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A Stochastic Analysis of the Impact of Volatile World Agricultural Prices on European and UK Agriculture

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  • Moss, Joan E.
  • Binfield, Julian C.R.
  • Zhang, Lichun
  • Patton, Myles
  • Kim, In Seck

Abstract

Successive Common Agricultural Policy (CAP) reforms and trade liberalisation have led to a more market-orientated European agricultural sector, with EU commodity prices now more closely linked to world prices. As a consequence EU prices have become more volatile. Greater price volatility increases uncertainty and raises fresh challenges for projections of policy impacts in the EU. To take account of world price volatility stochastic modelling has been applied to the FAPRI-EU partial equilibrium model, which includes a UK modelling system. Stochastic modelling provides a means to capture some of the inherent uncertainty associated with agricultural production systems. By varying assumptions about certain exogenous variables, stochastic models can be used to examine the different ways markets may behave. Variable world prices are incorporated within the EU GOLD model. This process identifies the impact of a stochastic distribution of world prices on EU agriculture rather than the single point estimates in the conventional deterministic approach. The results outlined in this study demonstrate the impact of volatile world prices on EU and, in particular, UK prices and market control instruments

Suggested Citation

  • Moss, Joan E. & Binfield, Julian C.R. & Zhang, Lichun & Patton, Myles & Kim, In Seck, 2011. "A Stochastic Analysis of the Impact of Volatile World Agricultural Prices on European and UK Agriculture," 85th Annual Conference, April 18-20, 2011, Warwick University, Coventry, UK 108771, Agricultural Economics Society.
    • Handle: RePEc:ags:aesc11:108771
    DOI: 10.22004/ag.econ.108771
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    References listed on IDEAS

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    1. Unknown, 2006. "FAPRI 2006 Stochastic Baseline: A View of 500 Alternative Futures," FAPRI-MU Report Series 44837, Food and Agricultural Policy Research Institute (FAPRI).
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    Cited by:

    1. Patton, Myles & Binfield, Julian C.R. & Kim, In Seck & Zhang, Lichun & Davis, John, 2012. "Linkages between the energy, biofuel and agricultural sectors," 86th Annual Conference, April 16-18, 2012, Warwick University, Coventry, UK 134717, Agricultural Economics Society.
    2. Britz, Wolfgang, 2014. "A New Graphical User Interface Generator for Economic Models and its Comparison to Existing Approaches," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 63(04), pages 1-15, December.
    3. Britz, Wolfgang, 2014. "A New Graphical User Interface Generator for Economic Models and its Comparison to Existing Approaches," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 63(4).

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    Keywords

    Agricultural and Food Policy;

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