This paper develops a non-separable household production model capable of analyzing the effects of the 2003 CAP reform, and especially EU farm payments, on individual Dutch dairy farms. Model results show that the 2003 CAP reform farm payments do not fully compensate the income loss caused by the milk price decrease. This implies that savings, and therefore, investment decreases. Investment shifts away from on-farm investment to off-farm investment. On-farm investment in milk quotas falls compared to investment in capital and land because the shadow price of milk quotas decreases relatively to the shadow prices of land and capital.
|Title of host publication||Modelling Agricultural Policies: State of the Art and New Challenges, 89th European Seminar of the EAAE, Parma, 3-5 February 2005|
|Place of Publication||Parma, Italie|
|Number of pages||11|
|Publication status||Published - 2005|
|Event||89th European Seminar of the EAAE - |
Duration: 3 Feb 2005 → 5 Feb 2005
|Seminar||89th European Seminar of the EAAE|
|Period||3/02/05 → 5/02/05|
Peerlings, J. H. M., & Ooms, D. L. (2005). Effects of the 2003 CAP Reform on Investments of Dutch Dairy Farms Simulations with a Household Production Model. In F. Arfini (Ed.), Modelling Agricultural Policies: State of the Art and New Challenges, 89th European Seminar of the EAAE, Parma, 3-5 February 2005 (pp. 882-892). Parma, Italie.