First Version of the SOVAM

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NOT FOR QUOTATION WITHOUT PERMISSION OF THE AUTHOR

FIRST VERSION

OF THE SOVAH

V. Iakimets V. Kiselev

September 1 9 8 5 WP-85-60

W o r k i n g Rapers are interim r e p o r t s on work of t h e International Institute f o r Applied Systems Analysis and have received only lim- ited review. Views o r opinions expressed herein do not neces- sarily r e p r e s e n t those of t h e Institute o r of its National Member Organizations.

INTERNATIONAL INSTITUTE FOR APPLIED SYSTEMS ANALYSIS 2361 Laxenburg. Austria

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FOREWORD

Understanding t h e n a t u r e and dimensions of t h e world food problem and t h e policies available to alleviate i t h a s been t h e focal point of IIASA's Food and Agriculture Program (FAP) since i t began in 1977.

National food systems are highly interdependent , and yet t h e major policy options e x i s t at t h e national level. Therefore, to e x p l o r e t h e s e options, i t i s necessary both to develop policy models f o r national economies and t o link them t o g e t h e r by t r a d e and capital t r a n s f e r s . Over t h e y e a r s FAP has, with t h e help of a network of collabomting institutions, developed and linked national policy m o d e l s of twenty countries, which t o g e t h e r account f o r nearly 80 p e r c e n t of important a g r i c u l t u r a l a t t r i b u t e s such as area. production, population, e x p o r t s , imports and s o on. The remaining countries are r e p r e s e n t e d by 14 somewhat simpler m o d e l s of groups of countries.

The c o u n t r i e s constituting t h e Council of Mutual Economic Assistance (CMEA) t o g e t h e r are a major influence on t h e world market. An a g g r e g a t e food and a g r i c u l t u r e m o d e l of t h e CMEA, in which t h e CMEA is treated as o n e nation h a s been developed by t h e FAP, as p a r t af t h e IIASA/FAP basic linked system.

In addition, development of detailed m o d e l s f o r some of t h e major nations constituting t h e CMEA w a s undertaken. The development of t h e Soviet Agricultuml Model (SOVAM) w a s s t a r t e d in late 1983 in collaboration with a number of institutions in t h e Soviet Union. These include t h e All- Union R e s e a r c h Institute of Cybernetics in Agriculture. Computer C e n t e r of t h e USSR Academy of Sciences, All-Union Research Institute f o r Systems Studies, and t h e Central Economic Mathematical Institute.

This working p a p e r i s one of a s e r i e s of working p a p e r s documenting t h e work t h a t went into developing t h e various m o d e l s of

FAP.

In t h i s p a p e r V. Iakimets and V. Kiselev d e s c r i b e a f i r s t version of t h e SOVAM.

Kirit S. P a r i k h Program Leader Food and Agriculture Program.

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Authors would like to a d d r e s s t h e i r g r a t i t u d e tq Academician A. N i k e nov and Academician V. Nazarenko f o r supporting t h e work and providing t h e d a t a needed f o r it. Helpful discussions with Dr. F. E r e s h k o and P r o f . 0.

Kossov were v e r y important. Our t h a n k s a l s o to Dr. V. Lebedev who h a s made fruitful contributions to t h e SOVAM from t h e beginning. W e are v e r y g r a t e f u l to Cynthia Enzlberger f o r typing and retyping t h i s manuscript.

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ABSTRACT

This paper contains the formalized description of t h e main modules f o r the first version of t h e SOVAM, including production and exchange modules and outline f o r t h e policy module.

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FZRST VERSION OF THE SOVAM

I.! I a k i m e t s , V KiseLev

1. tntroduction

During t h e development of t h e Soviet national a g r i c u l t u r a l policy model (SOVAY) i t w a s n e c e s s a r y t o provide f o r meeting t h e r e q u i r e m e n t s of t h e BLS at t h e same time t o k e e p t h e adequacy of t h e description of t h e economy, actually existing c o n t r o l s and methods f o r t h e i r implementation, mechanism f o r generating s h a r e s and growth rates of t h e a g r i c u l t u r a l development and p r i n c i p l e features of Soviet foreign t r a d e . This p a p e r contains f i r s t of a l l t h e d e s c r i p t i o n of t h e main f e a t u r e s and tendencies of f u r t h e r development of t h e Soviet a g r i c u l t u r e . The f o r - malized d e s c r i p t i o n of t h e f i r s t version of t h e SOVAM and i t s modules based on t h i s analysis is t h e main o b j e c t i v e of t h e p a p e r .

Background and r e q u i r e m e n t s f o r t h e SOVAM as well as i t s g e n e r a l s t r u c t u r e , information flows and t h e outline of consumption, e x c h a n g e and production modules were d e s c r i b e d in Iakimets, 1984; Fedorov and Iakimets 1985.

