Development of a new model at FAO – the Cosimo project

1. Development of a new model at FAO – the Cosimo project

2. Background – A pilot project • Need policy specific projection model at FAO • Impacts of policies on markets, markets on policies • “Agricultural Policy Indicators” Project • Integrate model and data work • Existing models in ESC • Integration of databases – FAOSTAT/ CBS(internal) • Inter-agency collaboration • OECD on projections. • Consortium FAO/OECD/IFPRI/WB on “API” • Engage others? Country affiliation? • Within-agency collaboration • Statistics Division

3. Objectives – first year • To build a policy specific projection model relevant to ESC’s work program • Extend OECD’s Aglink model – countries and commodities • Incorporate policy data from the “API” Project • To synthesize databases – FAOSTAT/CBS • Provide common analytic platform (? Troll/Eviews) • To do year projection and perform scenarios • Establish workable architecture for collaboration with OECD in projections work. • Program of work examining the impact of developed country policies on developing countries

4. Objectives – beyond • Assess FAO capacity and member interest in a new program of projections/analysis • Extend country and commodity coverage • Extend policy country coverage with API project • Country specific policy studies, prospects • Develop better indicators linked to system • National food security measures • Widen collaborration • Follow Aglink Cooperators idea to interested countries

5. Features • A modeling system that extends OECD’s Aglink model to key developing countries and regions • consistent file structures by country, yet customized to the country – as in Aglink • Identifies regional/product market clearing – beef, pork etc. • extends commodity coverage – sugar, cotton, coffee • incorporates API information • “Policy” vs “template” countries • Integrates ESCs short term Food Outlook program with projections/analysis • Beneficial use of data • Use of allocation systems for area, and food/feed demand • Calorie accounting

6. Scope – commodities (22) • Crops • Wheat, coarse grain, oilseeds, rice, cotton, sugar, roots, coffee • Products – oilseed oil, meals, palm oil • Livestock • Beef, pork, poultry, eggs, • Dairy • Fluid, butter, cheese, whole milk powder, skim milk powder, casein • Exogenous calorie equivalents for others

7. Scope – countries/regions (49)

8. Systems – Are they helpful? • Land allocation • Food expenditure • Feed expenditure

9. Allocation Systems: demand • Total food expenditure: • Generalised Addilog Demand System - multinomial logit specification – four food items (Bewley)

10. The strategy for parameter choices 1. Use available estimates • literature / WFM, FAPRI, USDA • check with analysts 2. Use systems / appropriate constraints • e.g. demand system properties 3. Estimate: research estimation agenda • by country / by commodity 4. Model validation – by country / by commodity • historical simulation, sample tests • model properties / impact multipliers 5. Emphasis on consultation / documentation

11. Rice food demand income ε

12. Conclusion • Does the world need another P-E world commodity model? • Models are about improving capacity for analysis, with documented structure, consistent data • What is the demand in developing countries for country and policy specific models? • What lessons for model features can we apply? • Theoretical restrictions? • General or specific country specifications • What collaborative arrangements are now possible and how can they work?