MĚŘENÍ KONKURENCESCHOPNOSTI AGRÁRNÍHO SEKTORU ČR

24.09.1999 | Odborné konference

Měření konkurenceschopnosti agrárního sektoru ČR pomocí metody PAM a modelu AGRO-3

Measuring of competitiveness of the Czech agrarian sector by the method PAM and the model AGRO-3

Ivan Foltýn, Ida Zedníčková

Adresa autorů:

RNDr.Ivan Foltýn,CSc., Ing.Ida Zedníčková,

Výzkumný ústav zemědělské ekonomiky, Mánesova 75, 120 58 Praha 2

e-mail: foltyn@agrec.cz

Anotace:

Otázky konkurenceschopnosti českého zemědělství se dostávají stále více do popředí zájmu jak zemědělských prvovýrobců, tak tvůrců agrární politiky, zejména s blížícím se vstupem ČR do EU. Jedná se o porovnání konkurenceschopnosti domácích výrobců ve vztahu ke konkurenčním výrobcům ze zemí EU jak z pozice současných celních, měnových a dalších bariér platících do okamžiku vstupu EU, tak po ”vstupním šoku”, kdy budou tyto bariéry odstraněny a nastane proces přizpůsobování českého zemědělství společné agrární politice EU. Pro měření konkurenceschopnosti agrárního sektoru ČR byla vybrána metoda PAM (Policy Analysis Matrix) umožňující vyhodnotit konkurenční pozici jednotlivých zemědělských komodit ve vztahu k agrárnímu trhu EU, resp. světovému trhu. Za zemědělství ČR bylo vybráno 9 nejvýznamnějších komodit (pšenice, ječmen, řepka, cukrovka, brambory, mléko, hovězí, vepřové a drůbeží maso). Pro tyto komodity byly vypočteny ve VÚZE ukazatele konkurenceschopnosti vycházející z metody PAM (např. koeficienty nominální a efektivní ochrany domácího trhu, náklady domácích faktorů apod.) v rámci mezinárodního projektu FAO (Ratinger, Matthews, 1999, Ratinger, Fischer, Foltýn, Zedníčková, Ulmanová, Toušek, 1999). Výpočty byly založeny na údajích za rok 1997 (nákladová šetření VÚZE, světové ceny podle OECD apod.) a prognózovány do roku 2004 a 2005 (tj.před vstupem a po vstupu ČR do EU). Pro posouzení vzájemných konkurenčních pozic jednotlivých komodit jak na domácím, tak na zahraničních trzích byl navíc využit makroekonomický model AGRO-3, do něhož byly implementovány údaje a prognostické předpoklady uplatněné ve scénářích metody PAM.

Summary:

Problems of competitiveness of the Czech agriculture are in the center of interest of both agricultural producers and agrarian policy makers, especially with respect to access of the Czech republic to the EU. The problem deals with comparing competitiveness of domestic producers in relation to producers of the EU from the point of view of actual tariffs, exchange rates and other barriers valid to the moment of the entrance to the EU, and after the ”entrance shock” when these barriers will be removed and when the adjusting process of the Czech agriculture to the common agricultural policy of the EU. For measuring of competitiveness of the Czech agrarian sector there was used the method PAM - Policy Analysis Matrix. This method enables to evaluate of the competitive position of individual agricultural commodities in relation to the EU market and world market. There were chosen 9 most important agricultural commodities (wheat, barley, rape seed, sugar beet, potatoes, milk, beef meat, pig meat and poultry). For these commodities there were computed in VUZE competitiveness indicators based on the method PAM (nominal protection rates, effective protection rates, domestic resource cost etc.) during the international FAO project (Ratinger, Matthews, 1999, Ratinger, Fischer, Foltýn, Zedníčková, Ulmanová, Toušek, 1999). Computations were based on the data for the year 1997 (cost investigation of VUZE, world prices of the OECD etc.) and predicted to the year 2004 and 2005 (i.e. before entrance and after entrance of the CR into the EU). For considering of mutual competitive position of the individual commodities on the domestic market, and on external markets the macroeconomic model AGRO-3 was used, in which there were implemented input data and prediction assumptions defined in scenarios of the method PAM.