2. Directions for the further development of Soviet agriculture

In o r d e r t o model c o r r e c t l y t h e growth rates and p r o p o r t i o n s of t h e development of t h e USSR a g r i c u l t u r e f o r t h e period of 15-20 y e a r s i t is n e c e s s a r y to t a k e into account t h e historically established tendencies and t h e i r f u t u r e changes u n d e r t h e influence of t h e centralized measures c a r r i e d o u t f o r t h e l a s t y e a r s . F o r t h e period 1979-1982 s o m e d e c r e a s e in a g r i c u l t u r a l growth rates w a s observed in t h e USSR mainly d u e to extremely unfavorable w e a t h e r conditions and shortcom- ings in economic mechanism. The important transformations in t h e national agro- industrial complex d i r e c t e d t o considerable improvement of i t s functioning were laid down by May (1982) Plenum of t h e Central Committee of t h e CPSU. The system of i n t e r r e l a t e d measures formulated within t h e USSR Food Program and in a number of following government resolutions showed i t s efficiency a l r e a d y f o r t h e t w o f i r s t y e a r s of realization (1983, 1984).

The following t h r e e wide d i r e c t i o n s f o r t h e f u r t h e r improvement of t h e efficiency of a g r o i n d u s t r i a l production u n d e r c u r r e n t implementation c a n b e c h a r a c - terized:

2.1. Improvement of the economic mechanism This d i r e c t i o n r e l a t e s to:

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strengthening t h e influence of economic incentives in a g r i c u l t u r e due to establishment of d i r e c t dependence of labour payment o n final results;

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enhancing non-financing by t h e S t a t e ;

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broadening t h e r i g h t s of collective and state f a r m s in r e l a t i o n t o t h e i r inter- nal economic activity, utilization of material and t e c h n i c a l r e s o u r c e s and finances;

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integration of management on t h e level of interacting economic systems (creation of regional agro-industrial amalgamation) and on t h e more h i g h e r level (creation of management bodies f o r t h e planning and coordination of activity on t h e f i r s t level and for t h e allocation r e s o u r c e s and investments).

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2.2. Implementation of structural changes in agriculture This d i r e c t i o n includes:

- improvement of t h e s t r u c t u r e of land u n d e r g r a i n cultivation;

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deepening s p e c i a l i z a t i o n of p r o d u c t i o n in d i f f e r e n t n a t u r a l a n d climatic zones;

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i n c r e a s i n g t h e efficiency of mineral f e r t i l i z e r s and o t h e r chemicals utilization by means of improvement of t h e i r compound ~ n d s t r u c t u r e a n d r a t i o n a l appli- c a t i o n with o r g a n i c f e r t i l i z e r s ;

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deveiopment a n d t e c h n i c a l s u p p o r t of technologies f o r c r o p cultivation set- t l e d t o w e a t h e r f l u c t u a t i o n s .

2.3. Implementation of structural changes in branches of production adjacent to agriculture

This d i r e c t i o n r e l a t e s to:

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improvement of quality of m a t e r i a l a n d t e c h n i c a l r e s o u r c e s a n d s e r v i c e s f o r a g r i c u l t u r e ;

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improvement of conditions f o r t r a n s p o r t a t i o n , s t o r a g e a n d p r i m a r y p r o c e s s - ing of a g r i c u l t u r a l commodities;

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broadening t h e r o a d c o n s t r u c t i o n in r u r a l d i s t r i c t s .

These m e a s u r e s are u n d e r t a k e n f o r stabilization of h i g h e r o u t p u t of a g r i c u l - t u r a l p r o d u c t i o n t o p r o v i d e self-sufficiency in foodstuffs a n d f o r n e c e s s a r y l e v e l of i n t e r n a l consumption independently of world m a r k e t .

I t i s e a s y t o see t h a t t a k i n g into a c c o u n t t h e abovementioned f a c t s , t h e ?To- ductivity of a g r i c u l t u r a l c r o p s c a n n o t b e modelled only on t h e b a s i s of i n d i r e c t e x t r a p o l a t i o n of t r e n d s ( F i g u r e 1) b u t should b e c a l c u l a t e d t a k i n g i n t o considera- t i o n t h e p r e s e n t c h a n g e s o b s e r v e d .

productivity

per 100 ha) ₀

./ -- -

^trend

Figure 1. Productivity of agricultural crops.

These c o n s i d e r a t i o n s h a v e t o b e t a k e n into a c c o u n t during t h e c o n s t r u c t i o n of t h e SOV.4Y.

3. Some peculiarities of macroeconomic modelling of the Soviet agricultural sector behaviour within the framework of the FAP system of models A s c o n c e r n s t o S o v i e t f o r e i g n t r a d e of a g r i c u l t a r a l commodities t h i s will b e permanently developed mainly on t h e b a s i s of a s s o r t m e n t e x c h a n g e a n d long-range b i l a t e r a l a g r e e m e n t s . I t should b e noted t h a t practica!ly i t i s impossible t o t a k e

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into account in t h e SOVAM because of a c c e p t e d high level of aggregation ( f o r example, f o r considerable t u r n o v e r inside of such a g g r e g a t e d commodity as "other food" t h e t o t a l export-import Snlance c a n b e equal to zero). The existing system of models c a t c h e s only large-scale changes in t r a d e of homogeneous commodities.

Such changes in foreign t r a d e flows can b e evaluated f o r t h e S o v i e t Union only f o r g r a i n and meat. However, in t h i s c a s e i t i s necessary a l s o t o t a k e i n t o account t h a t USSR will seek t o self-sufficiency of main a g r i c u l t u r a l p r o d u c t s , t o reduction of h a r d c u r r e n c y e x p e n d i t u r e s f o r purchases, and t o lessening t h e dependence on e x t e r n a l markets. I t should b e noted t h a t availability of g r a i n p u r c h a s e s by t h e Soviet Union during l a s t y e a r s w a s caused by extremely unfavourable weather conditions in main g r a i n producing regions.

