A Normative Approach To The Operation Of The New South Wales Milk Board

The New South Wa1es Milk Board was brought into being in 1929, as a result of producer action, to bring order into a highly disorganised market situation. The retailing of milk had been extremely competitive, milk supply and hence milk price had been erratic and hygiene had been a matter of caveat emptor. (1) The Board was without effective powers until the Milk Act, 1931, after which prices were stabilised, inspection of dairies was introduced and in general reasonable standards of hygiene were established. Initially whole milk quotas were allocated to factories. However, in the early 1950's it was found that despite a marked expansion of the milk zone, and despite a marked increase in price, the factory quota system still failed to produce sufficient winter milk. In 1955 individual farm quotas were introduced. A farmer's quota was determined by the zone in which he lived, and his level of winter milk production. In 1958 the quota system was altered again, in response to the discovery that a shortage of milk could occur at almost any time of the year. We will first discuss in detail certain shortcomings of current Milk Board operations; suggestions for improvement will be made. "Classical" and "quota" suggestions will be offered. The formal classical analysis will, of course, rely on the use of prices. The other suggestions will rely on an improved quota system supported by prices.