Economic Assessment Results Markus Kempen Outline Scenarios Definition

Economic Assessment Results Markus Kempen Outline Scenarios Definition

Economic Assessment Results Markus Kempen Outline Scenarios Definition Agricultural Income Effects Main Market Effects Overview on Cost Impacts Conclusion/Discussion Cross Compliance Assessment Tool Analyzed Scenarios Main Scenarios: Baseline 2005: Technically: CAPRI base year All measures implemented in base period 2005-2009 Compliance varies among SMR directives( GAEC issues and countries (70% 100%); on average about ~90% No implementation in Bulgaria and Romania Violation of measures as estimated/observed in base year Zero Compliance: Hypothetical situation without CC related measures Mainly used as comparison scenario Compliance100pct: Assuming full compliance with all measures Variations of Compliance100pct for Sensitivity Analysis: Cost200: cost doubled Cost500: cost increased by factor 5 Crops000Animals200: no cost for crops, animals doubled Crops200Animals000: no cost for animals, crops doubled

Cross Compliance Assessment Tool Income Effects (EU27) Zero Compliance Reference 2005 Compliance100pct Agricultural Income [Mio ] 223219 [% diff] 217729 216503 -2,5% -3,0% Premiums [Mio ] 34293 34284 34279 Total Output Value [Mio ] 327671 327951 327931

0,1% 0,1% 144506 145707 [% diff] 4,2% 5,0% of which related to CC [Mio ] 5919 7183 161315 161259 -0,1% -0,1% 42835 43270 [% diff] 5,5% 6,5% of which related to CC [Mio ]

2359 2755 166636 166672 0,3% 0,3% 33148 34022 [% diff] 12,2% 15,1% of which related to CC [Mio ] 3559 4428 [% diff] Total Input Value Crop Production Output [Mio ] [Mio ] 138745 161460

[% diff] Crop Production Input [Mio ] Animal Production Output [Mio ] 40619 166211 [% diff] Animal Production Input [Mio ] 29555 Cross Compliance Assessment Tool Income Effects (EU27) Zero Compliance Reference 2005 Compliance100pct Agricultural Income [Mio ] 223219 [% diff] 217729 216503 -5490 -6716 Premiums

[Mio ] 34293 34284 34279 Total Output Value [Mio ] 327671 327951 327931 0,1% 0,1% 144506 145707 [% diff] 4,2% 5,0% of which related to CC [Mio ] 5919 7183 161315

161259 -0,1% -0,1% 42835 43270 [% diff] 5,5% 6,5% of which related to CC [Mio ] 2359 2755 166636 166672 0,3% 0,3% 33148 34022 [% diff] 12,2% 15,1%

of which related to CC [Mio ] 3559 4428 [% diff] Total Input Value Crop Production Output [Mio ] [Mio ] 138745 161460 [% diff] Crop Production Input [Mio ] Animal Production Output [Mio ] 40619 166211 [% diff] Animal Production Input [Mio ] 29555 Cross Compliance Assessment Tool

Income Effects Sensitivity of Results Cross Compliance Assessment Tool Regional Income Effects Cross Compliance Assessment Tool Summary - Income Minor effects comparing baseline situation (about 90% compliance) and full compliance (100%) Cost related to CC standards are almost equal to drop in agricultural income Agricultural Income decreases compared to a situation without regulation ( ~ -3%) CC standards cost are significantly lower than premium payments No significant difference between crops and animal production ( with respect to income) Output value of animal products goes up with increasing cost (market effects can partially compensate) Output value of crops slightly decreasing (at most stable) Income drop homogeneous among regions [-5%, -1%] Cross Compliance Assessment Tool Market effects for selected activities/products Selcted Indicators in 100% Compliance Scenario (2005) - absolut or relative diff. to Zero Compliance Soft wheat Barley Rape seed Potatoes Fallow Land Dairy cows / Raw milk Pig fattening / Pork Production

Revenue CC Cost Price Supply Demand Net Trade [1000 ha or heads] [ / ha or head] [ / ha or head] [ per ton] [Mio tion] [Mio tion] [Mio tion] 22501 589,24 13,9 98,62 127961 121780 6030

0,40% -3,03 -0,44% 1118 1032 86 14044 451,67 98,62 61235 57908 3327 0,93% -3,66 -0,62% 887 822 64 4586 667,06

200,16 14194 14154 29 -1,13% 2,25 0,37% -288 -286 -1 2306 3362,24 122,65 62272 56572 5701 -0,45% 13,42 0,37% -584

-530 -54 280.53 143568 143568 0 0.25% -10 -10 0 1302,23 21497 18575 2923 2,01% -624 -566 -58 12294 13,2 29,1

46,7 23,2 -1,87% 25267 2018,12 -0,02% 2,39 239122 117,63 -1,33% 2,28 45,8 3,1 Cross Compliance Assessment Tool Regional Production Effects LU per ha Cross Compliance Assessment Tool Summary Market/Production Effects Animals: Overall decrease in herds; Increasing prices almost compensate CC cost ( but not loss of production) Decreases in prevailing intensive regions ( due cost related to manure application) Dairy sector almost not affected (quota!)

Crops: Cereal production increasing (best alternative); Cereal prices go down due decreasing (feed) demand and increasing acreage Additional cereal production is processed to bio fuels (at lower prices) demanding crops go down, costs can be partially compensated by price effects) Fallow Land: Set aside and fallow land decrease (due GAEC enforcing minimum maintenance) Assumptions on cost of fallow land are crucial! Cross Compliance Assessment Tool Cost Implication at EU level Cross Compliance Assessment Tool Regional Cost Implication Total cost per UAA Animal related cost per LU Nitrate Directive Crop related cost per UAA Animal Welfare Directive(s) Cross Compliance Assessment Tool Summary - Cost

Cost: Animal production more affected then crops Dir 4 (crops and animals) and Dir16-18 (only animals) major cost drivers Significant regional difference in cost effects (especially for animals) Cross Compliance Assessment Tool Conclusion/Discussion CC Cost are not compensated by market effects Divergent effects in Crop and animal sector - Public service payments might need to be targeted more strongly to livestock sectors (also in the light of important positive and negative externalities to environment by these sectors) Maybe accompanying measure needed on maintenance of fallow land level? Cross Compliance Assessment Tool Animal Welfare Minimum legal Standard Dairy cows Suckler cows Calves Pig fattening Minimum legal standard Estimated on farm condition Cross Compliance Assessment Tool Animal Welfare Criteria % of optimal condition Dairy cows - loose housing

100 80 legal standard on farm condition 60 40 20 0 T1f T1e T1a T1b T2b T2c T2e T2d T2a T3a T3e T3f T3b T3c T3d T4e T4f T4a T4b T4d T4c T5d T5a T5e T5g T5f T5c T5b Locomation Social interaction Flooring Light, air and noise Stockmanship Animal Nedds Index criteria % of optimal condition Pig fattening 100 80 legal standard on farm condition 60 40 20 0 T1e T1a T1c T1b T2f T2d T2e T2a T2b T2c T3f T3a T3e T3c T3d T4g T4f T4b T4a T4e T4c T5c T5g T5d T5e T5b T5a T5f Locomation Social interaction

Flooring Light, air and noise Stockmanship Animal Needs Index criteria Cross Compliance Assessment Tool Summary Animal Welfare Based on Animal Needs Index (Cattle and Pigs) Minimum legal standard based on EU and national legislation Estimated on farm condition extrapolated from own field study (Austria, 60 farms) Overall: On farm condition above minimum standard ( but several standards binding) Cross Compliance Assessment Tool

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