1. Implementation of planned measures will allow not only to a t t a i n t h e n e c e s s a r y level of i n t e r n a l a g r i c u l t u r a l production but will provide f o r i n c r e a s i n g t h e efficiency of production and c a p i t a l investments utilization. I t i s t h e f e a t u r e t h a t t o b e r e f l e c t e d by national model. However, because t h e r e are not quantitative evaluations of efficiency production growth i t s implementation c a n b e taken into consideration by some s c e n a r i o s by means of adjustment of coefficients of elasti- city of production functions. The more adequate way seems to b e t o see t h e speeded up growth of a v e r a g e c r o p productivity by y e a r s f o r t h e f i r s t 1 0 y e a r s p e r i o d without considerable i n c r e a s e of investments.

The efficiency of utilization of e a r l y made investments and accumulated potential in t h i s c a s e will b e also considered as more i n c r e a s e d in comparison with b e g i n ~ i n g of 1980. Then t h e more s t r o n g relationship of a g r i c u l t u r a l productivity f r o m mineral . f e r t i l i z e r s applications and investments h a s to b e used f o r t h e next p e r i o d (in comparison with relatiocship found from c o r r e l a t i o n analysis). I t i s not expedient t o use t h e l a b o u r a n d c o n t r o l v a r i a b l e f o r production modelling because t h e migration of labour between different b r a n c h e s of a g r i c u l t u r e i s a conserva- t i v e p r o c e s s and does not depend on some control effects.

2. Within t h e framework of t h e SOVAM t h e following o t h e r ways of increasing production efficiency is logical t o use (see Iakimets, 1984).

A. Changing t h e s t r u c t u r e of a c r e a g e both f o r b e t t e r utilization of bioclimatic potential of d i f f e r e n t r e g i o n s and f o r b e t t e r adaptation to requirements of population taking into a c c o u n t t h e tendencies of world m a r k e t . I t is expedient in t h i s way t o use as u p p e r constraint f o r annual c h a n g e s of a c r e a g e for s e v e r a l c r o p s t h e value equaled approximately t o 0.05 of a c r e a g e f o r previous y e a r because of i n e r t i a of p r o c e s s of changing t h e existing specialization of regions.

B.

Optimization of s t r u c t u r e of allocation of annual i n c r e a s e of mineral fertilizers supply taking into a c c o u n t responses of d i f f e r e n t c r o p s to f e r t i l i z e r s . This way will f a v o u r using t h e i n c r e a s e of f e r t i l i z e r s supply f o r elimination of

bottlenecks in c r o p production.

C. Sptimization of feed c r o p s production by means of i n c r e a s i n g roughage, suc- culent and g r e e n f o d d e r , coarse grain production as well as increasing t h e p r o t e i n feeds (such as c a k e s ) production f o r improvement of livestock

rations. In s p i t e of approximation of t h i s way description i t ' s consideration will b e useful f o r f u r t h e r elaboration of t h e model.

D.

From t h e point of view of interaction of t h e SOVAM with t h e FAP system it i s important t o c h a r a c t e r i z e t h e specifics of relationships of t h e Soviet Cnion with world market taking into consideration t h e o r i e n t a t i o n of t h e USSR on g r a i n self-sufficiency. The world market was and will b e in t h e f u t u r e mainly

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t h e s o u r c e f o r compensation of g r a i n s h o r t a g e s in extremely unfavourable y e a r s . The volume of g r a i n import will not b e strongly dependent on p r i c e s of world market. More exactly t h e volumes of t h e USSR g r a i n p u r c h a s e s will influence on t h o s e p r i c e s . Hence t h e more adequate t o t h e r e a l i t y will b e t h e following c o n c e p t f o r simulation of i n t e r a c t i o n of t h e SOVAM with world market model. Yie!d of a g r i c u l t u r a l c r o p s will b e determined a s a n a v e r a g e e x p e c t e d yield f o r achieved level of r e s o u r c e s supply. A t t h e same time t h e s e p a r a t e computer program will c a l c u l a t e c o r r e c t i o n f a c t o r s simulating influ- e n c e of weather fluctuations on g r a i n output. Values of t h e s e f a c t o r s a s w e l l as t h e i r time s e r i e s f o r t h e period u n d e r consideration will r e f l e c t observed r e c u r r e n c e of unfavourable y e a r s and c a n b e changed by means of scenarios.

S o basic calculated yield will monotone i n c r e a s e in a c c o r d a n c e with t r e n d and a c t u a l yield will b e evaluated with t h e help of s t o c h a s t i c values. Such a p p r o a c h will allow t o model t h e c r e a t i o n of s t o c k s which will b e replenished in favourabie y e a r s and will b e used in unfevourable on.es. The volume of g r a i n p u r c h a s e s on world market will b e determined also taking into account interna! demand, yield ir. dependence on w e a t h e r conditions, s t o c k s c r e a t e d in favourable y e a r s . A t t h e same time t h e i n v e r s e influence of world market p r i c e s on t h e s t r u c t u r e of p u r c h a s e s : in unfavourable y e a r s t h e volume of p u r c h a s e s c a n b e more f o r low p r i c e s .

