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Value Chains and impact

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Presentation at the Cassava Value Chains Workshop
CIAT, Cali, Colombia. 24-26 August 2016
Speaker: Daniel Mason-D'Croz

Published in: Science
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Value Chains and impact

  1. 1. Value Chains and IMPACT Daniel Mason-D’Croz Cali, Colombia August 24, 2016
  2. 2. What is IMPACT • IMPACT is a system of linked computer simulation models, which allows for ex ante scenario analysis of plausible futures for the global agriculture system • Primary Model Results: • Yields – sources of growth, climate effects by commodity and region • Prices – comparing socioeconomic and climate effects • Total demand – comparing commodities • Per-capita food demand – by commodity and region • Composition of demand – by commodity and region • Net trade – by commodity and region • Food security – by region Climate Models IMPACT Global Multi-market Model IMPACT Water Models Crop Models (DSSAT) Water demand trends Outputs : Commodity Prices Trade ConsumptionProduction Harvested Area Yields Macroeconomic Trends Post-solution Models Nutrition and Health Welfare Analysis Benefit-Cost Analysis CGE Models Land-use
  3. 3. What are scenarios • Scenarios are plausible futures • Scenarios are what-if stories used to explore future uncertainties • Scenarios can be told in narratives, numbers, and even images • Scenarios are not predictions of the future, but are instead focused on system dynamics and interactions and are based on knowledge of past and current behavior
  4. 4. Moving from the Past to the Future Future: broad uncertainty ForecastingPast Present perspective Future: broad uncertainty ScenariosPast Present perspective
  5. 5. Why use scenarios? • Scenarios provide concrete ways to deal with future uncertainty • They allow us to identify current and potential challenges and institutional vulnerabilities • Allow us to test and develop policies ex-ante based on our current understanding of system behavior
  6. 6. Time-steps in IMPACT • The multi-market model is on yearly scale • Water models on a monthly scale • Averaged to the year to integrate with IMPACT • Weather for the crop model inputs on a daily scale • The daily weather is used in the DSSAT crop model, however, this is aggregated to provide a yearly yield shock for IMPACT
  7. 7. IMPACT 3 Geography 159 • Countries 154 • Water Basins 320 • Food Production Units
  8. 8. IMPACT Commodities • Current Commodity Scope • Crops, Livestock, and Processed • 62 total commodities in IMPACT • 39 crop commodities • 6 livestock commodities • 15 processed commodities
  9. 9. • Complex models need a lot of data • Core database drawn from FAOSTAT • FAO Bulk Download for 3-year average around 2005 (04-06) • Disaggregated data comes from IFPRI’s SPAM, and FAO’s AquaSTAT • Have to harmonize this disparate datasets • Bayesian Work Plan • Iterate with new information • Never ending process Processing IMPACT Database Source Data (FAO, SPAM) Feedback to data source Priors on values and estimation errors of production, demand, and trade Estimation by Cross- Entropy Method Check results against priors and identify potential data problems New information to correct identified problems
  10. 10. IMPACT Model – Detailed Schematic • At its core is a highly disaggregated partial equilibrium model focused on the agriculture sector • It models the interactions between consumers, and producers at the national and international level • Modular design allows for the coupling of many different modeling techniques to more holistically analyze complex multi- dimensional problems
  11. 11. Partial Equilibrium in IMPACT Simplified Supply Curve P Q S D P0 P2 P1 Q1 Q2Q0 Simplified Supply Curve P Q S D P0 P2 P1 Q1 Q2Q0 Simplified Supply Curve P Q S D P0 P2 P1 Q1 Q2Q0 Production •Exogenous trends •Own prices •Input prices (land, feed, etc.) Prices •Global: •Supply = Demand •Net trade = 0 Demand •Income •Commodity prices •Population
  12. 12. Linked Dynamic Model Integration Food Model • Crop areas • Population • GDP • Livestock numbers • Prices Water Models • Demand/Supply • Water stress Shock on crop yields Solve Food Model in Stand Alone Mode Fix Areas and Livestock Numbers and call the Water Model Resolve the Food Model using Fixed Areas and Livestock with new yields including Water Stress
  13. 13. Water Models GCM RCP Crop Models Historical Trends and Expert Opinion Exogenous Endogenous Exogenous + Endogenous Yield Effects
  14. 14. Mapping DSSAT Results to IMPACT No Immediate DSSAT Proxy for the IMPACT Crop Biophysically Similar Crops DSSAT • Maize • Wheat • Rice • Sorghum • Soybeans • Groundnuts • Potatoes IMPACT • Barley • Other Cereals Wheat • Sugarcane Maize • Millet Sorghum • Pulses (chickpeas, pigeon peas, beans, cowpeas) Groundnuts 1 to 1 Mapping • Roots and Tubers • Fruits and Vegetables • Oilseed Crops • All other crops (incl stimulants, sugar beets, and cotton) Average of C3 Crops (all DSSAT crops excl. maize)
