The Livestock System In The Netherlands Under Attack: An Applied General Equilibrium Model Approach

Paper presented at the 18th EAAE Congress in Bonn in 2025. This paper provides an analysis of the economy-wide effects of reducing livestock numbers in the Netherlands with 10%, particularly in response to court rulings aimed at addressing persistent nutrient surpluses. Given the prominent position of the livestock production system in trade and its interlinkages with other industries this paper develops and uses an applied general equilibrium model to study the economy-wide effects. Model simulations show that given the relatively small size of the livestock sector the effects for the Dutch economy are limited except for the directly related industries and trade. The balance of trade deteriorates due to a reduction in meat and dairy exports that is not compensated for by the fall in feed imports. Interestingly, welfare goes up because of the lower surplus on the balance of trade (i.e. less leakage of welfare to the rest of the world) but also because of a second-best welfare effect resulting from reduced agricultural subsidies. Value added and employment fall with 6.58% for the livestock industry and 4.22% for the Food and Feed industry. Simulations show that price effects become smaller with increased substitution possibilities. However, quantity effects of increased substitution are small as the reduced supply quota in the livestock industry determines the change in quantity in related industries more than prices do. Overall, increased trade does not fully compensate for the lower domestic production. However, substitution makes that the effects are less dramatic than it is stated by farmers’ organisations and representatives of the Food and Feed industry. Keywords:Applied general equilibrium modelling, nutrient policies, livestock industry, food industry Further information ACT4CAP27 is a European research project aiming to enhance analytical capabilities, tools, and collaborative technical infrastructure within the policy modelling community, to provide support for evidence-based EU agri-food policies post-2027. ACT4CAP27 Project coordination: Wageningen Economic Research, The Hague, NLContact: [email protected] | Website: https://act4cap27.eu/ Project duration: 1 March 2024 – 28 February 2029 Funding acknowledgement ACT4CAP27 is funded by the European Union. Horizon Europe Grant Agreement No. 101134874. Views and opinions expressed are however those of the authors only and do not necessarily reflect those of the European Union or the European Commission. Neither the European Union nor the granting authority can be held responsible for them.