Short- and Long-Run Policy Evaluation: Support for Grassland-Based Milk Production in Switzerland

Abstract

Following the abolition of the milk quota in 2008, farmers in Switzerland strongly increased the use of concentrate feed in milk production. Against this background, the Swiss government introduced the voluntary grassland-based milk and meat (GMF) programme in 2014, which combines economic incentives with feeding restrictions to reduce the reliance on concentrate feed and increase the use of grass feed. We analyse the economic and ecological impacts of the GMF programme at the farm and at the sector level in the short- and long-run. We use a difference-in-differences approach (ex-post) and an agent-based simulation model SWISSland (ex-ante) to construct counterfactual states to evaluate the programme's impacts. We find that the GMF programme reduces the use of concentrate feed and increases the use of grass feed in Swiss milk production. Whereas the programme has a positive effect on economic indicators such as the farm income, we find no effect on ecological indicators such as the N surplus. Our analysis suggests that feeding restrictions on concentrate feed are not enough to achieve a reduction in the N surplus. Additional feeding restrictions on grassland are necessary. Furthermore, the GMF programme has a dampening effect on sectoral milk supply, and leads to a higher milk price.