture welfare effects on consumers. Outlays under the first pillar of the CAP are modelled in very high detail. Environmental indicators cover NPK balances and output of climate relevant gases according the guidelines of the Intergovernmental Panel on Climate Change (IPCC). Model results are presented as interactive maps and as thematic interactive drill-down tables.

Icône de l'outil pédagogique The technical solution

The technical solution of CAPRI is centred on the modelling language GAMS which is applied for most of the data base work and CONOPT applied as solver for the different constrained (optimisation) problems. The different modules are steered by a Graphical User Interface currently realised in C, which interacts with FORTRAN code and libraries which are inter‑alias dealing with data base management. Typically, these applications generate run-specific parts of the GAMS code. Exploitation tools apply additionally Java applets for interactive maps and XLM/XSLT to generate interactive HTML tables.

SEAMCAP is an adjusted version of the simulation engine of CAPRI in order to integrate it into the SEAMLESS framework that

  • allows to use external elasticities provided by EXPAMOD to steer the supply response in the regional supply models
  • allows to transfer scenario parameters from a Guided User Interface (GUI) for scenario handling
  • prepares a subset of model outputs to make them available to the user of SEAMLESS-IF

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