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    'Staff publications' is the digital repository of Wageningen University & Research

    'Staff publications' contains references to publications authored by Wageningen University staff from 1976 onward.

    Publications authored by the staff of the Research Institutes are available from 1995 onwards.

    Full text documents are added when available. The database is updated daily and currently holds about 240,000 items, of which 72,000 in open access.

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Record number 351561
Title Micro-economic panel data models for Dutch dairy farming
Author(s) Ooms, D.L.
Source Wageningen University. Promotor(en): Arie Oskam, co-promotor(en): Jack Peerlings; A.R. Hall. - [S.l.] : S.n. - ISBN 9789085045762 - 122
Department(s) Agricultural Economics and Rural Policy
Publication type Dissertation, internally prepared
Publication year 2007
Keyword(s) landbouwbeleid - melkveehouderij - familiebedrijven, landbouw - agrarische bedrijfsvoering - inkomen - financiën - financieel landbouwbeleid - regelingen - europese unie - econometrische modellen - nederland - gemeenschappelijk landbouwbeleid - cap - agricultural policy - dairy farming - family farms - farm management - income - finance - agricultural financial policy - regulations - european union - econometric models - netherlands
Categories Agricultural Policy
Abstract Keywords:micro-economic models, panel data, GMM, CAP reform, dairy farming

In The Netherlands, thedairy sector is the largest agricultural sub-sector based on both gross production value and number of farms.It is characterised by family farms in which large part of labour, management and risk bearing capital are supplied by the owner and his or her household. The dairy sector is highly regulated by the Common Agricultural Policy (CAP) of the EU. Within the CAP, milk production is limited since 1984 by farm specific quotas. The 2003 CAP reform, by introducing direct income payments, makes policies even more farm specific. To understand how individual family farms react to policy changes it is necessary to develop farm specific models. This is done using panel data and generalised method of moments (GMM) econometric estimation, keeping account of endogeneity, sample selection and unobserved farm specific effects. The estimated models describe milk production, on- and off-farm labour supply, investment in machinery, exit from, and growth in milk production. The models are used to understand how Dutch dairy farms react on the 2003 CAP reform.

 Results show a strong decrease of income on Dutch dairy farms due to the milk price decrease resulting from the 2003 CAP reform. Results are calculated without taking structural changes in Dutch dairy farming into account. However, results show that due to the milk price decrease the number of milk producing farms decreases and that it will be mainly small farms that exit. This leaves possibilities for remaining farms to grow and take advantage of the better earning capabilities of larger farms. In total the effect on income for the remaining farms is therefore less strong than calculated in a situation without structural change.

Decoupled payments are advocated by the World Trade Organization (WTO) as a way to transfer income to farmers with minimal potential to distort production and trade. However, theoretically decoupled payments can impact production through an income effect changing on- and off-farm labour supply. We do not find such an effect of decoupled payments on both on- and off-farm labour supplies and therefore production.

A new way of modelling the impact of financial variables on investment decisions is proposed. Estimation results show that financial variables do not have a significant effect on investment in machinery. So, direct income payments, as proposed in the 2003 CAP reform, do not affect investment in machinery in case these payments lead to changes in e.g. solvability or liquidity.
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