The mid-term Baseline Scenario

1 „Sustainable Land Management“ - Workshop on Models and Scenarios - 03.09.2012 Berlin

Forward projection of the current status under application of currently observed trends. Framework conditions are only varied where changes are already political agreed.

Definition

Models

• DART (Dynamic Applied Regional Trade): CGE model

• CAPRI (Common Agricultural Policy Regional Impact):

Agricultural Sector Model

DART: Input data

• UN population

• GTAP database

• Land use via land rents

• Biofuel demand from OECD (2012) and National Action Plans for

European Counties (2011)

• Disaggregation of crops based on FAO STAT

• Disaggregation of biofuel sectors based on F.O Licht and Méo

Consulting

CAPRI: Input data

• UN population

• FAO STAT

• OECD AGLINK/COSIMO database

• EUROSTAT (for Europe)

• Several other sources

DART/CAPRI

2 Baselines (different model types, databases etc) but:

Some variables are aligned (e.g. population and biofuel quotas)

And will be aligned soon (GDP and energy prices)

(both endogenous to DART and exogenous to CAPRI)

Population 2007-2030

CHNINDAFRROWMEASEALAMUSAMAIBRAFSURUSMEDJPNREUDEUPAOGBRFRACANANZBENSCA

After: United Nations, Department of Economic and Social Affairs, Population Division, Population Estimates and Projections Section (2010).

Global biofuel quotas From OECD Agricultural Outlook 2012:

101520253035404550

OtherET

OtherBD

Demand Mandate Share in total fuel

US ethanol

RFS2 EPA Option 1 EPA Option 2 EPA Option 3 Baseline

bnl Biodiesel Cellulosic Other advanced Other conventional

EU27 Renewable Energy Directive

Not reached

Ethanol Biodiesel

Who fills the RED in the transportation sector 0.5%

4.2% 5.3%

CAPRI Baseline

• Not yet finished

• Due to update to OECD/FAO Agricultural outlook 2012 (until 2021) and latest FAOSTAT database

• Until 2020 the CAPRI baseline will be based on that outlook

Results OECD Outlook 2012

Global Ethanol production and trade

020406080

100120140160180200

2006 2011 2016 2021

bnl Production Trade Trade/Production

Ethanol production and use in 2021

USA 51%

Brazil 22%

EU 11%

China 6%

India 2%

Thailand 1%

Other 8%

Use Thailand

2% India 2% China

Other 8%

Brazil 27%

USA 46%

Production

Ethanol Production and Use in other countries

Use Production Use Production

bnl Asia Other America Africa Other Europe Oceania

2009-2011 2021

Global biodiesel production and trade

2006 2011 2016 2021

bnl Production Trade Trade/Production

Biodiesel production and use

Asia Other AmericaAfrica OceaniaOther Europe

2021 2009 -2011

bnl EU-27 USA Argentina Brazil

2009 -2011 2021

Maize Wheat Rice Oilseeds

Real crop prices down from recent peaks but to stay on a higher plateau..

Demand - Key messages • Food and feed demand is robust

– Historically strong economic growth in developing, particularly in emerging countries

– Over four fifths of food demand growth is in developing countries

• Biofuel feedstock demand will remain strong but slower growing than in decade 2000-10: energy market is key.. – Policy distortions are still strong - mandates – Ethanol from maize tops out with US mandate, and global

growth will come mostly from sugarcane – Biodiesel from edible vegetable oils grows strongly

• Implications – Robust demand for food, feed and biofuel feedstocks will

pressure supply systems

Shifting consumption structure

Main drivers of consumption: • Population, slowing but still growing fast in Africa • Rising per-capita income, growing affluence of large middle classes in emerging

economies. • Towards diet harmonisation, yet large differences in per-capita consumption levels

persist. • The biofuel sector is expected to continue to grow rapidly and will increasingly affect

agricultural markets.

2000 2005 2010 2015 2020

Developing countries

Cereal

2000 2005 2010 2015

Developed countries

-0.6-0.4-0.2

00.20.40.60.8

11.21.41.6

Shift in global consumption from staple foods to value-added products continues

Food and feed dominate cereal use: Ethanol expands until 2015 – still small but important.

Total cereals use

Food Feed Biofuel Other

1.3% p.a.

1.2% p.a.

0.7% p.a.

1.7% p.a.

0.6% p.a. 1.8%

p.a. 26% p.a.

