How Will Decreasing Subsistence Production Affect Future Dairy Markets in the Central European Countries?
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This paper presents an approach to depict subsistence production of milk in a partial equilibrium
sector model and applies this approach to Poland, Bulgaria and Romania in the European
Simulation Model (ESIM). The restriction on milk production implied by the EU milk quota in
a situation with increasing market demand along with decreasing subsistence production and
consumption, potentially drives up prices for nontradable dairy products in the Central European
Countries (CECs), and results in significantly lower net exports and lower production
than if these countries do not accede to the EU. Results presented should be taken as tentative
and in no way final as the empirical foundation of many of the relevant parameters is weak.