National policy model for the Hungarian food and agriculture sector

Abstract

In this paper the structure and experiments of the Hungarian Agricultural Model (HAM) are summarized. The description of objectives and the model structure are followed by the discussion of the first model version (HAM-1) and the actual results. HAM is going to be the first system simulation model to describe the Hungarian food and agriculture sector having the following characteristics; — the model is dynamic and has a descriptive character; — the food consumption sphere is incorporated; — the nonfood production sectors of the economy are represented by assuming that they produce only one aggregated commodity; — the economic, technical and biological aspects of food production are covered; — both the production of agricultural raw materials and food processing are modelled; — under ‘other’ agricultural production and food processing all products not individually represented are aggregated; and — financial equilibrium is maintained. HAM is in fact a system of interconnected models. The government economic management and planning submodel describes the decision making and control of the socialist state following the idea of centrally planning the economy. The desired structure of food production, export, import and investment targets are calculated by a linear programming model. The revision of basic government policy instruments (e.g., domestic prices) is also endogenized in these submodels. The submodel of real sphere covers the whole national economy. The major blocks of the latter submodel are related to production (linear programming models for socialist agriculture and food processing sector, nonlinear optimization model for household and private agriculture), consumption and trade including non-linear demand system as well as updating available resources and other model parameters. The first relatively aggregated version of the model (HAM-1) is already operational. In the model nine food and agricultural commodities and one commodity expressing the rest of the economy are considered. The structure of HAM-1 and some of the results gained by these models are discussed at the end of the paper.