4. Formalized description of the main modnles

Considerations given in previous sections determine t h e f e a t u r e s of s e p a r a t e modules.

Annual levels of end consumption of s e p a r a t e commodities are genei-ated on t h e basis of t a r g e t s formulated in t h e USSR Food Program and t h e s e are con- s i d e r e d as main t a r g e t s . The r e q u i r e d t o t a l annual volumes of i n t e r n a l consumption are calculated in t h e model taking into account in farms demand. The possible i n t e r n a l output is determined taking into consideration t h e i n t e r n a l capacity of economy and weather conditions. Difference between supply and demand is d e t e r - mined on t h e basis of t h e s e calculations and is used for determination of import volume. This value is used f o r linkage of t h e SOVAY with t h e BLS. A t t h e same time t h e value of commodity deficit is used f o r analysis of t h e state economic s t r a t e g y : whether to import t h e n e c e s s a r y volumes or to r e d u c e consumption, or t o i n c r e a s e investment in a g r i c u l t u r e .

In t h e production module t h e maximally possible levels of consumption of s e p a r a t e goods close t o given t a r g e t s of consumption are dependent on various c o n s t r a i n t s (investments, f e r t i l i z e r s , a c r e a g e , e t c . ) and needed f o r t h i s domestic output taking into account i n t e r n a l industrial consumption are determined. Crop o u t p u t s are determined dependent on a c r e a g e s t r u c t u r e and p r o j e c t e d yields which itself depend upon available r e s o u r c e s and tendencies of development. Weather conditions and f e r t i l i z e r distribution d o not influence t h e a c r e a g e s t r u c t u r e . How- e v e r t h e s e h a v e a n e f f e c t on t h e volume of c r o p outputs. Such a n influence is r e f l e c t e d by corresponding c o r r e c t i o n coefficient. A s a r e s u l t t h e conditionally a c t u a l c r o p output is determined which is used f o r distribution. In t h e c a s e when t h i s conditionally a c t u a l output is h i g h e r t h a n p r o j e c t e d i n t e r n a l consumption, t h e s u r p l u s e s of commodities are d i r e c t e d t o s t o c k s . If not, then s t o c k s are used t o c o v e r deficit. If t h e s t o c k s available a r e not sufficient t h e n t h e import of t h e commodity is requested.

Within t h e exchange mociule, t h e volumes of imports are calculated dependent on calculated deficit, world m a r k e t p r i c e s and available h a r d c u r r e n c y . A s a r e s u l t , t h e c o r r e c t e d final consumptions of s e p a r a t e commodities are determined.

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The policy module is intended f o r national accounting, calculation of values of g e n e r a l indicators and c o r r e c t i o n of corresponding policy p a r a m e t e r s concerning production, consumption, investment policy, e t c .

4.1. Consumption module

This module was d e s c r i b e d in Fedorov, Iakimets, 1985. The s t r u c t u r e and volumes of each commodity planned consumption a r e calcu!ated on t h e basis of fixed t a r g e t s . Actual consamptior, will b e calculated a f t e r r e s u l t s of production and exchange module simulation.

4.2. Produdion module

One important s t e p f o r modeling a g r i c u l t u r a l production i s t h e construction of adequate yield functions f o r various c r o p s in r e l a t i o n t o a number of production f a c t o r s . Capital investments a r e one of such f a c t o r s . However, investments have no d i r e c t influence on yield, but i t s influence is a n i n d i r e c t o n e through fixed capi- t a l stock. I t is well known t h a t c r o p yields a r e significantly dependent on t h e timeliness of c a r r y i n g o u t t h e agrotechnological operations. Because many a g r i - cultural farms in t h e Soviet Union produce s e v e r a l commodities (5-10) t h e n t h e g e n e r a l p a r t of fixed c a p i t a l stock influencing yields h a s t o b e considered f o r all t h e s e c r o p s a t t h e same time. The value of t h i s p a r t h a s of c o u r s e a d i f f e r e n t impact on t h e yield of v a r i o u s c r o p s . However i t is difficult t o single o u t t h e s h a r e of t o t a l fixed c a p i t a l s t o c k used f o r s e p a r a t e commodities. T h e r e f o r e , i t is reason- able:

(1) t o consider t h e s t a t i s t i c a l relationship of yield of s e p a r a t e c r o p s o n t h e total fixed capital stock;

(2) t o a c c e p t t h a t f u t u r e yield is dependent on t h e increment of fixed capital stock.

A t t h e same time t h e yield of various c r o p s is d i r e c t l y dependent on mineral f e r t i l i z e r applied. In t h e USSR, t h e determined levels of s a t u r a t i o n of yields from f e r t i l i z e r application w a s achieved f o r r i c e and cotton and f o r some industrial c r o p s . This level of application should b e k e p t b e c a u s e t h e whole system of agro- technology and machinery w a s adjusted to it. However, taking into account t h e d i f f e r e n c e s between a c t u a l and normative efficiency of f e r t i l i z e r s f o r various c r o p s , t h e optimal r e d i s t r i b u t i o n of incremental volume of p r o d u c e d f e r t i l i z e r s will b e sought f o r during t h e simulation. I t means t h a t t h e value of t h e yield will depend on t h e increment of f e r t i l i z e r s used on t h e c r o p s .

