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Farm Accountancy Cost Estimation and Policy Analysis of European Agriculture

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Improving farm economics data

An old source of European agricultural economics data may no longer be the best tool for policy research. An EU project will determine whether it still is, and how it might be improved upon.

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The Farm Accountancy Data Network (FADN) is a source of economics data that assists in the study of European agriculture. However, uncertainty exists over whether the ageing network remains the best tool for that purpose. Attempting to answer that question was the 'Farm accountancy cost estimation and policy analysis of European agriculture' (FACEPA) project. The research consortium included 11 members from 9 European countries, and ran for 3.5 years from April 2008 to September 2011. With EU funding exceeding EUR 2.2 million, the project aimed to study the effectiveness of FADN. Project partners re-used data from earlier studies addressing cost of production and illustrated ways to achieve quantitative policy analysis using FADN data. To these ends, the project proposed to address six specific sub-topics. Apart from the research questions, the project intended to implement and test a cost model, and to propose methodological improvements. The project's statistical models have been tested and validated, and used for policy analysis of national FADN data from the nine member countries. It provided technical support and supplied European Commission policymakers with data. FACEPA developed tools to strengthen the European Commission's capacity to estimate costs of production for numerous agricultural products. Developed tools also improved the quality of impact assessment of Common Agricultural Policy (CAP) measures. The project also defined and implemented new modelling tools, and developed costing data for policy use. Its unstated findings were published in three separate reports, the third of which describes overall synthesis and conclusions. One of the main project outcomes was functional farm-level economic models, based on FADN cost estimates, appropriate for policy analysis. Cost functions have been estimated for dairy, beef and crop farms in Germany. The policy impact of the results has been analysed. FACEPA's work also provided greater insight into farm economics, which will translate to better policy decisions.

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