IMPACT - the International Model for Policy Analysis of Agricultural Commodities and Trade - was developed at IFPRI in 1990s, upon the realization that there was a lack of long-term vision and consensus among policy makers and researchers about the actions that are necessary to feed the world in the future, reduce poverty, and protect the natural resource base. This paper provides an updated description of the methodology for IMPACT.
The IMPACT model is a representation of a competitive world agricultural market for 30 crop and livestock commodities, including cereals, soybeans, cotton, roots and tubers, meats, milk, eggs, oils, sugar/sweeteners, fruits/vegetables, and fish. It is specified as a set of 115 countries and regions within each of which supply, demand, and prices for agricultural commodities are determined. The country and regional agricultural submodels are linked through trade, a specification that highlights the interdependence of countries and commodities in global agricultural markets. The model uses a system of supply and demand elasticities incorporated into a series of linear and nonlinear equations, to approximate the underlying production and demand functions. World agricultural commodity prices are determined annually at levels that clear international markets.
Demand is a function of prices, income, and population growth. Growth in crop production in each country is determined by crop prices and the rate of productivity growth. The model is written in the General Algebraic Modeling System (GAMS) programming language. The solution of the system of equations is achieved using the Gauss-Seidel method algorithm. This procedure minimizes the sum of net trade at the international level and solves for a world market price for a commodity that satisfies market-clearing conditions.
IMPACT generates annual projections for crop area, yield, and production; crop demand for food, feed, and other uses; crop prices and trade; and livestock numbers, yield, production, demand, prices, and trade. The current baseline year is 2000 (using a three-year average of 1999-2001) and the model incorporates FAOSTAT data (FAO various years) on commodity, income, and population; a system of supply and demand elasticities from literature reviews and expert estimates; and rates for malnutrition from UN-ACC/SCN and calorie-malnutrition relationships developed by Smith and Haddad (2000).