Policy measures usually have an impact on the way of farming and / or farm incomes. Furthermore, they can make on-farm adjustments necessary, for example, changes in the production system, in the size of the farm and other factors. On the other hand, farm adjustments can always be made independent of changes in framework conditions.
The data and the tools available in the agri benchmark can not only be used for benchmarking but also for policy and farm strategy analysis.
The basic model allows simulation of the farms for a period of ten years. Price and yield developments must be inserted exogenously, i.e., there is no algorithm or optimisation tool providing price and yield changes endogenously. However, the model reflects the complex, and sometimes contrary, impacts that changes in many variables may create at a certain point in time.
There are two operating modes available:
Deterministic mode: the model calculates only one result which is exclusively determined from the one-dimensional input of the operator.
Stochastic mode: the model calculates a distribution of output values for each output variable selected. This way, risk can be reflected by providing probabilities for certain results. The stochastic mode is performed by using the SIMETAR® Software developed by the Texas A&M University.
To perform policy and farm strategy analysis, the following steps are necessary:
1. Define a reference system for the policy or strategy analysis. The reference is also called ‘Baseline’. The baseline is defined as ‘the most likely development of the farm without changes in the framework conditions’. In practical terms, yield and price developments for inputs and outputs must be specified. Usually, profitability indicators such as farm profit are chosen to illustrate the farm development. This step can be done by the analysing scientist.
2. Define one or more policy scenarios to be analysed and determine / quantify the variables affected by the policy change. These are typically product or input prices as well as direct payments levels. The results from policy and/or strategy analysis are then compared with the baseline results. This step can be done by the analysing scientist.
3. The farm strategies can be analysed independent from or as a reaction to changes in framework conditions. In any case it is recommend to perform this step in close cooperation with advisors and farmers as they know best which strategies are most appropriate and realistic. Typical strategies would be a) stop farming, b) grow to different extents, c) change the production system, d) improve productivity / performance or a mixture of single strategies. If the farm strategies are a reaction to policy changes, the farm development under the new policy framework should be used as a reference system here (i.e., not the Baseline).
Further information for download is available in the training section.
