Agricultural policies features (Outdated)

In the context of the TradeAg research project 1), modelling features tested in the static version of MIRAGE-AGRI were implemented in the dynamic version. Changes incorporate mainly the modelling of dual labour market with a segmentation between rural and urban areas. An extension was also integrated in order to represent price support policy from developed countries on the world market. Other agricultural modelling features were also introduced.

In the standard version of MIRAGE, the labour market is assumed to be perfect in every region: a single wage is fixed for all sectors to model perfect mobility. In the agricultural modelling framework, the labour market can be distinguished into rural and urban market, which are not perfectly linked.

See section: Labour market (Outdated)

In order to model changes in the European Union trade policy, intervention prices have been introduced for agricultural exports. When activated, intervention prices make exportation subsidies endogenous with three possible behaviours on the market:

  • when the internal price is higher than the intervention price, no export subsidies are used.
  • when the internal price becomes lower than the intervention price, subsidies are given to producers in order to sustain production prices at the intervention level. Export subsidies distribution across regions is kept proportional to the one observed in the reference year. If there was no subsidy in the base year, this distribution is homogeneous.
  • when subsidized exports from the European Union come to exceed a sectoral WTO limit, the model ensures that exports are contained at the WTO level.

See for formulas on the equations page (Outdated).

For countries other than the EU or for sectors not concerned by intervention prices, the subsidy rate is set exogenous.

Farm support

Subsidies are introduced on output, land and capital. They are assumed proportional to the volume of output or factor. Data are available in the GTAP database but MIRAGE team is working at updating this information to take into account most recent reforms of agricultural support policy. Production quotas are also explicitly modelled, and originate rents. EU direct payments (semi-coupled) are generally treated as subsidies to the animal capital. Some others can be considered as subsidies to land. The fully decoupled ones are supposed to have no impact on the markets.

Land supply and mobility

Land mobility across agricultural sector is assumed to be imperfect and land supply can vary relatively to rate of return on this factor. Different treatments are done on land availability and use depending on the region concerned.

See land section for more details (Outdated)

Production quotas


1) European Commission DG Research funded project n°513666