Klíčová slova:

konkurenceschopnost, agrární sektor, zemědělské komodity, matematický model, nelineární optimalizace

Key words:

competitiveness, agrarian sector, agricultural commodities, mathematical model, non-linear optimization

Partial equilibrium model AGRO-3

For mathematical modeling of different variants of the agrarian policy in the Czech republic there was developed a partial equilibrium model of the agrarian sector (AGRO-3). This model is based on the supply and demand equilibrium for three markets - the market of agricultural commodities (market 1), the market of processed commodities (market 2) and the market of final food products (market 3). Exogenous variables of the model AGRO-3 are general macroeconomic conditions (world prices, inflation, exchange rate, income of population etc.), special economic conditions of the Czech agrarian sector (costs of agricultural commodities, functional relations between incomes and costs on the markets 1 - 3, initial food consumption in the basic year 1996, income and food demand elasticities etc.) and conditions of the agrarian policy and international commitments of the Czech republic (production quotas, tariffs etc.). Endogenous variables of the model AGRO-3 are production volumes, domestic prices, processors and retailers costs, target food demand and exports and imports on all markets. The model AGRO-3 is a non-linear optimization model with the objective function - profit of producers, processors and retailers (Foltýn, Zedníčková, 1998).

Basic assumptions of the model

The agrarian sector is defined as a part of the national economy which contains on the supply side such production which has its origin in the domestic agricultural production, and on the demand side the whole human consumption of final food products which has its origin either in domestic production, or in imports.

It is assumed that the agrarian sector consists of the three markets:

a) market 1 - a market of agricultural commodities, where supply is created by the domestic production of farmers and imports, and demand is created by food producers (processing industry)

b) market 2 - a market of food processed commodities, where supply is represented by the domestic food processing production and imports, and demand by the retailers

c) market 3 - a market of tradable (final) food products, where supply is created by retailers, and demand by all consumers and that consumers are in the model represented by indicators related to an average inhabitant and the total number of inhabitants of the country. It deals with the following indicators:

d) human consumption of purchased food products which the consumer purchases on the market number 3

e) human consumption of self-production foods which are not purchased on the market 3 (a part of consumption, e.g. pig meat, eggs)

f) the other expenditures which are provided by the consumer outside the market 3 (e.g. catering, dressing, transport, education, culture, sport etc.).

Modeling agrarian policy variants by the help of the model AGRO-3

The model AGRO-3 serves for simulation and proving of different variants of the agrarian policy to the target (chosen) year. It is obvious that the model AGRO-3 is - like all mathematical models - a simplicity of the reality. From that implies that this model enables to implement only some elements of the agrarian policy which is described as follows:

a) Macroeconomic assumptions

- development of world and reference prices of chosen commodities

- commitments of the Czech republic to the WTO: maximal import tariffs, minimal import

access to domestic market, maximal physical and financial amount for subsidized exports

- production quotas outgoing from relations of the CR to the EU

- development of exchange rate CZK to USD or CZK to EURO, respectively

- development of average incomes of the average inhabitant

- demographic development

b) Agricultural assumptions

- development of hectare yields and animal intensity indicators

- development of cost items with respect to the inflation

- boundaries for profit (loss) margins

- maximal usable arable and agricultural land

- feed technology development as a consequence of technical progress

- maximal quotas for individual commodities

- price limits (intervention prices, minimal guarantee prices etc.)

- agroenvironmental limits

- limits of lands for non-food usage (e.g. rape seed for fuel)

c) Food processing assumptions

- development of technological coefficients

- development of cost functions of food processed commodities in relation to prices of

agricultural commodities

- boundaries for profit (loss) margins of food processors

d) Retailing sector assumptions

- development of retailers cost functions

- boundaries for retailers profit margins according to commodities

e) Food consumption assumptions

- food consumption and non-food expenditures in the basic year

- consumer prices in the basic year

- development of non-food expenditures in the target year

- demand elasticities, i.e. income elasticities and direct price elasticities

- minimal and maximal bounds for price index changes for human consumption

- limits for food consumption changes and consumer prices on the base of other than price

criteria.

