Sectoral effects of changes to the milk market organisation in Switzerland

The sectoral and regional effects of the abolition of milk quotas as well as changes to the governmental price support system were analysed by means of the Sectoral Information and Forecasting System for Swiss Agriculture (SILAS). According to model calculations, as a consequence of an abolition of the milk quotas, milk production would increase in plain regions and decrease in mountain regions. In addition, a drop in sector income would have to be expected. With regard to changes to the governmental price support system, model calculations showed that the introduction of direct payments based on roughage consuming cattle equivalents would imply a more marked decrease in income than direct payments based on grassland area. From a financial point of view, plain regions would benefit more from direct payments based on roughage consuming cattle equivalents; whereas for mountain regions, direct payments based on grassland area would be more advantageous.