Analysis of the milk and dairy market and its reform policy in the EU
Within the Health Check of the Common Agricultural Policy (CAP) the European Commission endorsed the proposal of milk quota abolition and suggested an increase of quota by 1% annually from 2009 to 2013 to allow a "soft landing" of the milk sector to the end of quotas. In this context it is especially important to clarify, which economic effects can be expected of an abolition of the milk quota regime.
Milk is produced in every single EU Member State (MS) without exception. The dairy sector makes a substantial contribution to the agricultural turn-over in most MS, as well as in the EU in aggregate. In terms of value it represents approximately 14% of agricultural output and the EU is a major player in the world dairy market.
The AGRITRADE action has carried out three economic assessments of possible implications of the Health Check of the Common Agricultural Policy (CAP), with a particular focus on the effects of a milk quota abolition in the EU-27 in the year 2015.
Three agricultural sector models have been applied in cooperation with modelling teams from different research institutions:
AGMEMOD (AGricultural MEmber states MODelling), an econometric, dynamic, partial equilibrium, multi-country, multi-market model for EU agriculture delivers results for the EU-27, EU-15, EU-12, the individual Member States (MS) and their regional groupings.
CAPRI (Common Agricultural Policy Regionalised Impact) is an agricultural sector model that combines a representation of agricultural supply based on positive mathematical programming with a global trade model for agricultural commodities. The supply module of CAPRI covers the most important agricultural activities in the EU-27 at a regional level (NUTS 2).
CAPSIM (Common Agricultural Policy SIMulation) is a partial equilibrium model focusing on the agricultural sector with exogenous inputs of macroeconomic variables. It is comparative static and it relies on calibration techniques and a rigorous microeconomic framework for behavioural functions.
The full reports are available:
AGMEMOD: Modelling and Analysis of the European Milk and Dairy Market http://ipts.jrc.ec.europa.eu/publications/pub.cfm?id=2320
CAPSIM: Dairy Reform and Western Balkan Countries Accession Scenarios http://ipts.jrc.ec.europa.eu/publications/pub.cfm?id=2519
CAPRI: Regional Economic Analysis of Milk Quota Reform in the EU http://ipts.jrc.ec.europa.eu/publications/pub.cfm?id=2520