2.8% p.a.

Industrial (biodiesel) use of vegetable oil continues to increase

020406080

100120140160180200

Edible vegetable oil use

Food Industrial

4% p.a. 2% p.a.

4% p.a.

18% p.a.

Key messages - Supply

• Production will respond to higher prices – But how much, and where?

• Supply growth differs regionally – Industrial countries – slow growth – Most from developing and former transition countries

• Poultry and pork production respond to strong demand from developing countries, but with higher feed costs

• Productivity growth appears to be slowing – Where high access to variable inputs, supply response will be strongest

in the short term, but limited by higher fertilizer and feed costs – Growth in yields of many crops is slowing – Best land is mostly used, expansion will be to more marginal land, with

costly access and marketing, and more variable yields – Water supply for irrigation is increasingly limited

Net production indexes show a slowing of growth

1961-70 1971-80 1981-90 1991-00 2001-10 2011-20

All Agriculture Production 2.7 2.4 2.3 2.5 2.6 1.7

Production-per capita 0.7 0.6 0.6 1.0 1.4 0.7

Crops Production 2.7 2.4 2.3 2.5 2.6 1.7

Livestock Production 2.9 2.5 2.4 2.2 2.2 1.8

N. America L. America N.Africa&M.East SSAW.Europe E.Europe&C.Asia Other Asia

Net agricultural production index Growth dominated by Latin America, slowest is W. Europe

Key messages

• Demand remains firm, despite high prices • Global productivity growth is slowing • Price incentives for investment in agriculture

have increased • Emerging issues:

– Aquaculture

– Climate change

– Urbanization

– Global economic crisis

What will the CAPRI Baseline add to that outlook?

• Higher country resolution for Europe • Higher product disaggregation • Bilateral trade flows • Land market

European regions

EU015000 European Union 15 DEU GermanyEU010000 European Union 15 GBR Great BritainBUR Bulgaria and Romania FRA France

NO000000 Norway SCA EU ScandinaviaTUR Turkey BEN BeneluxCH Switzerland MED Mediteranian ( all on NUTS2 level) REU Rest of EUREU Rest of EuropeUKR Ukraine

DARTCAPRI

Asian/Oceanian Regions

RUS Russia

FSUFormer Soviet Union without Russia

IND India RUS Russia

PAK Pakistan FSURest of Former Soviet Union and rest of Europe

BGD Bangladesh JPN JapanCHN China CPA ChinaJAP Japan IND India

MALIND Malaysia and Indonesia MAI Indonesia Malaysia

TAW Taiwan SEA South East Asia

ASI_TIGAsian Tigers: Hong Kong, Singapore, South Korea

ASI_SEAsian South East (Vietnam, Thailand, Brunei)

ASOCE_LDC Asian and Ociania LDCASOCE_REST Rest of Asia

Oceania ANZ Australia and New Zealand NAC Australia New Zealand

DARTCAPRI

African Regions

MOR Morocco

MIDEAST Middle East MEA Middle East North Africa

NGA Nigeria AFR Subsaharan AfricaETH EthiopiaZAF South AfricaAFR_LDC Africcan LDCsAFR_REST Africa Rest (practically ACP)MED Other mediterrean countries

American Regions

USA USA USA USACAN Canada CAN CanadaMEX Mexico BRA Brazil

ARG Argentina PAUCParaguay Argentina Uruguay Chile

BRA Brazil LAM Rest of Latin AmericaMSA_ACP Middle and South America ACPRSA Rest of South and Middle AmericaURUPAR Uruguay and ParaguayMER_OTH Bolivia, Chile, Venezuela

PAS Rest of the World

DARTCAPRI

CAPRI DART CAPRI DARTWheat Wheat Raw milk at dairyRice (paddy eq) Paddy Rice Whey powederMaize Maize CaseinRye Whole milk powderBarley ButterOats Skimmed milk powderother cereals other grains CheeseRapeseed rape seed Fresh milk productsSoybean soy bean CreamSunflower other oilseeds Concentraded milk

palm fruit Rape oil Rapeseed oilSugar sugar cane Soya oil Soybean oil

sugar beet Palm oil Palm fruit oilPulses Rest of agriculture Sunflower oil Oil from other oil seedsPotatoes Olive oilTextiles Other vegetable oil Other vegetable oilsTobacco Rape seed cakeTomatoes Sunflower seed cakeOther vegetables Soya cakeApples pears peaches destilled dried grainsOther fruits Bioethanol BioethanolCitrus Biodiesel BiodieselTable grapesTable olivesTable wineBeefPork meatSheep and goat meatEggsPoultryCoffee, dry equivalentTea, dry equivalentCocoa beans, dry equivalent

