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Integrating Econometric and Mathematical Programming Models into an Amendable Policy and Market Analysis Tool using FADN Database

FP7-KBBE-2010-4 / 2011 - 2014


The design of effective and targeted CAP measures relies on a proper assessment of the impacts of EU policy changes and market developments on farmers and the whole economy. Uncertainty, instability and price volatility that relentlessly reshape agricultural markets today, call upon the development of new modelling tools able to scrutinise all relevant dynamics while also remaining easy to use and amend. The project improves and extends existing economic models that make use of the FADN informatics environment by developing a unique modelling framework that (i) encompasses all aspects of farmers' production decisions (ii) targets the single farm but also consistently aggregates to regional, national and the EU level (iii) takes into consideration the effects of uncertainty and risk on farmers' behaviour (iv) can be employed in different market environments, i.e. throughout the EU-27 and (v) can be amended and/or fine-tuned by EU and national FADN units. The project draws upon two major modelling tools (econometric and mathematical programming), while the validity of the employed theoretical models will be verified by their empirical application in each EU-27 country. The final outcome of the project is the construction of a methodological framework comprised of state-of-the-art economic models custom-built for the FADN database that will provide to policy makers an inclusive impact analysis of the effects of alternative policy and market developments scenarios under a real-life, dynamic context. Given the complexity of this framework, a simplified version of the models will be developed, all consistently and operatively joined into an amendable interface that will be user-friendly and easy to operate and still allow for a concise replication of our policy simulation results, capable to target at the efficiency of CAP measures, i.e. the single farm payment, although the whole framework will be also applicable providing some acquaintance with modelling parameterisation.

The consortium of 12 partners is co-ordinated by Prof. Konstadinos Mattas, University Thessaloniki, Greece.

Contribution of University Bonn:

Work package leader for WP4: Development of Farm Optimization Models Analyzing Farmers' Economic Behavior and Structural Changes RTD

Objectives of WP4:

  • To develop farm optimisation models including risk representation
  • To estimate behavioural parameters of farm group optimisation models for the EU 27 using single FADN data
  • To estimate Markov transition probabilities between farm types using FADN and FSS data and consistent with the FADN typology
  • To further develop and apply new Bayesian methodologies for estimating farm models and Markov chains in order to make best use of FADN data source
  • To validate the specification using Bayesian information measures and the influence of prior information
  • To provide a prototype farm model for the joint project tool that is easy to maintain and well adapted to the FADN informatics environment.

Staff at ILR working on the project:

Thomas Heckelei

Yinan Zhang

Hugo Storm

Journal articles, working papers and conference contributions related to the project:

Heckelei, T., Britz, W. and Zhang, Y. (2012): Positive Mathematical Programming Approaches – Recent Developments in Literature and Applied Modelling, Bio-based and Applied Economics, vol. 1 (1), p. 109-124

Last updated: Tuesday, October 30, 2012