Background analysis for a Temporary Measure (State aid) aimed at restructuring the Dutch Dairy Sector

The EU dairy sector is facing a crisis, which also affects Dutch dairy farmers. Low milk prices have negatively affected dairy farm profitability. At the same time, the structural adjustment in the Dutch dairy sector has slowed down: the reduction in the rate of farm exits was below normal levels and in contrast with the pattern observed in several other EU Member States. Now the Dutch government would like to consider a temporary support programme aimed at restructuring the dairy sector. The Ministry of Economic Affairs has requested Wageningen Economic Research to provide a background analysis with respect to such a temporary measure. This analysis is requested because the proposed measure would imply state aid to the Dutch dairy sector, which is only allowable in case a number of criteria are satisfied. This research should provide insight into this matter.