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In order to respond to increasing global food demand and provide for national economic growth, the Estonian Dairy Strategy for 2012−2020 aims to achieve a 30% growth in milk production. At the same time, there is a global attempt to reduce greenhouse gas (GHG) emissions. This paper analyses the medium-term (2015−2020) projections for milk production and associated GHG emissions from dairy cows in Estonia. The FAPRI-GOLD type market model of Estonian agriculture, which is used for projections of agricultural production, was supplemented with a module that helps project GHG emissions. The paper demonstrates the endogenisation of GHG emission factors in a relatively general agricultural market model context. The results imply that increasing milk production by 30% by 2020 would jeopardise Estonia’s commitments with regard to agricultural GHG emissions. However, the average GHG emission per tonne of produced milk will decline, thus reducing the “carbon footprint” of milk production.

From 2004-2015, the utilised agricultural area (UAA) in Estonia increased by 25%. Half of the UAA growth arose from the increase in the area of permanent grassland temporarily not used for production purposes. The main driver of growth in such land has been single area payment (SAP) paid in Estonia since the EU accession in 2004. While subsidising the maintenance of permanent grassland not used for agricultural production is in line with the objectives of the EU Common Agricultural Policy (CAP), it fuels discussions about the effects of this policy on agricultural producers. For every year, member states establish practices equivalent to maintenance of permanent grassland. Until 2014, in Estonia, the minimum activity for the maintenance of permanent grassland under the SAP, was harvesting the grass or chopping it and leaving on the ground. In 2015 and 2016 options for chopping and leaving the grass on the ground were restricted with an aim to target SAP more towards active land users, i.e. agricultural producers. Both agricultural producers and non-producers maintain permanent grassland not used for production purposes. Research on the practices used by different types of actors helps in understanding the variety of practices and potential effects of restrictions of these practices. The survey data was combined with the data from the registries of Estonian Agricultural Registers and Information Board (ARIB), to analyse the potential effects of restrictions of practices on agricultural producers and the area of permanent pasture in Estonia. The results indicate that both agricultural producers and non-producers use grass harvesting and chopping practices. Therefore, restrictions that have effect on both groups of land users are not the most efficient way of targeting SAP towards agricultural producers, and potentially reduce the area of permanent grasslands. This result would be in conflict with the aims of the CAP.

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