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 percent and 0.4 percent. Production of rootcrops increases by 0.4 percent. Pesticide and N-fertiliser use fall by 2.8 and 6.7 percent respectively and profit by two percent. 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, two percent of the total arable area is set-aside. However, the results differ strongly between farms. Copyright 1996 by Oxford University Press.