1. Outlook for Ukraine agriculture: results from AGMEMOD model
Guna Salputra (LVAEI)
Myrna van Leeuwen (LEI)
Oksana Golovnya (KNEU)
Serhiy Demyanenko (KNEU)
International scientific-methodical conference
”Legal-organizational Forms of Agri-industrial Formations: Status, Prospects and the Impact on Rural Development”
Vadym Hetman Kyiv National Economic University (KNEU)
Faculty of Economics of Agri-industrial Comlex, Kyiv, November 11-12, 2011

2. Vadym Hetman Kyiv National Economic University
Table of content
What is AGMEMOD
Objectives and (short) history
Methodology from data handling to output analysis
Data and variables
Structure of the model
Baseline scenario assumptions
Ukraine agricultural outlook to 2025 for grains and oilseeds, meat, dairy
Vadym Hetman Kyiv National Economic University
11-12 November 2011

3. Vadym Hetman Kyiv National Economic University
AGMEMOD
AGriculture MEmber States MODelling
Partial equilibrium
Dynamic
Recursive
Econometrically estimated
Multi-commodity markets and multi-country combined model
Incorporates 29 individual country models –
24 EU countries, Croatia, FYR Macedonia,
Turkey, Ukraine, Russia.
Vadym Hetman Kyiv National Economic University
11-12 November 2011

4. Vadym Hetman Kyiv National Economic University
Objectives of AGMEMOD
To make medium term annual projections and simulations for the main European agricultural sectors in order to
establish a reliable baseline and
evaluate measures, programmes and policies in agriculture at the EU level as well as at the stand-alone country (Member State, Accession Candidate and individual neighbouring countries) level with an emphasis on supply, demand, trade and prices.
Vadym Hetman Kyiv National Economic University
11-12 November 2011

5. History of AGMEMOD EU15 country models Organisation of project
Part I
EU15 country models
Organisation of project
EU funds 5th FP
Nati-onal
funds
Part II
EU27 combined model
Extension of Partnership
EU funds 6th FP
Part III
Extension with Turkey
IPTS funds
Part III
Extention with Russia, Ukraine
Endogeous world price
Extension Kazakhstan
Vadym Hetman Kyiv National Economic University
11-12 November 2011

6. From data handling to output analysis
Compile data on commodity supply/demand balances and macroeconomic and policy assumptions
Model specification for Ukrainian agricultural situation taking into account its specific structures and agricultural and trade policy
Estimate/calibrate the specified equations with Eviews and transfer into the AGMEMOD GAMS framework
Run , solve and validate the model
Generate baseline and scenario analysis
Vadym Hetman Kyiv National Economic University
11-12 November 2011

7. From data handling to output analysis
Vadym Hetman Kyiv National Economic University
11-12 November 2011

8. Data and variables in AGMEMOD
Endogenous variables
Prices
Supply/demand balances
production, consumption, stocks and trade
Exogenous variables
Macroeconomic indicators
GDP, population, inflation rate, exchange rates UAH/USD and UAH/EUR
Agricultural policy indicators
intervention prices
payments per ha/animal/production
input subsidies
production quota
Trade policy indicators
import and export duties
Import and export quotas and tariffs
quota tariff rates
Vadym Hetman Kyiv National Economic University
11-12 November 2011

9. AGMEMOD Ukraine model structure
Vadym Hetman Kyiv National Economic University
11-12 November 2011

10. Baseline narratives for Ukraine
Projections based on:
historical trends
taking account of the world market, macroeconomic and agricultural policy environment to 2025 as far as known at this moment
Status-quo situation up to 2025:
macro-economic projections (population, GDP, inflation, exchange rates) for Ukraine
continuation of specific Ukrainian agricultural policy instruments
continuation of trade policy of Ukraine
no assumptions on ongoing Doha Development Round of WTO
FAPRI April 2011 world prices incorporated
Vadym Hetman Kyiv National Economic University
11-12 November 2011

11. Vadym Hetman Kyiv National Economic University
UA baseline outlook
Grains and oilseeds
Vadym Hetman Kyiv National Economic University
11-12 November 2011

12. Soft wheat: competitive UA price compared to world and EU price
Soft wheat price (€/100kg)
Vadym Hetman Kyiv National Economic University
11-12 November 2011

