The Inefficiencies of Regionalised Trade of Milk Quota

Thia Hennessy (), Shailesh Shrestha (), Laurence Shalloo and Michael Wallace Author-School of Agriculture, Food Science and Veterinary Medicine, University College Dublin, Ireland
Additional contact information
Thia Hennessy: Rural Economy and Development Programme, Teagasc, Athenry, Co. Galway, Ireland
Laurence Shalloo: Dairy Production Research Centre, Teagasc, Moorepark, Co. Cork, Ireland

No 811, Working Papers from Rural Economy and Development Programme,Teagasc

Abstract: This paper estimates the inefficiencies associated with the regionalisation of milk quota trade. An optimisation model is developed to estimate the economic value of quota. Quota values are aggregated to derive supply and demand curves under two scenarios; first where quotas can trade nationally and second where the trade of quota is regionally restricted. Quota trade is simulated and the consequent effects on supplier structure are estimated. Through the derivation of sectoral cumulative cost curves it is possible to estimate the impact of regionalising quota trade on sector efficiency. The model is solved using National Farm Survey data from Ireland and the inefficiencies of regionalised quota trade in Ireland is estimated at €20 million. The model is also used to quantify the effect of policy uncertainty on quota trade. The implications of an early abolition or expansion of the EU milk quota on quota trade is quantified. The paper concludes by discussing the implications of restricted quota trade, especially in the context of eventual quota removal.

Keywords: Milk quota; Quota Trade; Optimisation modelling; Cumulative Cost Curves (search for similar items in EconPapers)
Pages: 24 pages
Date: 2008
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Citations: View citations in EconPapers (1)

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