How Will Decreasing Subsistence Production Affect Future Dairy Marketsin the Central European Countries?

This paper presents an approach to depict subsistence production of milk in a partial equilibriumsector model and applies this approach to Poland, Bulgaria and Romania in the European SimulationModel (ESIM). The restriction on milk production implied by the EU milk quota in a situation withincreasing market demand along with decreasing subsistence production and consumption, potentiallydrives up prices for nontradable dairy products in the Central European Countries (CECs), and resultsin 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 manyof the relevant parameters is weak....