European Commission logo
AGLINK-COSIMO

AGricultural LINKage - COmmodity SImulation Model

Agriculturemulti-commodity modelbaselineOECDFAOSimulationagricultural markets

overview

Agriculturemulti-commodity modelbaselineOECDFAOSimulationagricultural markets

main purpose

A global agricultural economic model used to simulate the medium-term development of annual supply, demand and prices for the main agricultural commodities produced, consumed and traded worldwide. It has been extended to simulate the economic impacts of market uncertainties and climate extremes.

summary

AGLINK-COSIMO is a global simulation model developed jointly by the Organization for Economic Cooperation and Development (OECD) and the Food and Agriculture Organization of the United Nations (FAO) Secretariats in collaboration with some OECD member countries. It is a partial-equilibrium, multi-commodity, recursive-dynamic model of global agricultural markets. It is used to simulate medium-term developments in annual supply, demand and prices of the main agricultural commodities produced, consumed and traded worldwide. Those projections are published annually in an extensive report (EC 2019) and also serve as a baseline reference for simulating counterfactual policy scenarios for in-house or scientific purposes, with this and other large-scale simulation models maintained in the European Commission. The 2020 version of the model has over 43,000 equations, covers more than 100 commodities (cereals, oilseeds, sugar, meats, dairy products, biofuels, cotton) in all OECD and FAO countries, and includes 43 domestic market-clearing prices that are linked with 36 international reference prices. The EU is treated as a single market.

At the EU level, the AGLINK-COSIMO model is used to produce the report ‘EU Agricultural Outlook for Markets and Income’ (EC 2019). The aim of this yearly exercise is to provide a detailed overview of EU agricultural markets over the next ten years (‘medium term’). It incorporates information from policy makers and market experts in the European Commission, as well as from stakeholders, researchers and modellers, thus culminating into a consensus regarding the likely evolution of European agriculture and related markets. The resulting projections serve also as a baseline reference for simulating counterfactual scenarios of policy relevance with AGLINK-COSIMO or even other large-scale simulation models used in the European Commission. Apart from its standard deterministic version, the model has a stochastic component where market uncertainty stemming from variability in crop yields and macroeconomic factors is examined. Recent extensions pertain to post-model calculations regarding nutrition (calories, undernourishment, obesity) and agricultural greenhouse gas emissions as well as to the quantification of market outcomes due to concurrent and recurrent extreme-climate events. 

model type

ownership

Third-party ownership (commercial companies, Member States, other organisations, …)
The OECD and the FAO are the sole owners of the model. The European Commission belongs to the users network and has a written agreement to use the model.

licence

Licence type
Non-Free Software licence

homepage

www.agri-outlook.org

details on model structure and approach

The overall design of the AGLINK-COSIMO  model focuses on the potential influence of agricultural and trade policies on agricultural commodity markets in the medium-term, typically 10 years ahead. Development on the basis of the (agricultural) economics literature, existing country-level models, and  formal bilateral reviews has resulted in a modelling system that reflects the views of participating countries. To remain tractable, the model specification imposes some degree of uniformity across country modules. Taking this constraint into account, agricultural markets are modelled to best capture relevant settings and policies that are country- and commodity-specific. In undertaking projection work with the AGLINK-COSIMO model, individual country modules are calibrated on baseline projections that participating countries submit annually to the OECD and FAO in the form of structured questionnaires.

model inputs

Main inputs to the European Commission’s version of the model are:

  • The latest OECD-FAO Agricultural Outlook (issued every June), which is updated with
    • the short-term outlook for EU commodity balances: crops (wheat, maize, coarse grains, sugar beet, oilseeds etc.), meat (dairy cattle, suckler cows, sheep, pigs, poultry etc.), dairy, sugar production and biofuel production.
    • the latest macroeconomic and policy assumptions, and
    • new model developments in terms of equations and data to better represent EU agricultural markets and policies.

Variables in the model can be endogenous (i.e., determined within the system) or exogenous (i.e., determined outside the system and simply inserted). Most behavioural equations are "double-log" which are popular in the estimation of  supply and demand functions. In those functions, explained variables (on the left-hand side) and explanatory variables (right-hand side) are expressed in logarithmic terms; that is Y experiences diminishing marginal returns with respect to increases in X:

log(Y)= a + b*log(X) + log(r)

where a is the intercept, b is the Y-to-X elasticity (constant), and r is the residual (so-called ‘r-factor’). Numerous variations of this general form exist to represent real-world movements, such as technological change and cobweb-like market adjustments. Intercepts, which are time-invariant, and r-factors, which are time-variant, are interdependent and equation-specific calibration terms. These terms are endogenous during model calibration but remain exogenous in simulation mode (e.g., for scenario analysis). Year-specific shocks are implemented by changing the corresponding r-factors of endogenous variables or the actual values of exogenous variables. Oil prices and macroeconomic factors, such as GDP growth, inflation, exchange rates, energy prices, and population are exogenous. 

model outputs

AGLINK-COSIMO generates projections on annual market balances for the next 10 years.

Key variables include production (e.g., crops, livestock), consumption (food, feed, biofuel, other industrial uses), trade (imports, exports), stocks (public, private), and prices (domestic producer, domestic consumer, domestic feed, global) of major agricultural commodities. The model covers over 100 commodities ranging from crops, such as wheat or maize, to processed goods and by-products, such as protein meals and distiller dried grains.

model spatial-temporal resolution and extent

ParameterDescription
Spatial Extent/Country Coverage
ALL countries of the WORLD
Spatial Resolution
World-regions (supranational)
Country/world regional level for domestic markets; world for global trade
Temporal Extent
Very short-term (less than 1 year)Short-term (from 1 to 5 years)Medium-term (5 to 15 years)
Temporal Resolution
Years
Market year for crops, calendar year for processed products and meats.