  15. 15. • Multivariable outcome that encompasses supply, access, quality, and stability across time and in the face of shocks to the food system • IMPACT focuses primarily on Food Supply although we are starting to move in areas of food quality with respect to nutrition, and potential variability. • Diet is an important predictor of health • Working with Martin School at Oxford we’ve linked the IMPACT food supply results to a Health model to estimate changes in non- communicable diseases based on changing diets 16 Going Beyond Food Supply IMPACT Food Supply Changes in Food Consumption Oxford’s Health Model Changes in deaths due to diets
  16. 16. USAID Project - Modularity in Action • USAID funded project assessing the benefits and costs of different CGIAR investment portfolios • Project incorporates 9 different models to not only assess economic effects, but also changes in welfare, nutrition, water quality, GHG emissions, land-use change, and biodiversity • No single model can adequately analyze all of the dimensions of the food system. Building an integrated system of models permits the application of expertise from a wider range of discipline
  17. 17. Activity-Commodity Framework • IMPACT 3 is a structural model • Describes the production process in a reduce form • Activities • Represent production processes • Farms, ranches, processing plants • Demand factors of production • Produce commodities 18
  18. 18. Activity-Commodity Framework • Commodities are: • Produced • Traded • Consumed • Can be endogenous or exogenous • Maize has endogenous production and demand • Oilseeds have endogenous production and both endogenous and exogenous demand (biofuels) • Fertilizers could be considered an exogenous commodity 19
  19. 19. 20 Crop Example Activity • Soybean Farm (jsoyb) • Demands land, fertilizer, labor Activity Output • Soybean Commodity (csoyb)
  20. 20. 21 Processed Commodity Example Activity • Soybean Processing (jsbol) • Demands soybeans (csoyb) at market price Processed Commodities • Soybean Oil (csbol) • Soybean Meal (csbml)
  21. 21. 22 Complete Oilseed Activity-Commodity Chain Activity • Soybean Farm (jsoyb) • Demands land, fertilizer, labor Activity Output • Soybean Commodity (csoyb) Activity • Soybean Processing (jsbol) • Demands soybeans (csoyb) at market price Processed Commodities • Soybean Oil (csbol) • Soybean Meal (csbml)
  22. 22. Imagining a value chain for Cassava in IMPACT • Currently there is just one activity, which produces primary equivalent cassava that is globally traded • Most traded cassava is processed, capturing this could improve how cassava is treated in IMPACT • Possible cassava activities are literally endless. How detailed do you need to be to answer your research question CassavaCassava Processing Starch Chips Other Cassava Chips Processed Food Starch Processing Feeds Starch Alcohol Etc.
  23. 23. Imagining a value chain for Cassava in IMPACT • What would be needed • Lots of new data and knowledge • Production numbers, technical coefficients, demand/consumption/trade statistics, behavioral trends for producers and consumers, etc. • How would these processes change over time and in the face of shocks • Where are these activities taking place • Where are the commodities being traded and consumed • Perhaps raw cassava isn’t traded internationally in the future, and is only a domestic commodity where consumers and cassava processors have to compete with each other to purchase raw cassava from farmers • Some new commodities may be more complex than others to model correctly • For example starch. Can we model cassava starch adequately without also considering the broader starch market that would include potential substitutes like maize and potato starch
  24. 24. Imagining a value chain for Cassava in IMPACT • What can IMPACT directly model? • Production, consumption, and trade • Effects on food security, potentially health and nutrition • How cassava and its processed commodities can or will compete with other commodities • Incorporate into new livestock module to better reflect cassava’s potential as a feed crop • Potential effects of scaling up • Need to add additional models or select a different tool • Income effects, input costs and trends (i.e. country CGE models) • Sub-national changes (gender, poverty, etc.) • Policies are exogenous and would need to be represented by scenarios • We can’t endogenously make a country go from a non-producer to a producer easily. National policies that change equilibrium conditions need to be handled exogenously • Market thresholds however can be captured if we know where these thresholds are
  25. 25. Thank you d.mason-dcroz@cgiar.org

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