Agriculture & economics

Abstract: The European Climate Law mandates the European Union’s climate neutrality objectives by 2050, aligning with the European Green Deal and interim greenhouse gas (GHG) emission reduction targets. The Agriculture, Forestry, and Other Land Use (AFOLU) sectors play a crucial role due to their dual function in sequestering carbon and emitting GHGs. This report assesses the potential contribution of the AFOLU sectors to the EU's 2050 targets using CAPRI model scenarios. Recent model enhancements enable a more integrated analysis of GHG emissions and carbon removals, allowing for a detailed assessment of land-based mitigation options. The scenarios assess increased afforestation, sustainable forest management, protection of peatlands, and pricing of AFOLU GHG emissions and removals. Results indicate that reversing GHG emission trends requires significant action, particularly enhanced soil carbon sequestration and climate-smart agricultural practices. The protection of histosols and land conversion towards grassland and forest areas significantly increase carbon dioxide removals, while lower livestock and crop production reduce methane and nitrous oxide emissions. Policies strengthening forest protection and afforestation further enhance the carbon sink capacity of the AFOLU sectors, potentially achieving negative net emissions by 2050. However, it is important to note that emission leakage (i.e., increases in emissions outside the EU) could limit global net reductions.

Abstract: Governments are increasingly considering fiscal instruments to improve dietary health. This paper quantifies the medium-term impacts on European food markets of a differentiated VAT policy that promotes healthy food consumption while discouraging intake of less nutritious products. Scenarios involve reduced VAT on grains, pulses, and poultry, and increased rates on beef, pork, sugar, and highfat dairy. Our results show a significant decline in domestic consumption of targeted foods. However, part of this reduction is exported to other markets – a phenomenon described as “health leakage,” raising questions about the broader effectiveness of such fiscal interventions.

Abstract: This article explores the impact of extreme weather on food availability and how yield gap reductions in developing countries could make them less vulnerable to the imported effects of extreme weather shocks. Our extreme weather scenario results show that simultaneous weather-related shocks to crop yields in main exporting countries could lead to substantial increases in world food prices, threatening food security in countries strongly reliant on food imports. Maize and wheat prices increase by 40% and 50% due to extreme weather, increasing food expenditure in import-dependent countries (by up to 5%). Countering this effect, closing yield gaps in developing countries would substantially lower international prices and food expenditures, especially in developing countries. If the yield gap is reduced by 20% relative to economic potential over a 6-year period (yield gap scenario), maize and world prices decrease by 20% and 15%, decreasing food expenditure per capita in import-dependent countries. Finally, a combined scenario shows that the yield improvements only partially offset the impact of imported shocks on import-dependent countries, and these effects vary by country, depending on their production capability and their net-trade position. World maize and wheat prices increase by only 9% and 26% and still raise food expenditure in import-dependent countries.

Abstract: As one of the world's largest players in global trade, the EU pursues an open, sustainable and assertive trade strategy. The recent conclusions and ongoing negotiations of 10 European Union Free Trade Agreements (FTAs) with Australia, Chile, India, Indonesia, Malaysia, the Mercosur bloc (comprising Argentina, Brazil, Paraguay and Uruguay), Mexico, New Zealand, the Philippines and Thailand are expected to diversify the EU's agri-food trade and enhance the resilience of its food supply chain. This resilience hinges on diversifying import sources and market outlets, which can be achieved through a robust trade policy that ensures access to a sufficient supply of affordable food for citizens. A two-step modelling approach was employed to assess ex-ante the cumulative economic impact of these FTAs on food commodity trade, production, consumption and prices in 2032. The analysis reveals that both EU imports and exports increase in value in the simulated scenarios, with notable sectoral variations. On the one hand, exports of dairy products and pig meat exhibit significant growth. On the other hand, potential vulnerabilities of the EU beef, poultry meat, sugar and rice sectors are identified. The study also examines the impact of the United Kingdom's trade agenda on the EU agri-food sector, quantifying the impact of the recent agreements between the UK, Australia and New Zealand, as well as the UK's future accession to the Trans-Pacific Partnership agreement on the EU agri-food sector.

Abstract: Adequate monitoring of the EU transition toward sustainable food systems can promote policy coherence and provide better evidence for informed policy making. This paper presents an initial concept and methodology for an EU food system monitoring framework, integrating a systems’ perspective and key sustainability elements relevant to the EU context. Grounded in scientific evidence and extensive dialogues among scientific experts with interdisciplinary backgrounds, we define an EU food system sustainability model that provides a conceptual framework for monitoring. This model encompasses 12 thematic areas and 37 indicator domains, synthetized through a rigorous review of existing frameworks and the assessment of nearly 250 relevant indicators via a transparent workflow and an integrated collaborative digital tool. We identify data gaps that signal challenges ahead in effective monitoring, but also opportunities for research and cooperation. To advance with an EU food system monitoring framework, it is essential to engage in participatory processes with stakeholders, ensuring an inclusive and transparent approach.

