Explaining, predicting and linking European farm structural change with the European farm supply model IFM-CAP

Background and Objective

To display future developments at the level of farm groups in the EU, it is crucial to predict the structural change in agriculture. Main objective of this project is the development of a method and an application tool for the EU Commission for the short-to-medium term prediction of the structural development of farms. For this, different regional and global factors will be assessed. The results are going to be implemented in the IFM-CAP supply model.

Approach

First, we assess which processes, with respect to farm specialization and farm size, are relevant for structural change in agriculture. Therefore, we define a country-specific grid of farm groups for all EU countries. On the basis of this data, we want to transfer a recently applied approach from the marketing science to our estimation of farm structural change from the farm to the regional level. Possibly all regions of the EU countries are going to be analysed.

Data and Methods

The most important data source is the Farm Accountancy Data Network (FADN) of the EU. Additionally, we use data from EUROSTAT and Common Agricultural Policy Regionalized Impact (CAPRI)-Model to identify the factors that influence structural change.
The estimation is based on a Multiplicative Competitive Interaction (MCI) model and explains the development of a certain farm specialization as the change of the attraction of different production possibilities.

Our Research Questions

• Which farm group is most competitive and characterises the future agricultural structure?
• Which factors determined the evolution of the farm specialisations in the last 20 years?
• Does the shape of the CAP have a significant influence on the structure of agriculture?
• How does the structural change in agriculture differ between the analysed Member States?
• How strong is the influence of regionally differing variables on structural change?
• How does the explicit consideration of agricultural structural change influence the IFM-CAP supply model results?

Results

The compilation and analysis of country-specific farm groups gives a much more detailed picture of the structural changes in agriculture in the EU. The additional consideration of no longer active farms in a non-active farm group promises in future to analyse a further part of the agricultural structural change - farm abandonment - at the same time. This will probably also allow us to aproximate how the number of farms as a whole can develop.