The o t h e r f a c t o r influencing t h e yield is technological p r o g r e s s in a g r i c u l t u r e r e l a t e d f o r example t o t h e selection of new v a r i e t i e s , production of new substances f o r plant protection, e t c . Dynamics of t h e yield growth depends also o n efficiency of economic incentives and mechanisms in a g r i c u l t u r e . Both of t h e s e f a c t o r s a r e poorly c o r r e l a t e d with c a p i t a l investments. However, to t a k e into account i t s influence on yields, t h e s e c a n b e t r e a t e d a s a function of time. Thus c r o p yield function ui(t) f o r i-th c r o p c a n b e written a s

where K,(t) is t h e t o t a l fixed c a p i t a l stock in a g r i c u l t u r e and l F i ( t ) i s a commodity wise increment of f e r t i l i z e r s used.

.4s a n example of t h e simple version of a yield function, t h e l i n e a r relationship such a s

ui(t)

=

-q,i

+

^ali ^t

+

azi

.

^K,(t)

+

agi

-

^AFi(t)

c a n b e used.

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Using t h e c o r r e l a t i o n models l i n e a r and nonlinear t r e n d s f o r s e p a r a t e c r o p s a c e found.

Thus f o r r i c e t h e z c n l i n e a r t r e n d was a c c e p t e d as a n a p p r o p r i a t e one. A t t h e same time f o r o t h e r g r a i n c r o p s t h e e x t r a p o l a t i o n of t h e yield growth w a s made on t h e basis of t h e l i n e a r t r e n d s mainly d u e t o t h e f a c t t h a t t h e o p p o r t u n i t y f o r t h i s growth %as n o t y e t e x h a u s t e d .

T l e influence of s e p a r a t e f a c t o r s on yield w a s estimated on t h e b a s i s of t h e h i s t o r i c a l d a t a , r e s u l t s of calculation by c o r r e l a t i o n models a n d with t h e help of e x p e r t estimates.* A s a n example. w e c a n give t h e following estimated yield function f o r wheat:

F o r r i c e t h e a v e r a g e yield a c c o r d i n g t o t r e n d f o r l a s t y e a r s e q u a l s 4 . 1 t o n p e r ha. T h e r e f o r e w e supposed t h a t t h e f u r t h e r growth of i t w i l l b e d u e t o t h e agrotechnological improvement a n d t h e s e l e c t i o n of new v a r i e t i e s o r in o t h e r words i t wil! b e a function of time:

The values of c o e f f i c i e n t s in t h e s e equations were s t a t i s t i c a l l y estimated. F o r all o t h e r c r o p s w e h a v e a l s o correspondingly estimated yield functions. With r e s p e c t to livestock p r o d u c t i o n t h e o u t p u t i s s t r o n g l y d e p e n d e n t on f e e d available.

In o r d e r t o i n c r e a s e t h e utilization of t h e biological p o t e n t i a l of t h e productivity of animals, improvement in f e e d mix should b e made. This i s t h e most important area, b e c a u s e o t h e r problems s u c h as buildings for l i v e s t o c k , h a v e in g e n e r a l b e e n solved.

Taking i n t o a c c o u n t t h e s p e c i f i c s of Soviet a g r i c u l t u r a l p r o d u c t i o n and t r a d e , t h e l i s t of commodities c o n s i d e r e d were e x t e n d e d to 18, including:

(1) l ~ h e a t (2) r i c e

(3) c o a r s e g r a i n (4) g r e e n f e e d (5) p r o t e i n f e e d (6) v e g e t a b l e oil (7) s u g a r b e e t (8) v e g e t a b l e s (9) p o t a t o (10) f r u i t s

(11) f i b r e c r o p s (12) bovine a n d ovine (13) p o r k (14) p o u l t r y meat

(15) d a i r y (16) e g g s

(17) wool (19) non-agricultural commodity

F o r t h e e x c h a n g e module of t h e SOVAM t h e s e commodities are a g g r e g a t e d to t h e ELS 10 commodity list.

The 1 8 commodities e x t e n d e d l i s t i s n e v e r t h e l e s s a l s o q u i t e a high l e v e l of a g g r e g a t i o n a n d t h e d e t a i l e d c o n t r o l s in o r d e r t o r e f l e c t t h e a p p r o p r i a t e economic s t r a t e g y of t h e State c o n c e r n i n g t h e s t r u c t u r a l c h a n g e s of t h e a g r i c u l t u r a l production, dependent o n t h e l e v e l of d e f i c i t f o r s e p a r a t e commodities, are difficult t o determined. T h e r e f o r e w e c h o o s e as t h e main c o n t r o l s s u c h v a r i a b l e s as:

(1) increment of f e r t i l i z e r application f o r e a c h c r o p ,

(2) quantity of f e e d used f o r t h e production of e a c h livestock commodity, a n d

Thus, the contribution of mlneral fertilizers t o the yield growth was made using the data i r o n Xesyats V.K., Planovoe Khozyaystwo, Vol. 4, 1983.

(12)

(3) c r o p a c r e a g e .