primary processed

CAPRI results

• Will be presented through the GDI on DART

regional resolution,

• but CAPRI regional results will be available

further disaggregated upon request

CAPRI Result EU - type

Cropping share cereals

CAPRI Result Global - type

Wheat production

Baseline results DART model

Change in biofuel production and trade in 2020 (global quotas vs no quota)

Bioethanol Biodiesel

Production

Exports/Trade

GDP 2004-2030

GDP in India, China, and Africa triples

Change in energy word prices

COL CRU GAS MGAS MDIE OIL ELY

Price change 2004 - 2027

Change in energy prices – by region

0 1 2 3 4 5 6 7 8

DEUGBRFRASCAMEDREUUSACANANZRUSFSUBRAPAOLAMCHNINDMAISEAMEAAFRROWCOL CRU GAS MGAS MDIE OIL ELY

PLMoil RSDoil SOYoil OSDNoil ETH1 BDIE

Change in word prices – biofuel commodities

PDR WHT MZE GRON PLM RSD SOY OSDN C_B LVS

Price change of agricultural commodities in China and Germany 2004 - 2027

2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026

CHN PDR CHN WHT CHN MZECHN GRON CHN RSD CHN SOYCHN OSDN CHN C_B CHN LVSCHN AGR

2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026

DEU WHT DEU MZE DEU GRON

DEU RSD DEU OSDN DEU C_B

DEU LVS DEU AGR

Change in land prices: Brazil

BRA AEZ1

BRA AEZ2

BRA AEZ3

BRA AEZ4

BRA AEZ5

BRA AEZ6

BRA AEZ7

BRA AEZ8

BRA AEZ9

BRA AEZ10

BRA AEZ11

BRA AEZ12

BRA AEZ13

BRA AEZ14

BRA AEZ15

BRA AEZ16

BRA AEZ17

BRA AEZ18

Change in land prices: Germany

DEU AEZ1

DEU AEZ2

DEU AEZ3

DEU AEZ4

DEU AEZ5

DEU AEZ6

DEU AEZ7

DEU AEZ8

DEU AEZ9

DEU AEZ10

DEU AEZ11

DEU AEZ12

DEU AEZ13

DEU AEZ14

DEU AEZ15

DEU AEZ16

DEU AEZ17

Change in land prices: China

CHN AEZ1

CHN AEZ2

CHN AEZ3

CHN AEZ4

CHN AEZ5

CHN AEZ6

CHN AEZ7

CHN AEZ8

CHN AEZ9

CHN AEZ10

CHN AEZ11

CHN AEZ12

CHN AEZ13

CHN AEZ14

CHN AEZ15

CHN AEZ16

CHN AEZ17

CHN AEZ18

Change in Trade: USA

PDR WHT MZE GRON PLM RSD SOY OSDN C_B LVS AGR

USA USA USA USA USA USA USA USA USA USA USA

change imports 2004 - 2027 change exports 2004 - 2027

Change in Trade: USA

ETH1 ETH2 BDIE

USA USA USA

Change in Trade: BRA

141% 83% 88% 55% 768% 160% 142% 126% 68% 83%

PDR WHT MZE GRON PLM RSD SOY OSDN C_B LVS

BRA BRA BRA BRA BRA BRA BRA BRA BRA BRA

Base year values very small for sugar beet (c_b) rapeseed imports and palm exports

Change in Trade: IND

PDR WHT MZE GRON RSD SOY OSDN C_B LVS AGR

IND IND IND IND IND IND IND IND IND IND

Base year values very small for lvs, agr

Change in Trade: CHN

8138% 780% 36356% 197%

565% 198% 539% 427% 197% 1302%

PDR WHT MZE GRON PLM RSD SOY OSDN C_B LVS AGR

CHN CHN CHN CHN CHN CHN CHN CHN CHN CHN CHN

Base year values very small for all but wht, soy, lvs, agr

Next steps

• Small improvements in DART • Inclusion of GDP and energy prices in CAPRI

• Calculation of scenario runs (afternoon session)

Comments and questions are very welcome!

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