Effects of biogas production on inter- and in-farm competition

Arlette Ostermeyer and Franziska Schonau

No 135772, 131st Seminar, September 18-19, 2012, Prague, Czech Republic from European Association of Agricultural Economists

Abstract: Biogas production is one of the influential innovations of recent decades in German agriculture. Due to high guaranteed energy prices biogas production led to distortions in agricultural and land markets. This paper provides insights in effects of biogas production on farms, farm structures and rural areas for the region Altmark, Germany, for the period 2012-2026 by using the agent-based simulation model AgriPoliS. AgriPoliS enables to simulate agricultural structural change and impacts of policies based on a linear programming approach. To maximize the household-income, farm agents can invest, produce and compete against each other on the land rental market. To analyse effects of biogas production, biogas plants, possible substrate mixtures and feed-in remunerations are introduced in the model. In our analyses, we focus on 1) the choice of production of farms, 2) the competition between farms, and 3) impacts on rural areas including environmental issues and labour market. Our simulation results show that biogas production provides especially for farmers with high management capabilities and large farms a profitable income opportunity. On average, biogas farms cannot increase their profitability. As result of an increased value added through biogas production and high competition among farms, rental prices increase and thus a high share of the value added is transferred to the land owners. Biogas production leads to an intensification of land use, especially to increases in cultivation of grass and maize silage instead of meadows and other crops, and in livestock production. This may cause negative environmental effects. On the other hand both, the intensification and the biogas production have positive effects on the labour market as biogas farms have an additional workforce demand.

Keywords: Agribusiness; Agricultural and Food Policy (search for similar items in EconPapers)
Pages: 20
Date: 2012-09-18
New Economics Papers: this item is included in nep-agr, nep-cmp, nep-ene and nep-env
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:eaa131:135772

DOI: 10.22004/ag.econ.135772

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