The a c r e a g e s cannot b e changed quickly because t h e c h a n g e s of fixed capital stocks, f a r m s ' specialization should b e followed t o it. T h e r e f o r e , t h e corresponding constraints on annually changing a c r e a g e (a 0.5%) were used. Such s m a l l admissible deviations r e f l e c t t h e cautious a p p r o a c h t o t h e r e s u l t s of optimization calculations mainly d u e t o t h e fact t h a t f o r a g g r e g a t e d commodities t h e a v e r a g e yield does not c o r r e s p o n d to t h e a c t u a l efficiency of t h e c r o p . The constant con- s t r a i n t of t o t a l a c r e a g e w a s used because i t w a s supposed t h a t f o r t h e period under consideration t h e i r qualitative improvement on t h e basis of amelioration would b e more important t h a n area expansion.

All

t h e s e preconditions were used t o implement t h e production module as t h e optimization problem with t h e following economic content.

To find t h e commodity-wise final consumption (maximally close to t a r g e t s ) , c r c p a c r e a g e s , c r o p output, mineral f e r t i l i z e r distribution, f e e d utilization and import subject t o c o n s t r a i n t s on total a c r e a g e , t o t a l amount of f e r t i l i z e r s delivered t o a g r i c u l t u r e and t r a d e balance and, taking into account balances of rational utilization of p r o d u c e d output, and balances of meeting t h e complete requirements of livestock with f e e d s according to s t a n d a r d s u n d e r given output of

!ivestock commodities. Let u s give a formalized d e s c r i p t i o n of t h e production a o a e l .

Let us denote I index set of c r o p commodities (i E I) and J

-

index set of livestock commodities ( j E J ) , I

U

J

=

I,, /I,!

=

n-1, n

=

18.

The following d a t a are used in t h i s module:

c I * ~ ( ~ ) human'consumption t a r g e t s f o r c r o p commodities in y e a r t ; d*,(t) t h e same for livestock commodities;;

A (t) t h e t o t a l a c r e a g e ;

xi(0) t h e a c r e a g e of i-th c r o p at t h e beginning of t h e p e r i o d under consideration;

a, oi, u1 specifically determined weights.

Standards g i v e n e z o g e n o u s l y

8:

(t) amount of k-th s u b s t a n c e t o produce 1 unit of j-th livestock commodity (k

=

1 feed units, k

=

2 p r o t e i n )

Xi,(t) maximum admissible s h a r e of i-th feed in livestock r a t i o n to p r o d u c e j-th commodity.

oi marginally possible p e r c e n t a g e of annual change of a c r e a g e for i-th c r o p ;

&(t) i n c r e a s e of mineral f e r t i l i z e r s supply;

qi c r o p yield increment d u e t o additional f e r t i l i z e r supply;

EP

nutrients c o n t e n t of i-th f e e d (k

=

1 feed unit, k

=

2 p r o t e i n ) bi, 6, s h a r e s of i n t e r n a l output considered in balances.

b , + l and 7, p a r a m e t e r s determining s h a r e s of meat output and t r a d e . The model h a s t h e following c o n t r o l and intermediate variables:

d.,(t), d,(t) calculated a c t u a l human consumption of c r o p and livestock commodities;

(13)

zi(t), zj(t) import of t h e s e commodities;

y i(t),y j(t) output of t h e s e commodities;

wi(t) volume of utilization of i-th c r o p commodity f o r feed;

h Fi(t) increment of f e r t i l i z e r s application f o r i-th c r o p ; xi(t) a c r e a g e f o r i-th c r o p

Within one y e a r period of calculation (t) t h e problem i s t o find s u c h values of con- t r o l variables

t o minimize

[a x o i ( q * ( t )

-

^di(t)lZ

+

( 1

-

a ) z o j ( d j * ( t ) + j ( t ) ) z l

i f

subject to:

A. Crop production

output of i-th c r o p , where

yield production function f o r e a c h c r o p written f o r example as

The yalue of a g r i c u l t u r a l c a p i t a l s t o c k s is calculated in t h e policy module as follows:

where I,(t-1) are investments into a g r i c u l t u r a l c a p i t a l s t o c k s a n d D,(t-1) is depreciation r a t e .

To r e f l e c t an impact of w e a t h e r fluctuations on c r o p s output t h e coefficient t i ( t ) i s introduced. This coefficient shows t h e e x c e s s ( t i ( t ) > l ) o r t h e d r o p ( t i @ )

<

1 ) of t h e expected c r o p output in comparison t o t h e o r e t i c a l one, calculated according t o (3). Values of t h i s coefficient f o r various c r o p s c a n b e e l a b o r a t e d on t h e basis of t h e analysis of h i s t o r i c a l meteorological d a t a f o r t h e l a s t 20-30 y e a r s showing t h e impact of w e a t h e r fluctuations on c r o p yield and t h e c o r r e l a t i o n of o u t p u t s f o r different c r o p s . The e x p e c t e d c r o p output t h e r e f o r e i s

y1(t)

=

t i ( t ) ' ~ [ ( t ) , (5)

where:

is t h e t h e o r e t i c a l c r o p output.

constraint on utilization of t o t a l f e r t i l i z e r s i n c r e a s e .

z

^xi@)

⁼

^A(t) balance of a c r e a g e s f

( 1

-

ui) xi(t

-

1 ) s x i ( t ) s (1

+

ffi) x i ( t

-

1 )

(14)

c o n s t r a i n t on change of s t r u c t u r e of a c r e a g e . B. Feed balances and livestock output.

balance of t o t a l f e e d utilization in f e e d units (k

=

1 ) and in p r o t e i n (k

=

2).

balances of e a c h t y p e of f e e d s in f e e d units ( k = l ) and in p r o t e i n (k=2).

yJ(t)

-

bJ +I

-

^yJ+1(t) _BJ ^for^j

⁼

1 2 , 1 3 s t r u c t a m l c o n s t r a i n t s o n domestic meat output.

