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Abstract
As a result of the 2003 reform of the Common Agricultural Policy Irish dairy farmers will be confronted with declining milk prices and reduced profitability per hectare. One possible solution to this problem is to reduce their drystock numbers and to enter the Rural Environmental Protection Scheme (REPS). The aim of this paper is to investigate the impact of participation in REPS on the performance of dairy farms and to discuss its future role in Irish dairy farming. In order to do this a series of econometric models are used to estimate the impact of participation in REPS on four measures of farm performance. In all four models REPS was found to be statistically significant and the sign on the parameter estimate for REPS was as expected.