OECD Network – Farm Level Analysis

A.Kinsella

Introduction• Network for distributional analysis set up by OECD

• 18 participants from 12 OECD countries

• 10 OECD Secretariat staff

• European Commission

• Most participants contact persons nominated by their delegations in response to the OECD’s request

• DAFF proposed Teagasc be involved

Introduction

• Last meeting of network focused on:– defining terms of reference for a project analysing the

distribution of support – discussing other possible topics for analysis , including

the feasibility of estimating the response of risk adverse farmers to policies

– Various possible topics were outlined in a presentation of the OECD Programme of work for 2009-10 including Productivity and Competitiveness

Introduction

• Last meeting of network focused on:– planning the organization of a seminar in conjunction

with the Working Party on Agricultural Policies and Markets (APM) to enable network members to present on-going work of potential interest to delegates

Distribution of Support – Defining terms of Reference

• Discussion of the scope, methodology and data availability for a project on the distribution of support

• Participants outlined/presented the main policy issues regarding the distribution of support in their country, and gave information on data availability and the type of analysis available (see ppt presentations on the website www.oecd.org)

Presentation of the OECD Programme of work 2009-2010

• Carmel Cahill, Head of Policies and Trade in Agriculture Division, presented the Programme of Work recently adopted by the OECD Committee for Agriculture for 2009-10 and highlighted specific items where the network could contribute. These included:

• New PSE (Producers Support Estimate) indicators with a structural/distributional character;

Presentation of the OECD Programme of work 2009-2010

• Also included:

• Disaggregated effects of policy reform on specific types of farms or households

• Risk analysis

• Structural factors determining farm productivity

• Farm household income

• The presentation is available on the network website www.oecd.org

Simulating the response of risk adverse farmers to policy

• OECD presented the methodology used in previous OECD work on how risk adverse farmers respond to different policies

• The objective is to estimate the impact of different types of risk-related policies on risk, production and welfare, and on the interaction between different risks and measures

Simulating the response of risk adverse farmers to policy

• Data needs were outlined & participants asked to comment on data availability in their country for possible future work in this area.

• Many participants indicated strong interest & gave preliminary indication on the availability of panel data necessary to derive the matrix needed for the proposed analysis.

• Secretariat will directly contact participants that expressed interest to make progress in this work

Simulating the response of risk adverse farmers to policy

• Step 1: Select the pop.group/s for this study

• Select at least one (maybe more) homogenous group/s of the population from farm level survey data - the group would preferably be farms specialized in crops.

• In order to have homogenous farms in each group, they could be selected according to farm type, farm region or farm size (e.g., crop farm, in region A, with a cultivated area above 50 ha).

Simulating the response of risk adverse farmers to policy

• Step2: Select a sample of farms from each population group

• From each group of population selected at the first step, identify 50-100 single farms in the survey sample. The main criterion for selection would be the length of time in the survey sample

• Each selected farm should have stayed in the sample for at least 5 years (ideally more than 10 years)

Simulating the response of risk adverse farmers to policy

• Step 3: Define the vector of variables

• Define the vector of several (at least two) variables which are components of a hypothetical calculation of farm profit (e.g., output price and yield of one crop, and other revenue).

• Using the standard formula of the profit function The objective is having as many components of the profit equation as possible, according to the information available in the database

Simulating the response of risk adverse farmers to policy

• Interaction between OECD & participants may be necessary to identify the vector of variables.

• For each individual crop that will be retained among the selected vector of variables, a new market price time series variable (Pi) will be added to the vector.

• OECD provide national level prices accordingly for this purpose - time series data will be identified from available sources & used for all individuals in the sample

Possible topics of interest for future work

In addition to risk management • Issues related to farm productivity and

competitiveness (Fiona/Carol Newman informed and hope to present Irish results at forthcoming meeting)

• Specialisation/diversification activities. • The role of farm households in rural areas, value-

added activities and diversification of activities were also mentioned as issues of growing interest

Possible topics of interest for future work

• Farm household income, in particular off-farm income activities and the sources of off-farm income depending on farm characteristics

• Persistency of low incomes and tracking income levels over time

• Environmental performance • Data needs were outlined & participants asked to comment

on data availability in their country for possible future work in this area

Possible topics of interest for future work

• As a follow on, output from RERC in many of these areas has been forwarded to OECD

• Secretariat will directly contact participants that expressed interest to make progress in this work

Forthcoming Seminar in conjunction with the APM* Working Party

• Presentations of research work on various topics from some participants with a view to informing APM Working Party about what is underway

• Providing information that could be useful when designing future programmes

* Working Party on Agricultural Policies and Markets (APM)

OECD Network – Farm Level Analysis

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