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--- input_allocation [2020/02/11 09:25] – created matsz
+++ input_allocation [2020/02/11 09:27] – matsz
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-====== Input Allocation ======
+===== Input Allocation =====
+The term input allocation describes how aggregate input demand (e.g. total anorganic N fertiliser use in Denmark) is ‘distributed’ to production activities. The resulting activity specific data are called input coefficients. They may either be measured in value (€/ha) or physical terms (kg/ha). The CAPRI data base uses physical terms and, where not available, input coefficient measured in constant prices.
+Micro-economic theory of a profit maximising producer requires revenue exhaustion, i.e. marginal revenues must be equal to marginal costs simultaneously for all realised activities. The marginal physical input demand multiplied with the input price exhausts marginal revenues, leading to zero marginal profits. Marginal input demands per activity can only be used to define aggregate input demand if they are equal to average input demands. The latter is the case for the Leontief production function.
+The advantage of assuming a Leontief technology in agricultural production analysis is the fact that an explicit link between production activities and total physical input use is introduced (e.g. environmental indicators can be linked directly to individual activities or activity specific income indicators, since gross margins can be calculated). The disadvantage is the rather rigid technology assumption. We would for example expect that increasing a crop share in a region will change the average soil quality the crop uses, which in turn should change yields and nutrient requirements. It should hence be understood that the Leontief assumption is an abstraction and simplification of the ‘real’ agricultural technology in a region. The assumption is somewhat relaxed in CAPRI as two ‘production intensities’ are introduced.
+Input coefficients for different inputs are constructed in different ways which will be discussed in more detail in the following sections:
+  * For nitrate, phosphate and potash, nutrient balances are constructed so to take into account crop and manure nutrient content and observed fertiliser use, combined with gaseous losses. These balances ex post determine the effective input coefficients and regional availability of manure and overfertilisation parameters.
+  * For feed, the input calculation is rooted in a mix of engineering knowledge (requirement functions for animal activities, nutrient content of feeding stuff, recommendations on feed mix), observed data ex post (total national feed use, national feed costs), combined within a Highest Posterior Density (HPD) estimation framework.
+  * For the remaining inputs, estimation results from a FADN sample in the context of the CAPSTRAT project (2000-03) are combined with current aggregate national input demand reported in the EAA and standard gross margin estimations, again using a HPD estimation framework.
+===Input allocation excluding young animals, fertiliser and feed ===