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The Inefficiencies of Regionalised Milk Quota Trade

Author

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  • Thia Hennessy
  • Shailesh Shrestha
  • Laurence Shalloo
  • Michael Wallace

Abstract

This paper estimates the inefficiencies associated with the regionalisation of the milk quota trade. An optimisation model is developed to estimate the economic value of quota. Quota values are aggregated to derive quota sale and purchase curves under two scenarios: first, where quotas can be traded nationally and second, where the trade of quota is regionally restricted. Quota trade is simulated and the consequent effects on supplier structure 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 are estimated at €27 million. The paper concludes by discussing the implications of restricted quota trade, especially in the context of eventual quota removal.

Suggested Citation

  • Thia Hennessy & Shailesh Shrestha & Laurence Shalloo & Michael Wallace, 2009. "The Inefficiencies of Regionalised Milk Quota Trade," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(2), pages 334-347, June.
    • Handle: RePEc:bla:jageco:v:60:y:2009:i:2:p:334-347
    DOI: 10.1111/j.1477-9552.2008.00187.x
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    References listed on IDEAS

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    1. Alston, Julian M., 1981. "A Note on the Effects of Non-Transferable Quotas on Supply Functions," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 49(03), pages 1-9, December.
    2. Boots, Maroeska & Oude Lansink, Alfons & Peerlings, Jack, 1997. "Efficiency Loss Due to Distortions in Dutch Milk Quota Trade," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 24(1), pages 31-46.
    3. Antonio Alvarez & Carlos Arias & Luis Orea, 2006. "Explaining Differences in Milk Quota Values: The Role of Economic Efficiency," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(1), pages 182-193.
    4. David Colman & Michael Burton & Dan Rigby & Jeremy Franks, 2002. "Structural Change and Policy Reform in the UK Dairy Sector," Journal of Agricultural Economics, Wiley Blackwell, vol. 53(3), pages 645-663, November.
    5. Colman, David, 2000. "Inefficiencies in the UK milk quota system," Food Policy, Elsevier, vol. 25(1), pages 1-16, February.
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    Cited by:

    1. Piotr Borawski & Marta Guth & Wojciech Truszkowski & Dagmara Zuzek & Aneta Beldycka-Borawska & Bartosz Mickiewicz & Elzbieta Szymanska & Jayson Kennedy Harper & James William Dunn, 2020. "Milk price changes in Poland in the context of the Common Agricultural Policy," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 66(1), pages 19-26.
    2. Frick, Fabian & Sauer, Johannes, 2016. "Deregulation and Productivity – Empirical Evidence on Dairy Production," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 236032, Agricultural and Applied Economics Association.
    3. Frick, Fabian & Sauer, Johannes, 2016. "Deregulation And Productivity – Empirical Evidence On Dairy Production," 56th Annual Conference, Bonn, Germany, September 28-30, 2016 244884, German Association of Agricultural Economists (GEWISOLA).
    4. Cathal O'Donoghue & Thia Hennessy, 2014. "Chapter 03: The Agri-Food Sector," Chapters from Rural Economic Development in Ireland, in: Rural Economic Development in Ireland, edition 1, chapter 3, Rural Economy and Development Programme,Teagasc.
    5. Shrestha, Shailesh & Hennessy, Thia & Abdalla, Mohamed & Forristal, Dermot & Jones, Michael B., 2014. "Determining Short Term Responses of Irish Dairy Farms under Climate Change," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 63(03), pages 1-13, September.
    6. Hennessy, Thia & Lapple, Doris & Shalloo, Laurence & Wallace, Michael, 2020. "An economic analysis of the Irish milk quota exchange scheme," International Journal of Agricultural Management, Institute of Agricultural Management, vol. 9, December.
    7. Hennessy, Thia & Lapple, Doris & Shalloo, Laurence & Wallace, Michael, 2012. "An economic analysis of the Irish milk quota exchange scheme," International Journal of Agricultural Management, Institute of Agricultural Management, vol. 1(3), pages 1-9.
    8. Vítězslav DOUBEK & Jaroslav ŠVASTA & Lucie ACKERMANN BLAŽKOVÁ, 2012. "Agricultural trade in example of milk from perspective of multi-criteria analysis," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 58(7), pages 315-323.
    9. Shrestha, Shailesh & Hennessy, Thia & Abdalla, Mohamed & Forristal, Dermot & Jones, Michael B., 2014. "Determining Short Term Responses of Irish Dairy Farms under Climate Change," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 63(3).
    10. Glover, Jane, 2011. "Where has all the cream gone: How sustainable is the English dairy supply chain?," 85th Annual Conference, April 18-20, 2011, Warwick University, Coventry, UK 108940, Agricultural Economics Society.

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