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MFSS99 – Medium Term Simulation and Forecasting System, 1999 Revision

Funding

European Commission, Eurostat, Contract no. 2001 63500001

Duration

Juli 1999 – March 2001

Objectives

The Medium-term Forecast and Simulation System ( SPEL/EU-MFSS ) had become increasingly cumbersome and difficult to handle. Ad hoc amendments over time and the Fortran code also reduced transparency. In this situation Eurostat and DG Agriculture launched a new effort to in view of a user- friendly policy information system for a first quick analysis of CAP issues.

  • User-friendlyness: involving ease and speed of operation
  • Transparency: for continued operation, maintenance, checking and discussion of model structures or modules
  • Detailed coverage of products and CAP policies
  • Economy in information requirements
  • Reliability of results at the EU Member State level
  • Results for the major variables of political interest: Market results and agricultural income in the revised definitions of the Economic Accounts for Agriculture (EAA).

Methodology

General:

  • Lean model, stripped off from all indispensible (but interesting) elements, e.g. budgetary impacts, full welfare analysis and environmental impacts
  • Comparative static
  • Behavioural functions driven by a set of synthetic elasticities
  • Calibration of elasticities to standard microeconomic conditions in the base year.
  • Complete coverage of market balances for agricultural products as covered by the EAA

Supply side

  • Double log behavioural functions for activity levels.
  • Exogenous yields
  • Land balance imposed

Demand side

Double log behavioural functions for processing and human consumption

Market clearing

  • For major agricultural commodities (cereals, oilseeds, butter, skimmed milk powder and beef): exogenous information on world market prices.
  • For other products with limited extra-EU trade (e.g. potatoes, pigs and poultry): exogenous specification of net trade and market clearing determines endogenous prices.

Policy instruments

  • Border measures: tariffs (specific or ad valorem), flexible levies / variable export restitutions, WTO constraints on subsidized exports
  • Domestic support: intervention, subsidies, CAP premiums
  • Set aside: exogenous or based on an elasticity with respect to the obligatory set aside rate.
  • Quotas: implemented as quota on total production with shadow revenue.

Data sources

  • Eurostat gave data on market balances (ZPA1), economic accounts values (COSA) and a number of EU producer prices (PRAG), if they could not be derived as unit values.
  • Partial incorporation of revised EAA data, but old SPEL/EU database was more or less in line with revised definitions.

Additional information:

  • Witzke, H.P., Zintl, A. (2001): A Modelling Tool for Policy Makers: MFSS99, in: T. Heckelei, H.P. Witzke, W. Henrichsmeyer (eds.), Agricultural Sector Modelling and Policy Information Systems, Proceedings of the 65th EAAE Seminar in Bonn, March 29-31, 2000, pp. 273-280.
  • Witzke, H.P., Verhoog, D., Zintl, A. (2001): Agricultural Sector Modelling - A New Medium-term Forecasting and Simulation System (MFSS99), Theme 5, Research in Official Statistics, Luxembourg: Office for Official Publications of the European Communities.
  • Witzke, H.P., Zintl, A. (2001): MFSS99 – Presentation for MFSS99 Training Session, Luxembourg, March 8-9, 2001 (ppt).
Last updated: Tuesday, 16-Sep-2008 10:36:48 CEST