Following model calculations presented in this paper he removal of the EU quota system will result in 21% more milk production in the Netherlands. Large dairy farms expand and achieve higher income levels compared to a scenario with quota continuation, as increasing scale of production and decrease of quota costs outweigh price reductions and extra manure disposal costs. Production in the category of relatively small farms, however, declines and farms in this category will leave business. Sector income will only marginally fall while production expansion will remain within the limits of present environmental policies related to manure and nutrient applications.