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Using administrative data to model CAP reform. Sinéad McPhillips Economics & Planning Division Department of Agriculture, Food & the Marine Kevin Hanrahan Agricultural Economics and Farm Surveys Department Teagasc. Overview. Commission proposals on SFP DAFM analysis

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using administrative data to model cap reform

Using administrative data to model CAP reform

Sinéad McPhillips

Economics & Planning Division

Department of Agriculture, Food & the Marine

Kevin Hanrahan

Agricultural Economics and Farm Surveys Department

Teagasc

overview
Overview

Commission proposals on SFP

DAFM analysis

Irish “internal convergence” proposal

Comparisons with other proposals

Modelling by Teagasc on farm types

Conclusions

commission proposals on sfp
COMMISSION PROPOSALS ON SFP
  • Distribution of Direct Payments within Member States (‘internal convergence’):
    • Progressive movement to uniform national or regional payment rates per hectare by 2019
    • Entitlements based on eligible hectares declared in 2014 by active farmers with at least one entitlement in 2011
dafm analysis
DAFM analysis

Modelling based on DAFM administrative data

Objective: To quantify effects of Commission proposals, & to develop and propose alternatives

Administrative data collected by DAFM (such as contained in the SPS application form) provides a wealth of useful data

eligible area

payment amount

stocking density

models analysed
Models analysed

Flat rate national

Flat rate at NUTS 2 & NUTS 3 level

Regions based on stocking density

All resulted in large transfers within regions/local area as well as between regions

irish proposal on internal convergence
IRISH PROPOSAL ON INTERNAL CONVERGENCE
  • “Approximation” - move towards the average
  • Applies to the whole payment (green and basic)
  • Based on commission’s proposals for external convergence
  • Results; average gains of 29% for 65,000 farmers, average losses of 9% for 56,000. Those with highest payments lose most.
  • 5 Member States supportive (Spain, Portugal, Italy, Denmark and Luxembourg)
slide10

Irish Proposal – Internal Convergence Breakdown

Note: All figures are estimates only, based on modelling exercises carried out by DAFM, using eligible area and actual payments to farmers in 2010, in order to analyse the overall impact of alternative proposals on Irish farmers.

other proposals emerging
OTHER PROPOSALS EMERGING
  • However, other Member States have other ideas
  • In addition, other proposals are coming from the European Parliament all the time – this is a moveable feast
    • CAP reform now s.t. “ordinary legislative procedure”,
    • i.e. co-decision of Council and Parliament
slide12

Comparative Analysis: Commission, Capoulas Santos (EP)

and Irish Minister’s Proposals

Note: All figures are estimates only, based on modelling exercises carried out by DAFM, using eligible area and actual payments to farmers in 2010, in order to analyse the overall impact of alternative proposals on Irish farmers.

modelling by teagasc
MODELLING BY TEAGASC
  • Adding data from the AIM and other DAFM databases (animal numbers and type)
  • So as to allow farms to be categorised according to the FADN farm typology
    • Similar approach to that used in Census of Agriculture typing of farms
  • Useful for CAP negotiations
  • Database could be adapted for a variety of analytical purposes
sps payment share of ffi by farm system nfs 2010
SPS Payment Share of FFI by Farm System (NFS 2010)

impact on income of a euro change in subsidy

depends on the farming system’s subsidy dependence

Teagasc 2010 NFS (Hennessy et al. 2011)

farms by farm system and economic size
Farms by Farm System and Economic Size

1 ESU = €1,200 SO

S ≤ 8 ESU; 8<M≤40 ESU; L>40 ESU

results from teagasc analysis
Results from Teagasc analysis

Reform is a zero-sum game

If there are losers there are winners/If there are winners there are losers

Specialist dairying and tillage, which are more intensive systems, have more losers than winners, but still a substantial number of winners.

Drystock farms, by contrast, have more winners than losers, but still have a surprising number of losers.

Largest absolute gains/losses on those farms that are larger recipients of DP

Larger relative gains on farms with smaller DP receipts

Doesn’t make sense to talk about “cattle men winning” and “dairy men losing” – there are winners and losers in all farm types

conclusions
CONCLUSIONS
  • Detailed administrative data allows more precise modelling of the effects of policy change
    • Can provide insights not provided by other data
  • Particularly useful when comparing one proposal against another
  • Still have to bear in mind that they are just models
    • Not predictive of what will happen in the real world
  • Cannot provide information on income or production effects