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Effects of EU dairy policy reform for Dutch dairy farming: a primal approach using GMM estimation

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  • Daan L. Ooms
  • Jack H. M. Peerlings

Abstract

This paper estimates a production function for milk using a generalised method of moments estimator to avoid the endogeneity problem. Using the first-order conditions for profit maximisation, the economic effects for individual Dutch dairy farms of the 2003 EU dairy policy reform are analysed. With an expected milk price decrease of 21 per cent, profit decreases on average by 22 per cent. EU direct payments compensate for roughly 53 per cent of this fall in profit. The profit reduction means that 69 per cent of all small farms have negative income from farming, compared with 15 per cent in the initial situation. Copyright 2005, Oxford University Press.

Suggested Citation

  • Daan L. Ooms & Jack H. M. Peerlings, 2005. "Effects of EU dairy policy reform for Dutch dairy farming: a primal approach using GMM estimation," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 32(4), pages 517-537, December.
    • Handle: RePEc:oup:erevae:v:32:y:2005:i:4:p:517-537
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    Cited by:

    1. Tomáš DOUCHA & Ivan Foltýn & Jaroslav HUMPÁL, 2012. "Profitability of dairy and suckler cows breeding on Czech farms," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 58(9), pages 397-408.
    2. Sauer, Johannes, 2008. "Quota Deregulation and Organic versus Conventional Milk – A Bayesian Distance Function Approach," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6425, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Luigi Biagini & Federico Antonioli & Simone Severini, 2020. "The Role of the Common Agricultural Policy in Enhancing Farm Income: A Dynamic Panel Analysis Accounting for Farm Size in Italy," Journal of Agricultural Economics, Wiley Blackwell, vol. 71(3), pages 652-675, September.
    4. Luigi Biagini & Simone Severini, 2021. "The role of Common Agricultural Policy (CAP) in enhancing and stabilising farm income: an analysis of income transfer efficiency and the Income Stabilisation Tool," Papers 2104.14188, arXiv.org.
    5. Samson, G.S. (Sabrina) & Gardebroek, Koos & Jongeneel, Roelof A., 2012. "The Cost Function Structure of Dutch Dairy Farms: Effects of Quota abolition and Price Volatility," 126th Seminar, June 27-29, 2012, Capri, Italy 125956, European Association of Agricultural Economists.
    6. Frýd, Lukáš & Sokol, Ondřej, 2021. "Relationships between technical efficiency and subsidies for Czech farms: A two-stage robust approach," Socio-Economic Planning Sciences, Elsevier, vol. 78(C).
    7. Sauer, J., 2009. "Quota Deregulation and Organic versus Conventional Milk – A Bayesian Distance Function Approach," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 44, March.
    8. Boere, Esther & Peerlings, Jack & Reinhard, Stijn & Heijman, Wim, 2014. "The dynamics of dairy land use change with respect to the milk quota regime," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182710, European Association of Agricultural Economists.
    9. Moro, Daniele & Sckokai, Paolo, 2013. "The impact of decoupled payments on farm choices: Conceptual and methodological challenges," Food Policy, Elsevier, vol. 41(C), pages 28-38.

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