Agricultural policy analysis in Finland with the AGMEMOD model: Lessons to be learnt?

The objective of this paper is to assess empirically the impacts of further reform of the CommonAgricultural Policy (CAP) on the agri-food sector in Finland. To meet the objective, aneconometric model for Finnish agriculture - built as a part of the AGMEMOD project - wasutilised. The projection and policy simulations presented in the paper demonstrate that themodel provides the basis for relatively straightforward baseline projection, and an initialframework for agricultural policy analysis. Yet, there remains substantial scope for furtherwork on the model. In particular, the effects of big policy shocks are clearly not adequatelycaptured by the model. The linear equations of supply together with low elasticities estimatedfrom historical data generate simulation results, which do not in our opinion fully capturefarmers’ reactions to these changes.