Study to assess the impact of future options for the future reform of the sugar common market organisation

Funding

EU-Commission, DG Agriculture, Contract no. 2001/S131-088925

Duration

November 2001 – June 2003

Organisation

Project leader: EuroCARE GmbH

Sub-contractor:

University of Hohenheim, Institute for Farm Management, Stuttgart-Hohenheim, Germany

Objectives

Impact analysis of reform options for the Sugar Common Market Organisation (CMO), predefined by the EU-Commission, on relevant stakeholders and aspects:

• Agriculture (sugar beet and competing crops)
• Sugar industry
• Employment
• Consumers
• Outermost regions,
• Developing Countries, Least Developed Countries and ACP Countries
• Overall cost/benefit comparison

Options to be examined:

• Option 1: Quota reduction to phase out export refunds
• Option 2: Cut in support prices to phase out export refunds.
• Option 3: "Agenda 2000-like " = price cut with partial compensation
• Option 4: Combination of both quota- and price-reduction
• Option 5: Suppression of quota regime with price cut and partial compensation
• Option 6: Full liberalisation of the sugar regime

Methodology

General

Chart: Top down approach in co-ordinated and complementary use of several quantitative economic tools

WATSIM

At the international level the World Agricultural Trade Simulation Model ( WATSIM) simulated the trade impacts of reform options on third countries and international price levels. For this study

• the regional composition has been redefined to identify relevant regions (least developed Countries, ACP Countries) and
• WATSIM has been transformed from a trade flow model clearing through a "world market" to a trade flow model capable of reflecting the impact of bilateral trade policies.

Main responsible: Dr. Arnim Kuhn

CAPSIM

For the representation of EU markets with the main characteristics of the sugar production and the sugar CMO on the level of EU Member States, the Common Agricultural Policy Simulation Model (CAPSIM ) has been used. Main adjustments have been

• a rather detailed description of the sugar sector including the CMO
• a recalibration of the supply responce in line with CAPRI

CAPSIM and WATSIM were iterating: WATSIM provided world market prices and gross import flows to CAPSIM, whereas CAPSIM yields a supply response resulting from the specification of quotas and sugar intervention prices.

Main responsible: Dr. Peter Witzke

CAPRI

CAPSIM sugar beet prices are input for a special version of the activity-based supply model for Common Agricultural Policy Regional Impact analysis ( CAPRI), used to estimate regional land use and crop mix in EU Member States on the NUTS 2 level. Sugar specific adjustments were:

• the explicit distinction of sugar beet producer types, and
• a modified objective function acknowledging the stochastic nature of yields and a speculative motive for C beet production.

Main responsible: Marcel Adenaeuer

Farm management models

CAPSIM sugar beet prices were also input for simple farm management models: (expected) gross margins have been compared between sugar beet and alternative crops and the most profitable crop consistent with agronomic restrictions is assumed to be chosen. In spite of discrete responses at the farm level the aggregated results

• provided valuable complementary insight on the supply response on sugar beet farms and they
• permitted to obtain results on the effects of tradability of delivery rights on different scale

Main responsible: Prof. Dr. J. Zeddies

Special studies

to tackle a number of issues deserving attention but less suitable for formal modelling:

• competitiveness of the processing industry
• inter-professional relations, and
• alternative sweeteners

Main responsible: Dr. B. Zimmermann

Additional information:

• Henrichsmeyer, W., Adenaeuer, M., Kuhn, A., Witzke, H.P., Zeddies, J., Zimmermann, B. (2003): Study to Assess the Impact of Options for the Future Reform of the Sugar Common Market Organisation, Main report, EuroCARE, Bonn (Still not yet released for publication by the EU Commission).
• Henrichsmeyer, W., Adenaeuer, M., Kuhn, A., Witzke, H.P., Zeddies, J., Zimmermann, B. (2003): Study to Assess the Impact of Options for the Future Reform of the Sugar Common Market Organisation, Appendix, EuroCARE, Bonn (Still not yet released for publication by the EU Commission).
• Witzke, H.P.(2003): Applied welfare analysis of reform options for sugar CMO with CAPSIM (ppt).
• Witzke, H.P., Kuhn, A. (2003): Assessing Reform Options for the Sugar Common Market Organisation - Quantitative Analyses with Interlinked Models, Referat auf der 43. Jahrestagung der Gesellschaft für Wirtschafts-und Sozialwissenschaften des Landbaus (GeWiSoLa), Stuttgart-Hohenheim (pdf).

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Last updated: Thursday, 30-Oct-2008 10:25:00 CET