This paper examines the regional, farm-specific and sectoral effects of the new CAP regime for cereals and oilseeds (CO) with a simulation model of Dutch arable farming. The model is estimated with panel data on Dutch arable farms over the period 1970–1992. Simulation results are aggregated for different farm classes and for the whole sector. Simulation of the new CO regime shows a reduction in the output of CO crops and other outputs by respectively 8.9 per cent and 0.4 per cent. Production of rootcrops increases by 0.4 per cent. Pesticide and N-fertiliser use fall by 2.8 and 6.7 per cent respectively and profit by 2 per cent. Most large farms react to the new CO regime by reducing the area of CO crops and participating in the set-aside arrangements. In aggregate, 2 per cent of the total arable area is set aside. However, the results differ strongly between farms.