Economic situation of dairy farms after liquidation of the system of milk production quotas

Abstract

In step with the European Union's new budget perspective for 2014–2020 changes will be taking place in the Common Agricultural Policy. One of these changes will be the liquidation of the system of milk production quotas. It is predicted that in the result of the liquidation of the quota system the production of milk on the EU market will grow, which is likely to lead to a decrease in its procurement price. The article marks an attempt at determining the future economic situation of dairy farms, which is certain to be affected by the indicated changes. Research was conducted on the basis of model farms specializing in milk production and representing different volumes of production. In order to determine the income situation of the examined farms in 2014 and 2020 definite assumptions relating to the future costs of production means, productivity and milk procurement prices were adopted. The results of the simulation have shown that between 2014 and 2020 the incomes of all the analysed farms will decrease. The greatest fall will be experienced by farms having the smallest herds of dairy cows. Their operation will be barely profitable. The rest of the analysed model farms may record in 2020 a decline in profitability of between 20% and 30% in comparison with 2014. Such situation will compel milk producers to take strategic decisions concerning the possibilities of their further operation.