13. Rapeseeds: UA price below world and EU price
Rapeseeds price (€/100 kg)
Vadym Hetman Kyiv National Economic University
11-12 November 2011

14. UA baseline: grains and oilseeds
Area harvested:
total grains area harvested projected to show moderate increase
80% of grains area is allocated to soft wheat, barley and maize
total oilseeds area harvested projected to grow in reaction on
UA is becoming an important rapeseeds producer and exporter to EU countries due to increasing biodiesel demand
soybeans area would grow: UA is a protein-deficient country and soybean meals demand is expected to grow in answer on the actual rise of investments into meat and dairy sectors
Vadym Hetman Kyiv National Economic University
11-12 November 2011

15. Vadym Hetman Kyiv National Economic University
Soft wheat: production mainly driven by yield grow, slightly increase of wheat area harvested
Soft wheat (mio tons)
Vadym Hetman Kyiv National Economic University
11-12 November 2011

16. Vadym Hetman Kyiv National Economic University
Barley: UA belongs to main barley exporters (80% to Middle East); higher feed use demand from increasing beef and poultry sectors
Barley (mio tons)
Vadym Hetman Kyiv National Economic University
11-12 November 2011

17. Vadym Hetman Kyiv National Economic University
Rapeseeds: higher production expected as answer on higher demand for biodiesel (eg from EU); increasing net-export position
Rapeseeds (mio tons)
Vadym Hetman Kyiv National Economic University
11-12 November 2011

18. UA baseline outlook
Livestock and meat

19. Beef: UA price follows the world price; it is slightly declining due to increasing self-sufficiency rate; UA is net-exporter
Beef price (€/100kg)

20. AGMEMOD workshop, Brussels, 13/14 September 2011
Pork: UA price close to EU price and significantly above world price; import tariffs; UA is net-importer of pork
AGMEMOD workshop, Brussels, 13/14 September 2011

21. Vadym Hetman Kyiv National Economic University
Poultry: UA price follows the world price; UA price is below the world and EU prices; UA has turned into a net-exporter of poultry
Vadym Hetman Kyiv National Economic University
11-12 November 2011

22. Vadym Hetman Kyiv National Economic University
Beef: increase of beef production, important factor - increasing slaughter weight
Beef (1000 tons)
Vadym Hetman Kyiv National Economic University
11-12 November 2011

23. Vadym Hetman Kyiv National Economic University
Pork: import tariffs prevent influence from ROW; UA expected to remain net-importer
con
Pork (1000 tons)
Vadym Hetman Kyiv National Economic University
11-12 November 2011

24. Poultry: 70% of production is concentrated into 2 vertically integrated companies; significant investments in more integration expected; UA was net-importer to 2008, but has turned into a net-exporter
Poultry (1000 tons)

25. UA baseline outlook
Milk and dairy

26. Milk: price lower than EU price
Milk price (€/100kg)

27. Butter: domestic price follows same patterns as world and EU prices, but at lower level

28. Vadym Hetman Kyiv National Economic University
Cheese: UA price lower than world and EU prices; slightly increasing due to increasing demand
Vadym Hetman Kyiv National Economic University
11-12 November 2011

29. Vadym Hetman Kyiv National Economic University
Butter: stable production and domestic use projected; declining domestic use due to stable cons/head, but decreasing population; this enforces UA net-export position
Butter (1000 tons)
Vadym Hetman Kyiv National Economic University
11-12 November 2011

30. Vadym Hetman Kyiv National Economic University
Cheese: projected production increase (1%/year) linked to projected higher milk production; yearly 1.7% rise in cheese cons/cap; UA keeps net-export position but with declining tendency
Cheese (1000 tons)
Vadym Hetman Kyiv National Economic University
11-12 November 2011

31. Conclusions on baseline outlook
UA is competitive partner on world crop markets and under baseline is projected to remain net-exporter of grains and oilseeds
UA milk production expected to increase, which leads to higher beef production as well
UA is projected to remain net-importer of pork; relatively high domestic price compared to other meats
UA is projected to remain a net-exporter of dairy products with a movement towards production of cheese and fresh products (higher value products)
Vadym Hetman Kyiv National Economic University
11-12 November 2011

32. Thank you for attention
More information: ,
Vadym Hetman Kyiv National Economic University
11-12 November 2011