Abstract: The Joint Research Centre (JRC) – the European Commission service providing evidence-based science and knowledge to support EU policies – has set up its first monitoring framework to provide information on progress towards a fair, healthy and environmentally friendly food system, built on a set of environmental, economic and social (including health) indicators. More than 350 indicators on underpinning policies were screened and their suitability assessed for the intended objective. The selected indicators have been visualised in a monitoring dashboard, an information system and a communication tool created by the JRC. This report summarises the main steps taken to develop the system, the principles governing the selection of the indicators and plans for further work. This EU monitoring framework does not constitute a final product. The various Commission services acknowledge data gaps and intend to address them to ensure a more comprehensive approach and reflect new policy priorities. The monitoring framework will provide policymakers, stakeholders and citizens with relevant information about the sustainability of the EU food system. Considering the significant impact of the food system on the EU’s economy and citizens, the monitoring tool intends to assess the cumulative impact of all actions related to competitiveness, the environment and health in the EU

Abstract: This paper examines the challenges and drivers shaping EU agriculture in the medium term, focusing on its capacity to meet societal demands and remain resilient. Key drivers include climate change, global population growth, and geopolitical shifts, while innovation fosters adaptation. The EU’s regulatory responses and the evolution of the Common Agricultural Policy (CAP) will determine how agriculture reconciles environmental sustainability with farmers’ concerns about fair competition, influencing global outcomes.

Abstract: The Common Agricultural Policy Strategic Plans (CSPs) of the EU Member States (MSs) introduce a new CAP delivery model for the programming period 2023-2027, establishing a common framework for CAP payments, while granting MSs the flexibility to design interventions for direct payments, sectoral interventions, and rural development tailored to the needs of their agricultural sector. This report serves a dual purpose: Firstly, it provides an overview of the CSPs Master file, which consolidates all 28 CSPs to facilitate a structured analysis of the new CAP, along with essential concepts characteristic to the CSPs. Secondly, the report presents a comparative analysis of the initially approved CSPs, focusing on the financial aspects and specifics of their implementation across MSs, as well as some insights into the contributions to organic farming. The analysis of all CSPs highlights significant diversity and heterogeneity in the interventions adopted by the MSs. The CAP is supported by 307 billion EUR, comprising 264 billion EUR from the EU Budget and 43 billion EUR from national co-financing. Direct Payments are the most dominant component, with the Basic Income Support for Sustainability remaining the most important CAP tool to support EU farmer income, accounting 51% of direct payments, followed by eco-schemes at 24%. Rural Development allocations also show considerable diversity across intervention types and MSs.

Abstract: Research in the area of agro-economic modelling has been one of the key contributions of the Joint Research Centre (JRC) to the development of better agri-food policies in the EU. This article provides an overview of the development of the JRC's integrated agro-economic modelling platform since its establishment in 2005. We highlight the main contributions to policy analysis and describe in detail two key areas, namely the provision of medium-term projections for agricultural markets and the analysis of various CAP proposals. Furthermore, we describe the gradual shift to expand the capabilities of individual models within the platform to encompass aspects beyond traditional agro-economic aspects and incorporate environmental considerations. Model integration remains a focus both within the platform at different levels and scales, and in conjunction with biophysical models. This, together with incorporating knowledge from other fields of economic analysis is fundamental to capture changing policy objectives.

Abstract: The objective of the report is to analyse purchasing patterns of organic food products and plant-based alternatives and examine how sensitive the consumption of these products is to changes in prices. The report analyses are based on consumer purchasing panel data from five EU countries – Germany, Spain, France, Italy and Finland – for 2018–2022. The report finds that consumption patterns of organic food products and plant-based alternatives are heterogeneous across countries, products and socioeconomic household groups. The econometric estimates show that (i) the magnitudes of the own-price elasticities of organic products, plant-based alternatives and conventional products vary across products and countries, ranging between – 0.13 and – 1.30, (ii) the price sensitivity of the sustainable products is more heterogeneous than that of their conventional counterparts and (iii) changes in the prices of organic products minimally affect the purchasing quantities of their conventional counterparts (i.e. the corresponding cross-price elasticities mostly range between – 0.05 and 0.05), while changes in the prices of the conventional products tend to affect the purchases of organic products (i.e. the corresponding cross-price elasticities mostly range between – 0.50 and 0.50).