C. Commodities utilization balances.

6,

.

~ ! ( t )

=

di(t> + wi(t>

-

zi(t>

f o r c r o p commodities 6J ' Y ~ ( ~ )

=

dJ(t)

-

^zJ(t)

f o r livestock commodities.

D. Agricultural t r a d e

c o n s t r a i n t on h a r d c u r r e n c y utilization with R(t) given exogenously and p r i c e s pi(t-1) and pJ(t-1) t a k e n f r o m t h e BLS r e s u l t s of equilibrium simulation f o r t h e p r e v i o u s period.

z J ( t ) 7j+1 ' Z J + ~ ( ~ ) j

=

1 2 , 1 3 (15)

s t r u c t u r a l c o n s t r a i n t o n t r a d e of meat commodities.

Given model contains t h e nonlinearity b e c a u s e of (2). I t c a n b e solved by exo- genous determination of d i s c r e t e levels of t h e yield qq(t) c o o r d i n a t e d with t h e r e q u i r e d amounts of r e s o u r c e s Ka(t) and hFP(t). T h e r e f o r e t h e c r o p yield f o r t h e l e v e l q h a s a fixed value. Thus f o r t h e t y p e of function as in (3):

u f ( t )

=

uol

+

ali t

+

api Ka(t)

+

agl

.

^AFig(t).

Hence equation (2) c a n b e r e w r i t t e n as yi(t)

= C

x f ( t )

.

^uig(t>

9

w h e r e xP(t) i s a c r e a g e f o r i-th c r o p with q-th l e v e l of yield and c o r r e s p o n d i n g levels of r e s o u r c e s .

Because of possible deviations of values of calculated final consumption (di(t) and dJ(t)) o n t a r g e t s (di*(t) a n d dJ*(t)) t h e s u r p l u s of deficit of i t i s determined

The calculated valaes of o u t p u t s yi(t) and yJ(t) a r e compared with exogenously given low bounds of i t (yl(t) a n d yJ(t) ). A s a r e s u l t t h e deficit or s u r p l u s of

- -

(15)

o u t p u t s i s a l s o determined:

I r 1 ( t >

= -

y i ( t )

-

yl(t)

I t means t h a t a l l baiaiices used within t h e p r o d u c t i o n model h a v e t o b e c h a n g e d . If t h e c a l c u l a t e d o u t p u t s are h i g h e r t b a n t h e s e !ow bounds, t h e n t h e s u r p i u s e s :vill b e used t o eliminate consumption d e f i c i t s (16) a n d t o i n c r e a s e t h e s t o c k s . If not t h e n t a r g e t s of consumption will b e c o v e r e d by s t o c k s if t h e s e are enough o r by additional i m p o r t s if not.

L e t us denote:

s p ( t ) . sf(') s t o c k s of commodities at t h e beginning of y e a r t, s:(t), s;(t) r e p l e n i s h m e n t of s t o c k s .

s c ( t ) , sj-(t) depletion of s t o c k s ,

'ki(t), 'kj(t) final d e f i c i t of commociity a f t e r complete meeting of consvm.ption tar- gets.

? h e n t h e equations f o r c h a n g e s of s t o c k s are

a n d final d e f i c i t s a r e c a l c u l a t e d as follows

*,(t)

=

Ayi(t) - M i ( t ) +j(t)

=

%Yj(t)

-

M j ( t )

If \ki(t), o r .kj(t) are positive ( s u r p i u s of o u t p u t s ) t h e n t h e s t o c k s will b e r e p l e n - ished:

si'(t>

=

*i(t) (24)

s,+(t)

=

*,(t) (25)

If t h e s e are n e g a t i v e , t h e n d e f i c i t of consumption will b e c o v e r e d by s t o c k s when t h e s e a r e available:

*,(t)

=

si-(t)

=

⁰, si-w

s

sp<t> (26)

*j(t)

=

sJ-(t)

=

9 , s i ( t ) 4 s p ( t ) (27)

If t h e s t o c k s do not c o v e r t h e d e f i c i t , t h e n r e q u e s t f o r import i s determined:

Q t )

=

*,(t) + s J t ) , s c ( t )

=

s p ( t ) (28)

z j ( t )

=

*j(t) + s i ( t ) ^t ~ i ( t )

=

s P ( t ) (29)

When t h e s e new values of i m p o r t s are r e w r i t t e n f o r t h e BLS commodities l i s t t h e model i s r e a d y f o r e x c h a n g e t h r o u g h world m a r k e t .

4.3. The Exchange Module

.After a g g r e g a t i n g e x p e c t e d i m p o r t s f o r t h e SOVAY detailed l i s t of commodities are c a l c u l a t e d using t h e p r i c e s of t h e p r e v i o u s y e a r t o t h e imports f o r t h e BLS !ist within t h e e x c h a n g e module t h r o u g h t h e l i n k a g e p r o c e d u r e , t h e new v a l u e s of imports are s o u g h t f o r using t h e d a t a o n h a r d c u r r e n c y available f o r t h i s .

