This report synthesises the findings from the workshop on "Developments and Prospects of Farm Level Modelling for post 2013 CAP impact analysis" organised jointly by the IPTS-JRC and the Directorate-General for Agriculture and Rural Development in Brussels, 6-7 June 2012. The report constitutes a comprehensive overview of the state of approaches and modelling platforms currently employed for micro-level policy analysis at farm-level, representing a specific response to, and consideration of, recent policy developments within the evolving CAP context. Particular attention was given to the methodologies and approaches applied for policy impact assessment, from the general perspective to specific impact of policy reforms, not least structural change and risk/uncertainty, as well as financial and dynamic investment behaviour and technological choice, to market and biophysical inter-linkages. An important part of the report represents conclusions and recommendations towards developing a generic farm level modelling approach able to capture impacts of future CAP developments.

Agriculture is the product of a complex mixture of behavioural, biophysical and market drivers. Understanding how these factors interact to produce crops and livestock for food has been the focus of economic investigation for many years. The advent of optimisation algorithms and the exponential growth in computing technology has allowed significant growth in mathematical modelling of the dynamics of agricultural systems. The complexity of approaches has grown in parallel with the availability of data at increasingly finer resolutions. Farm-level models have been widely used in agricultural economic studies to understand how farmers and land owners respond to market and policy levers. This book provides an in-depth description of different methodologies and techniques currently used in farm-level modelling. While giving an overview of the theoretical grounding behind the models, an applied approach is also used. Case studies range from the application of modelling to policy reforms and the subsequent impacts on rural communities and food supply. This book also provides descriptions of the use of farm-level models in much wider fields such as aggregation and linking with sectoral models. Its purpose is to show the reader the methods that have been employed to inform decision-makers about how to improve the economic, social and environmental goals required to achieve the aims of multidimensional policy.

This book, which is the first to be published in the emerging field of farm-level microsimulation, highlights the different methodological components of microsimulation modelling: hypothetical, static, dynamic, behavioural, spatial and macro–micro. The author applies various microsimulation-based methodological tools to farms in a consistent manner and, supported by a set of Stata codes, undertakes analysis of a wide range of farming systems from OECD countries. To these case studies, O’Donoghue incorporates farming policies such as CAP income support payments, agri-environmental schemes, forestry planting incentives and biomass incentives – in doing so, he illuminates the merits of microsimulation in this environment.

This manual presents the second version of the EU-wide individual farm level model IFM-CAP which has been developed to assess the economics and environmental impacts of the CAP and related policies, such as the Strategies embedded in the European Green Deal. The rationale for such a farm-level model is based on the increasing demand for a micro simulation tool capable to model farm-specific policies and to capture farm heterogeneity across the EU in terms of policy representation and impacts. Based on Positive Mathematical Programming, IFM-CAP seeks to improve the quality of policy assessment upon existing aggregate and aggregated farm-group models and to provide assessment of distributional effects over the EU farm population. To guarantee the highest representativeness of the EU agricultural sector, the model is applied to every EU-FADN (Farm Accountancy Data Network) individual farm (83,292 farms). The present manual provides a detailed description the IFM-CAP model (IFM-CAP V.2) in terms of design, mathematical structure, data preparation, modelling livestock activities, allocation of input costs, modelling of the current CAP setting (2013-2020) and calibration process. The theoretical background, the technical specification and the outputs that can be generated from this model are also briefly presented and discussed.

The purpose of this paper is to discuss how farm-level modelers can best extend their research to address issues broader than just farm income. The paper describes how trade-off curves are a valuable tool for summarizing the missing information to policy makers on economic problems related to sustainability issues and agriculture. We outline steps an economic researcher could follow in developing an integrated farm-level model that successfully links changes in environmental quality with agricultural practices so that the relevant trade-offs for policy analysis can be quantified.

Microeconomic modeling has been an important tool for agricultural economists for several decades and promises to be important for ad-dressing the research problems of the 1980s as well. This volume explores the possibilities for using micromodeling to analyze how individual farm businesses react to and are affected by farm policies. Although this purpose represents only one potential use of micro-modeling, effective modeling for policy analysis necessitates a broad look from several historical, analytical, and institutional perspectives. The Micromodeling Conference held November 18-20, 1981, at Airlie House, Virginia, under the auspices of the U.S. Department of Agri-culture's Economic Research Service and the Farm Foundation reflected these concerns.