ABSTRACT
Although the EU agricultural policy reform in 1992 was not primarily directed at reducing the environmental pollution caused by agricultural production, it will have an impact on the environment. In this chapter, the effects of a reduction in the grain price on the input levels of nitrogen fertilizer and pesticides and on yields in Dutch winter wheat production are investigated. First, a description of long-term developments in yield and nitrogen and pesticide use is given. The effects of lower grain prices on these long-term developments are discussed. This serves as a background for the analysis of the short-term effects of lower grain prices on inputs and outputs. A crop level relation between inputs and yield is estimated for the South West Clay Area in the Netherlands for the period 1981-90. Optimal input and output levels are determined on the basis of this relation. This is done for the historical period and for situations with changing price ratios.
