Economic Analysis of the Effects of the Expiry of the EU Milk Quota System

This report has been prepared to provide a quantitative assessment of the impact of the abolition of EU milk quotas on the EU dairy sector, including the different policy approaches of gradual phasing out and abrupt abolition of milk quota

Removing EU milk quotas, soft landing versus hard landing

This paper analyses EU dairy policy reforms and mainly focus on EU milk quota removal scenarios. The model used to evaluate the scenario is a spatial equilibrium model of the dairy sector. It integrates the main competitor of the EU on world markets, Oceania, as well as the main importing regions in the rest of the world. The paper first assesses the impact of the Luxembourg scenario in the prospect of a new WTO agreement in the future. It then provide a quantitative assessment of the impact of the abolition of EU milk quotas on the EU dairy sector either through a gradual phasing out or through an abrupt abolition of milk quotas. Compared to a status-quo policy, the Luxembourg policy leads to a 7.6 percent milk price decrease and a 1.9 percent milk production increase. A gradual increase of milk quotas as recently proposed by the European Commission (+ 7% over 6 years) generate a 9% drop in the EU milk price (compared to the Luxembourg scenario) and an increase in production by 3.5%. A complete elimination of quotas leads to an additional 1% increase in production and an additional 3% drop in the EU milk price. As compared to the baseline scenario, in the Luxembourg scenario in 2014-15, producers gain 1.3 billion ¿, whereas in the same year they lose 2.6 billion ¿ in the soft landing scenario. As such the direct payments are more than sufficient to compensate producers for the loss of producer surplus in the Luxembourg scenario, but fall short to achieve full compensation in the soft landing scenario

Rôles,impacts et services issus des élevages en Europe. Synthèse du rapport d’expertise scientifique collective

L’élevage, secteur majeur pour l’économie de nombreux territoires et structurant beaucoup de paysages ruraux européens, fait l’objet de controverses, depuis au moins une décennie, notamment du fait des dommages environnementaux qu’il engendre. Dans un tel contexte, il est apparu nécessaire d’étayer les débats en faisant le point sur l’état des connaissances scientifiques relatives aux rôles, impacts et services environnementaux, économiques et sociaux issus des élevages européens et leurs produits. Pour ce faire, les ministères français en charge de l’Environnement et de l’Agriculture ainsi que l’Agence de l’environnement et de la maîtrise de l’énergie (Ademe) ont sollicité l’Inra pour réaliser une expertise scientifique collective (ESCo) abordant conjointement les multiples conséquences sur les milieux et le climat, l’emploi et le travail, les marchés et certains enjeux sociaux et culturels, de la production et de la consommation humaine de produits d’origine animale (bovins, ovins, caprins, porcins et avicoles). L’analyse de ces diverses dimensions s’appuie sur les démarches d’évaluation rapportées dans la littérature scientifique internationale. Abordées, dans un premier temps, de manière analytique et globale, les connaissances ont ensuite été mobilisées par « bouquet de services » au sein de territoires contrastés. Les relations entre les différents impacts ou services permettent d’identifier des compromis et des leviers d’action envisageables pour les systèmes d’élevage. Livestock production is a sector of major economic importance that defines many European rural areas. It has become the focus of controversy over the past decade or more, particularly with regard to the environmental impacts it causes. In this context, it seemed useful to support this debate with a critical review of the state of scientific knowledge on the role, impacts, and services – environmental, economic, and social – associated with European livestock production. Accordingly, the French ministries responsible for Agriculture and the Environment, in cooperation with the French Environment and Energy Management Agency (ADEME), requested INRA to undertake a collective scientific assessment addressing the many consequences – for the environment and the climate, for employment and labor, for markets, and for a variety of social and cultural issues – related to the production and human consumption of animal products (cattle, sheep, goats, pigs, and poultry). Analysis of these diverse dimensions was based on assessment methods utilized and described in the international scientific literature. Using a broad, analytical overview as a starting point, the review proceeded by identifying the "service bundles" associated with livestock production in contrasting areas

Impact of a gradual increase in milk quotas on the EU dairy sector

The European Union (EU) dairy sector is facing significant changes due to EU enlargement, the Luxembourg reform and ongoing World Trade Organisation (WTO) negotiations. This paper explores the impact of alternative dairy policies in the context of a WTO agreement and further dairy policy adjustments. In particular, it analyses the impact of gradual but significant increases in EU milk quota and discusses the implications of different changes in the allocation of milk quotas. These scenarios are compared with the status quo as decided in the Common Agricultural Policy reform of 2003. We find that, by 2014--2015, the market effects of abolishing quota are similar to those of a 2 per cent gradual quota increase starting in 2009. Oxford University Press and Foundation for the European Review of Agricultural Economics 2009; all rights reserved. For permissions, please email [email protected], Oxford University Press.

Trade liberalisation and greenhouse gas emissions: the case of dairying in the European Union and New Zealand *

The link between trade and the environment has aroused considerable interest both in terms of the impact of trade liberalisation on the environment, and also the impact of environmental policy on production and trade. Of key environmental concern at present is global warming and its association with greenhouse gas emissions. Agriculture is a sector of the economy that both contributes to, and will be affected by, climate change. This paper models the impact of agricultural trade liberalisation on greenhouse gas emissions from agriculture around the world, focusing particularly on the effects on New Zealand, a small economy highly dependent on agricultural trade. A partial equilibrium agricultural multicountry, multicommodity trade model is used for the analysis, extended to include physical production systems and their greenhouse gas emissions. Two simulations are performed: removal of agricultural policies in the EU and in all OECD countries. The results indicate that although producer returns in New Zealand increase, greenhouse gas emissions also increase significantly. EU producers face lower returns but also lower greenhouse gas emissions. Copyright 2006 The Authors Journal compilation 2006 Australian Agricultural and Resource Economics Society Inc. and Blackwell Publishing Ltd .

Supply and demand for commodity components: implications of free trade versus the AUSFTA for the US dairy industry *

During the negotiations on the Australia-US free trade agreement (AUSFTA), the US dairy industry vigorously opposed opening the US market to imports of Australian dairy products on the grounds that the US industry would be devastated. Subsequently, the agreement signed in February 2004 made an exception for dairy, providing for only limited quota expansion and no free trade, even at the end of the long implementation period. This paper presents a simulation model of world dairy markets, represented by supply and demand equations for fat and non-fat components of milk and manufactured dairy products. We use the model to analyse the effects on US milk markets of both a hypothetical agreement, allowing free bilateral trade in dairy products, and the actual AUSFTA. An important contribution to the literature is the derivation of explicit supply and demand relationships for milk components. The components model allows an analysis of long-term production, consumption, and trade patterns that is not tied to specific, fungible products. Simulations indicate that increased imports from Australia resulting from bilateral trade liberalisation would have resulted in small reductions in US milk prices and production. The much smaller increases in Australian access to the US market under the actual AUSFTA will have even smaller, almost negligible, impacts. Copyright Australian Agricultural and Resource Economics Society Inc. and Blackwell Publishing Ltd 2006.