Effects on Investment of the 2003 CAP Reform: A Household Production Model for Dutch Dairy Farms

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.


Issue Date:
2005
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/24649
Total Pages:
10
JEL Codes:
Q12; Q18
Series Statement:
Contributed Paper




 Record created 2017-04-01, last modified 2017-04-26

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