Modelling the new EU cereals and oilseeds regime in the Netherlands

This paper examines the regional, farm-specific and sectoral effects of the new CAP regime for cereals and oilseeds (CO) with a simulation model of Dutch arable farming. The model is estimated with panel data on Dutch arable farms over the period 1970-1992. Simulation results are aggregated for different farm classes and for the whole sector. Simulation of the new CO regime shows a reduction in the output of CO crops and other outputs by respectively 8.9 per cent and 0.4 per cent. Production ofrootcrops increases by 0.4 per cent. Pesticide and N-fertiliser use fall by 2.8 and 6.7 per cent respectively and profit by 2 per cent. Most large farms react to the new CO regime by reducing the area of CO crops and participating in the set-aside arrangements. In aggregate, 2 per cent of the total arable area is set aside. However, the results differ strongly between farms.