Constraints to growth: Long-term modelling for agriculture

Abstract

The OECD’s medium term analysis of agricultural markets makes use of the Aglink-Cosimo model, a global partial equilibrium model with considerable commodity detail, and a recently specified link to land use. The complexity of this model, and of similar models used to examine the commodity-specific effects of market shocks and policy changes, has advantages and disadvantages. Its chief strength is that it enables a subtle understanding of the interactions across different commodities on both the supply and demand sides, and can trace out the wider effects of specific shocks and policy interventions. On the other hand, its sheer complexity makes it difficult to understand some of the core structural drivers, in particular productivity growth, that drive market and price developments over long-term. It also makes it more difficult to gauge associated long term linkages, including to food security and climate change. Accordingly, TAD/ATM has developed a more simple LAO (Long Agricultural Outlook) model, a partial-equilibrium model which projects to 2050. The use of a simple structure aims to strip away the multiple short to medium term uncertainties and focus on long-term drivers. The explicit representation of constraints to agricultural growth will be used to “anchor” medium term price projections relative to the long term trend, and to examine long term implications for food security and climate change.