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Effects of the 2003 CAP Reform on Investments of Dutch Dairy Farms Simulations with a Household Production Model

Author

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  • Peerlings, Jack
  • Ooms, Daan

Abstract

This paper develops a non-separable household production model capable of analysing 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.

Suggested Citation

  • Peerlings, Jack & Ooms, Daan, 2005. "Effects of the 2003 CAP Reform on Investments of Dutch Dairy Farms Simulations with a Household Production Model," 89th Seminar, February 2-5, 2005, Parma, Italy 239272, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaae89:239272
    DOI: 10.22004/ag.econ.239272
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