(16)

A s mentioned e a r l i e r , in S o v i e t a g r i c u l t u r a l t r a d e a n n u a l v a l u e s of import a n d e x p o r t are d e t e r m i n e d mainly o n t h e b a s i s of b i l a t e r a l a n d multi!ateral a g r e e m e n t s a b o u t t h e a s s o r t m e n t e x c h a n g e o r by payment witin i n d u s t r i a l goods f o r s u c h a g r i - c u l t u r a l commodities as t r o p i c a l f r u i t s , tea, c o f f e e , c o c o a , etc., t o improve a n d d i v e r s i f y t h e s t r u c t u r e of r a t i o n f o r people. In r e s p e c t t o main s t a p l e foods, t h e a t t a i n m e n t of self-sufficiency i s planned in t h e n e a r e s t f u t u r e a n d t h e world m a r k e t will b e used f o r compensation of t h e d r o p in domestic o u t p u t induced by u n f a v o u r a b l e w e a t h e r conditions.

Within t h i s module, t h e i m p o r t s are d e t e r m i n e d by r e q u e s t e d i m p o r t s Zi(t), z^,(t), c a l c u l a t e d in t h e p r o d u c t i o n module, a v a i l a b l e h a r d c u r r e n c y R(t), a n d equilibrium m a r k e t p r i c e s of t h e y e a r u n d e r simulation p i ( t ) , p,(t).

In t h e e x c h a n g e module t h e problem s u c h as t h e following o n e i s s u p p o s e d t o b e solved:

Find v a l u e s of i m p o r t s Ti(t), z f ( t ) t o minimize

s u b j e c t t o

4.4. Outline of the Poiicy Module

This module allows t o a n a i y s e t h e solution of p r e v i o u s p r o b l e m a n d t e n d e n c i e s of national economic development in o r d e r t o a d j u s t d e t e r m i n e d c o n t r o l parame- ters. Decision making h a s t o b e made from' t h e point of view of t h e whole economy i n t e r e s t s . T h e r e f o r e t h i s module i s aimed t o e v a l u a t e t h e i n f l u e n c e of a g r i c u l t u r a l development o n t h e n a t i o n a l economy. In p a r t i c u l a r i t h a s t o b e d o n e f r o m t h e p o i n t of view of comparison of a g r i c u l t u r a l growth rate with n o n a g r i c u l t u r e o n e f o r v a r i o u s allocation of investments.

a l l o c a t i o n of investments.

K,(t)

=

K,(t

-

1 ) ( 1

-

^D,(t

-

1 ) )

+

I,(t

-

^{1 )}

i n c r e a s e of c a p i t a l s t o c k s in n o n a g r i c u l t u r e ( t h e same f o r a g r i c u l t u r e ) .

national income in a g r i c u l t u r e .

I N X ( ~ )

=

a o ( t ) ~ , ( t ) ~ '

-

~ , ( t ) ^1-al (35)

national income in n o n a g r i c u l t u r e with l a b o u r f o r c e s L,(t) given exogenously.

INN(t)

=

( 1

+

A(t)) I?I'N(t

- I)

condition f o r non d e c r e a s i n g of national income in a g r i c u l t u r e . IY(t)

=

IYA(t)

+

IY?j(t)

t o t a l national income.

I ( t )

=

I S ( t

-

1 )

.

a

(17)

investment in t h e whole economy.

Some additional notations i n t r o d u c e d in t h i s s e c t i o n include:

r!(j)(t) is i n c r e a s e of national income d u e t o o n e unit of i-th (j-th) a g r i c u l t u r a l commodity p r o d u c t i o n ; a n d A is t h e growth rizte of national income in ~ o n a g r i c u l - t u r e .

The determination of v a l u e s of r i ( t ) a n d r j ( t ) was t h e difficult problem. Appli- cation of t h e r e g r e s s i o n a n a l y s i s t e c h n i q u e s t o c o n s t r u c t equation connecting a g r i - c u l t u r a l national income with changing o u t p u t s of d i f f e r e n t commodities did n o t yield t h e a p p r o p r i a t e r e s u l t .

T h e r e f o r e t h e a t t e m p t w a s made t o e s t i m a t e t h e g r o s s a g r i c u l t u r a l o u t p u t (G (t)) on t h e b a s i s of a v e r a g e national wholesale p r i c e s G i ( t ) , z J ( t ) ) a n d t h e n t o use i t t o find c o r r e l a t i o n r e l a t i o n s h i p with a g r i c u l t u r a l national income. R e s u l t s of estimations b a s e d on d a t a f o r t h e p e r i o d 1970-1980 yield t h e following equation:

Finally

5. Conclusion

In t h i s p a p e r t h e f i r s t v e r s i o n of t h e SOVAM w a s d e s c r i b e d t o give g e n e r a l ideas a b o u t i t s s t r u c t u r e , commodity l i s t s a n d s e p a r a t e modu!es.

References

Iakimets, V. (1984). Background a n d Requirements f o r t h e SOVAM: S o v i e t Agricul- t u r a l Model, IIASA, L a x e n b u r g .

Fedorov, V., a n d V. Iakimets (1985). Outline of t h e SOVAM, IIASA, L a x e n b u r g , (forthcoming).