How successful can household data be

1

• How successful can household data be?
• Krijn J. Poppe
• LEI Agricultural Economics Research Institute,
  The Hague

2
Road map presentation

• Reflection on a Paris dream
• 2. Micro-economic data needed
• 3. Some technical experiences in the NL
• 4. Where is Europe?
• 5. The Paris anxiety will household data make
  the dream come true?
• References

3
Reflection on a Paris dream

• Doha agrees that in 2010 agricultural policy has
  to be developed into
• Environmental policy (polluter pays)
• Market for public goods (e.g. landscape,
  biodiversity) or direct payments in specified
  contracts ? amber box
• Market solutions for risk management
• General tax/social security system ? green box
• FADN-ARMS data set to monitor and audit policies
  / interference with production decisions

4
Reflection on a Paris dream

• But in the European view agriculture is
  different
• Weather (like selling sunglasses in a seaside
  resort)
• Fixed costs (like oil-industry)
• Land attracts rent (like location in tourism)
• Cyclical (like steel)
• Perishable products (like newspapers)
• Family sized (like restaurants and higher
  turnover)
• Labour, capital and management in one hand
  suboptimal
• Uncontrollable production process (like the film
  industry)
• Multi-functionality (like Amsterdam?, pay flowers
  not the milk?)
• Food is special (like water, drinks or medicines)

5
Reflection on a Paris dream

• 1955
• Poverty in agricultural backward regions
• Intensification as a strategy
• Migration to cities and emigration
• Agricultural regions not in the network bad
  roads, no cars, no telephones
• Farmers often not in social security / tax system
• Agriculture a large part of regional economy
• Price policy an efficient transfer mechanism (for
  ALL employed)

• 2003
• Poverty is with immigrants and broken families in
  the cities
• Environmental issues as a result
• Rural areas have residential function
• Rural areas are in all the networks, including
  internet cars are there of more use then at rush
  hour in cities
• Farmers are in the social system and benefit from
  two safety nets
• Agriculture is a small part of the regional
  economy
• Price policies and coupled payments are not
  efficient transfer mechanisms

6
Micro-economic data needed

• Moving from price support to income safety net
  has implications for the need for research and
  data
• More attention to individual farm data
  (distribution, cross compliance)
• More attention to households and individuals
• Less price statistics (thin markets)
• Less sector data
• Integration of micro / macro

7
Micro-economic data needed

• Individual farm data
• Distribution
• Estimation of payments on viability farms
• Estimation of effects policy on production
  decisions (green box!)
• 2. Household data on individuals
• 3. Relation between farm(s) and households over
  time
• Farms and households are not stable

8
Household data are needed

• non-farm labour income
• non-farm investment income
• social security benefits
• Total household income
• - taxes paid
• - household consumption
• savings
• capital gains in agriculture
• capital gains outside agriculture
• increase in net worth
• Net worth / wealth
• PER INDIVIDUAL

9
Household data are needed

• We are experienced technically possible
• What is a farm?
• size (a family with 3 cars is not a car dealer)
• income criteria doesnt work well
• some have locations with integrated decisions
• complicated juridical structures over short time
• How about households
• give way to individuals (tax)
• changing composition over short time periods
• 1.3 per farm

10
Household data are needed

• We are not experienced in
• Household economics
• (G. Schmitt, Germany, argued long for it in
  vain)
• Comparison with other sectors (policy equity)

11
Where is Europe?

• The RICASTINGS study on FADN EU-15 (1999)
• Data on non-farm income in
• Netherlands, Germany, Denmark, Austria, Finland,
  Sweden, UK
• Interest in Portugal, Ireland
• Recommendation voluntary exchange of data
• Not yet implemented

12
Where is Europe?

• The RICASTINGS study on FADN EU-15 (1999)
• Recommendation voluntary exchange of data
• Not yet implemented, due to
• DG-Agri focus on new ICT
• No political will in some countries

13
Where is Europe?

• Why do interested countries not exchange data and
  start to analyse policies ??
• Database with anonymus individual data at OECD
  (or ?)
• Harmonisation of data definitions in this
  database (based on IAS 41, Lux. Income Study,
  TIAH)
• Yearly report and analysis of (international)
  policy proposals

14
The Paris anxiety

• Will household data make the dream come true?
• NL experience
• no public outcry on direct payments
• (but public is more sensitive in 2003 compared
  to 1955)
• not enough comparison to other sectors
• not enough use (access?) by Ministry of Finance /
  Trade / NGOs
• Conclusion
• Greater transparency is possible and desirable
• Action is needed

15
References

• Susan Offutt The future of farm policy
  analysis a household perspective in American
  Journal of Agricultural Economics 84 (5, 2002),
  1189-1200
• C. Gundersen, K.J. Poppe and S. Offutt 'The
  Safetynet for farmers in comparison with the
  general population experiences from the US and
  the Netherlands', in K.J. Poppe et al. Pacioli
  10 European farmers and the growing of data,
  LEI, The Hague, 2003
• K.J. Poppe Approaches to obtaining income data
  case the Netherlands, paper delivered to a
  workshop at Wye College, April 2002, published on
  http//household.aers.psu.edu
• C. Abitabile, G. Beers, G. Bonati, K. de Bont, B.
  Delhomme, G. Larsson, H. Lindén en K.J. Poppe
  Ricastings- the feasibility of a new farm return
  for the FADN, The Hague, 1999