IDEAS home Printed from https://ideas.repec.org/a/bla/jageco/v60y2009i2p334-347.html
   My bibliography  Save this article

The Inefficiencies of Regionalised Milk Quota Trade

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1477-9552.2008.00187.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1477-9552.2008.00187.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. 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.
    2. 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.
    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. Colman, David, 2000. "Inefficiencies in the UK milk quota system," Food Policy, Elsevier, vol. 25(1), pages 1-16, February.
    5. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sauer, Johannes, 2008. "Quota Deregulation and Organic versus Conventional Milk – A Bayesian Distance Function Approach," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6425, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Thia Hennessy & Shailesh Shrestha & Laurence Shalloo & Michael Wallace, 2008. "The Inefficiencies of Regionalised Trade of Milk Quota," Working Papers 0811, Rural Economy and Development Programme,Teagasc.
    3. Shrestha, Shailesh & Hennessy, Thia C., 2008. "A prospect of moving towards free milk quota market in Ireland – will milk quota movement follow efficiency?," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 43657, European Association of Agricultural Economists.
    4. Elskamp, Rebecca & Hailu, Getu, 2013. "Do Efficient Dairy Producers Purchase Quota?," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149678, Agricultural and Applied Economics Association.
    5. Wieck, Christine & Heckelei, Thomas, 2004. "Development Of Marginal Cost Distributions In Dairy Production Regions Of The Eu," 2004 Annual meeting, August 1-4, Denver, CO 19943, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Juan Aparicio & Magdalena Kapelko & Lidia Ortiz, 2021. "Modelling environmental inefficiency under a quota system," Operational Research, Springer, vol. 21(2), pages 1097-1124, June.
    7. Johannes Sauer, 2010. "Deregulation and dairy production systems: a Bayesian distance function approach," Journal of Productivity Analysis, Springer, vol. 34(3), pages 213-237, December.
    8. Levi, Loic & Chavas, Jean-Paul, 2018. "How Does Eliminating Quotas Affect Firm Investment? Evidence from Dairy Farms," 2018 Annual Meeting, August 5-7, Washington, D.C. 273831, Agricultural and Applied Economics Association.
    9. Sauer, J., 2009. "Quota Deregulation and Organic versus Conventional Milk – A Bayesian Distance Function Approach," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 44, March.
    10. Kersting, Stefan & Hüttel, Silke & Odening, Martin, 2015. "Structural change in agriculture under capacity constraints: An equilibrium approach," Thuenen-Series of Applied Economic Theory 140, University of Rostock, Institute of Economics.
    11. Ang, Frederic & Oude Lansink, Alfons, 2014. "Dynamic profit inefficiency: a DEA application to Belgian dairy farms," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182649, European Association of Agricultural Economists.
    12. Pavel Ciaian & d'Artis Kancs & Jo Swinnen, 2008. "Static and Dynamic Distributional Effects of Decoupled Payments," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 51(2), pages 20-47.
    13. Alex W. Chernoff, 2015. "Between a cap and a higher price: Modelling the price of dairy quotas under price ceiling legislation," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 48(4), pages 1403-1429, November.
    14. 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.
    15. Chernoff, Alex W., 2013. "Between a Cap and a Higher Price: The Dairy Quota Trilemma," Trade Policy Briefs 146977, Canadian Agricultural Trade Policy Research Network.
    16. Kersting, Stefan & Hüttel, Silke & Odening, Martin, 2016. "Industry dynamics under production constraints — The case of the EU dairy sector," Economic Modelling, Elsevier, vol. 55(C), pages 135-151.
    17. Gillespie, Patrick & O'Donoghue, Cathal & Hynes, Stephen & Thorne, Fiona & Hennessy, Thia, 2015. "Milk quota and the development of Irish dairy productivity: a Malmquist index using a stochastic frontier approach," 2015 Conference, August 9-14, 2015, Milan, Italy 211684, International Association of Agricultural Economists.
    18. Stefan Kersting & JProf. Silke Huettel & Prof. Martin Odening, 2013. "Structural change in agriculture – an equilibrium approach," EcoMod2013 5300, EcoMod.
    19. Lukáš Čechura & Zdeňka Žáková Kroupová & Irena Benešová, 2021. "Productivity and Efficiency in European Milk Production: Can We Observe the Effects of Abolishing Milk Quotas?," Agriculture, MDPI, vol. 11(9), pages 1-21, August.
    20. Alfons Oude Lansink & Arno Van Der Vlist, 2008. "Non‐Parametric Modelling of CO2 Emission Quota," Journal of Agricultural Economics, Wiley Blackwell, vol. 59(3), pages 487-497, September.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jageco:v:60:y:2009:i:2:p:334-347. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0021-857X .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.