European dairy policy in the years to come : impact of quota abolition on the dairy sector

This paper examines EU dairy sector and market developments, and the likely impact of the milk quota removal. The latter is illustrated by model simulations focused on the Dutch dairy farm sector. Declining milk prices raise the question whether quota are still relevant to the sector. Ongoing trade liberalisation will further push down EU milk prices, with significant income effects. The Dutch case study shows that early quota abolition will be beneficial for larger farms eager to expand and enhances structural change. Implications for the European dairy processing sector are discussed too. The paper concludes by presenting sets of policy instruments that may facilitate the sector gradual adjustment to a situation without milk quota