Phasing out milk quotas: a bio-economic model to analyse the impacts on French dairy farms[Suppression des quotas laitiers : un modèle bioéconomique pour analyser l'impact sur les exploitations laitières françaises]

This book chapter discusses the productive and economic implications of several options for the future Common Agricultural Policy (CAP) focusing on French dairy farms (as France includes 16% of the EU milk quota). The options studied follow the proposals made by the European Commission in May 2008 for the "Health Check" of the CAP. We examine the cross effects, on the productive strategy of French dairy farms, of the phasing out of milk quotas and price variations. A bio-economic model is developed to measure the productive, economical and environmental impacts on French dairy farms of the milk quota abolition. While respecting the principle of agent rationality (maximization of profit), the model incorporates the economic risk related to the volatility of input and output prices. Thus, the model maximises the expected utility of income while taking into account a set of constraints: regulatory, structural, zootechnical, agronomic and environmental. The model is applied to four types of dairy farms to reflect the diversity of production systems in the west of France. Simulations show that French dairy farms have a strong production potential but this increase in milk volume results in an intensification of the production system and has negative effects on the environment.