Dairy Quota and Farm Structural Change: A Case Study on the Netherlands

This paper sets out to analyse the impact of milk quotas had on the dairy farm structure of the Netherlands. In addition projections on the likely farm structure under different milk quota scenarios are explored. Moreover mobility indicators characterizing structural change are developed and calculated. A Markov probability model is estimated relying on a generalized cross entropy approach. The introduction of milk quotas as of April 1, 1984 froze the dairy farm structural adjustment, at least initially. However, later on mobility started to increase, which is likely to reflect the quota tradability and lease possibilities. Moreover there is evidence that the milk quota regime has increased concentration of dairy production among farms with 50-69 cows. If after quota abolition the dairy farm structural dynamics would be the same as in the 1972-83 period, then quota abolition in 2015 will lead to a substantial increase in the number of farms in 2022 as compared to the current status qu