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An economic analysis of the Irish milk quota exchange scheme

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  • Hennessy, Thia
  • Lapple, Doris
  • Shalloo, Laurence
  • Wallace, Michael

Abstract

In Ireland, the trade of milk quota is subject to regional restrictions and a large variation in quota prices between regions has caused some controversy. This article investigates this issue by analysing the functioning of the Irish milk quota exchange market. For this purpose, the economic value of milk quota is estimated using an optimisation framework. The estimated values are then compared to milk quota prices paid at the exchange market. The analysis reveals that quota is undervalued in the border, midlands and west and south-west regions, while milk quota is overvalued in the east and south regions. This implies that farmers in certain regions overpay for additional quota, while other farmers secure good value for their quota investments. The paper concludes by discussing that the identified regional differences are only partly explained by economic and production factors.

Suggested Citation

  • 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.
    • Handle: RePEc:ags:ijameu:329810
    DOI: 10.22004/ag.econ.329810
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    References listed on IDEAS

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    1. 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.
    2. Colman, David, 2000. "Inefficiencies in the UK milk quota system," Food Policy, Elsevier, vol. 25(1), pages 1-16, February.
    3. Peter Bogetoft & Kurt Nielsen & Henrik Ballebye Olesen, 2003. "The single-bid restriction on milk quota exchanges," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 30(2), pages 193-215, June.
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