The basic model structure of AGRO-3 contains about 100 indicators representing agricultural production, about 50 indicators for food processing industry, about 40 indicators for retail sector of final foods, and about 50 indicators for food consumption branch and non-food expenditures.

Using model AGRO-3 for measuring competitiveness of agricultural commodities

The model AGRO-3 enables to compare relations of domestic producers (farmers and food processors) and foreign competition on domestic markets (market 1, 2 and 3). For this purpose there are introduced into the model following constraints:

a) For each agricultural commodity which is considered from the point of view of competitiveness we define

max EXPi <= 10, max IMPi <= 10, max EXPSi <=10,

where EXPi is the export of a commodity i without subsidies in foreign market prices (either world market prices, or market prices of the export destination country) reduced by transport costs of a domestic exporter to a destination place which can be realized in case when the domestic market price is lower than the export price

IMPi is the import of a commodity i in foreign importer prices either without the domestic tariff, or with the domestic tariff of the commodity i which can be realized in case

when the domestic market price is greater than the import price

EXPSi is the export of a commodity i with subsidies in the domestic market price which can be realized in case when the domestic market price is greater than the export price, whereas the price difference of the domestic market price and the export price represents unit state expenditures for the subsidized export

value ”10” represents ”the small amount” of the given commodity for considering of the export or import trends.

b) For each considered commodity there are defined predicted cost values in nominal prices related to the target year of computation, predicted intensity values (hectare yields, milk yield, daily animal weight increase etc.) and predicted values of export and import prices in domestic currency (in relation to the commodity external price and to the predicted exchange rate).

c) Further there are defined general assumptions about the demography development of population, the population income development per capita, the inflation development, the development of non-food expenditure per capita etc.

The model AGRO-3 then computes on base of the optimizing criterion (maximization of profit of the agrarian sector) an optimal solution (if it exists) which corresponds to the market equilibrium conditions on the market 1, 2 and 3. The solution of the model enables to compare export and import tendencies of domestic producers in relation to external producers for each considered commodity by the help of the following indicators of competitiveness:

a) The value of non-subsidized export (EXP.val) and ”the strength of the export pressure” of domestic producers by means of the export dual price (EXP.dual).

b) Analogously the value of subsidized export (EXPS.val) and the export pressure of domestic producers for this type of export (EXPS.dual).

c) The value of import (IMP.val) and ”the strength of import pressure” of foreign competitors on the domestic market by means of the import dual price (IMP.dual).

From the point of view of the competitiveness measuring we can give the following statements based on the above defined indicators:

a) If the value EXP.dual, or EXPS.dual, or IMP.dual is positive, then the considered agricultural commodity has a tendency to non-subsidized export, or to subsidized export, or to import, respectively.

b) If the value EXP.val, or EXPS.val, or IMP.val reaches the boundary value (the feasible upper bound is 10), then this tendency to non-subsidized export, or to subsidized export, or to import is realized, respectively.

c) The strength of this tendency is the bigger, the higher is the positive value of the correspond dual price (EXP.dual, or EXPS.dual, or IMP.dual, respectively).

d) If the value EXP.dual, or EXPS.dual, or IMP.dual is negative or zero, then the considered commodity has no tendency to non-subsidized export, or to subsidized export, or to import and the value EXP.val, or EXPS.val, or IMP.val remains zero (the feasible lower bound is 0), respectively.

e) The tendency to non-export, or to subsidized non-export, or to non-import is the bigger, the higher is the correspond negative dual price (EXP.dual, or EXPS.dual, or IMP.dual, respectively) in the absolute value.

From these characteristics there implies that on the base of the solution of the model AGRO-3 we can give the following definitions:

Definition 1 (competitiveness of a commodity): The given commodity is competitive related to external competition if the following relations for the corresponding indicators hold:

EXP.dual > 0 and IMP.dual <= 0.

