ECONOMIC EFFECTS OF THE ABOLITION OF MILK QUOTA SYSTEM IN THE EUROPEAN UNION - SIMULATION RESULTS BASED ON THE AGMEMOD MODEL (Ekonomiczne skutki likwidacji kwot mlecznych w Unii Europejskiej - wyniki symulacji z wykorzystaniem modelu AGMEMOD)
The paper provides an analysis of the implications of dairy policy reform on the agricultural market in the EU and in individual Member States. Both a theoretical study of the production control programme and model-based quantitative simulation of the effects of milk quota system abolition are presented in the paper. The results obtained in empirical analysis indicate that gradual expansion of milk quotas and elimination thereof in the end lead to market conditions changes which affect farmer's decisions and regional distribution of production in the EU. According to simulation results, EU milk production would increase by 4.8% causing a decrease of milk prices by around 7% as a result of milk quota abolition. The relatively slight scale of these changes leads to the conclusion that external factors concerning world situation are more important for the future EU milk market development than the changes in the milk quota system. Consumers are the main beneficiaries of the reform. They would benefit from declining prices of dairy products. According to the CAPRI model simulations, overall loss of agricultural incomes in the EU due to milk quota abolition could total 2.0%, including losses of dairy farmers' incomes - 5.8%.
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