Definition 2 (non-competitiveness of a commodity): The given commodity is not competitive related to external competition if the following relations for the corresponding indicators hold:

EXP.dual <= 0 and IMP.dual > 0.

In the other cases which are not contained in definitions 1 and 2 that means:

eitherEXP.dual > 0 and IMP.dual > 0,

orEXP.dual <= 0 and IMP.dual <= 0,

it is not possible to decide uniquely if the considered commodity is or is not competitive.

Let us note that in case of the competitive commodity the domestic market should be fully supplied by the domestic producers with the possibility of export activities without danger of import competition. In case of non-competitive commodity there is no possibility to export without subsidies, but moreover there exists the real danger for domestic producers to be pressed out from the domestic market. In this case it is reasonable to consider some type of the domestic market protection.

Model predictions of competitiveness for the year 2005

In the framework of the FAO project there were solved by the model AGRO-3 three scenarios for the year 2005 (when the accession of the Czech republic to the EU was assumed):

a) scenario EU parallel - in which it is assumed the entrance of the CR to the EU in 2005 and the development of the Czech agriculture intensity (hectare yields, daily increase of animals etc.) goes in the intervall 1997 - 2005 parallel to EU (the Czech agriculture in this case cannot reach the EU level till 2005)

b) scenario EU convergent - in which it is assumed the entrance of the CR to the EU in 2005 and the development of the Czech agriculture intensity (hectare yields, daily increase of animals etc.) goes in the intervall 1997 - 2005 quicklier than in EU so that the Czech agriculture will reach the EU level till 2005

c) scenario OUT parallel - in which it is assumed no entrance of the CR to the EU in 2005

and 4 types of farms:

a) farms of physical persons: individual farms under 50 ha

b) farms of physical persons: individual farms over 50 ha

c) farms of legal persons: cooperatives

d) farms of legal persons: companies.

Results of the model AGRO-3 computations for chosen commodities (identical with PAM), where costs and export and import prices for the chosen commodities were taken from PAM and implemented into the model AGRO-3, are contained in the following table.

Table 1. Prediction of competitiveness of the Czech agriculture for the year 2005

Commodity scenario EU-k EU-p OUT-p

Type of farm 1 2 3 4 1 2 3 4 1 2 3 4

Wheat 0 y y y n 0 y n n 0 y n

Barley n n y n n n n n n n n n

Rape seed 0 0 0 0 0 0 0 0 0 0 0 0

Sugar beet 0 0 0 0 0 0 0 0 0 0 0 0

Potatoes 0 0 0 0 0 0 n n 0 0 n 0

Beef n n n n n n n n n n n n

Pork n n n n n n n n n n n n

Poultry x x 0 0 x x 0 0 x x 0 0

Cow milk n n n n n n n n n n n n

Remarks: scenarios: EU = in the year 2005 it assumed accession of the CR to the EU

OUT = in the year 2005 it assumed no accession of the CR to the EU

k = technological progress in the CR is convergent to the EU

p = technological progress in the CR is parallel with EU

Type of farm: 1 = individual farm under 50 ha

2 = individual farm over 50 ha

3 = cooperatives

4 = companies

Symbols: y = the given commodity is competitive

n = the given commodity is non-competitive

0 = the given commodity is neutral from the point of view of

competitiveness

x = for types 1 and 2 the commodity ”Poultry” is not investigated

From this table we can derive the following conclusions for individual commodities in correspondence with the definitions 1 and 2:

1. No commodity is uniquely competitive according to all scenarios and all types of farms.

2. Wheat is competitive according to the scenario EU-k in 3 cases, according to the other scenarios only in 2 cases. The competitiveness of wheat was computed in all scenarios only for cooperatives.

3. Barley is nearly 100% non-competitive.

4. From the other crops rape seed and sugar beet are neutral and potatoes partly neutral and partly non-competitive.

5. Still worse situation we can observe by the animal commodities. Totally non-competitiveness was obtained from model computations for beef, pork and milk, while poultry is only neutral.Regarding to pork production it can be influenced by the year of observation.