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Impact Of Phasing Out Milk Quotas On Structure And Production Of Finnish Dairy Sector


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  • Lehtonen, Heikki


We evaluate impacts of milk quota abolition in Finland where production costs and producer price of milk are among the highest in the EU. We analyse several price scenarios for dairy products corresponding to 10-30% reductions in raw milk prices in the EU following milk quota expansion of 2% per year. The sector model includes 18 dairy products and regions and other agricultural activities. Armington -assumption is used in modelling foreign trade. Trade of milk quotas and structural change are endogenous in the model. The results suggest that 10-15% reductions in the EU milk prices would result in less than 10% decrease in Finnish dairy production. Investments to large farm units would still increase. However, if the EU milk prices decreased by 15-20% production would fall by 10-22%. Overall it seems that milk quota abolition is not likely to result in any drastic downscaling of dairy sectors in Finland.

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Bibliographic Info

Paper provided by European Association of Agricultural Economists in its series 107th Seminar, January 30-February 1, 2008, Sevilla, Spain with number 6465.

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Date of creation: 2008
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Handle: RePEc:ags:eaa107:6465

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Keywords: Milk quotas; EU; milk production; dairy product processing; farm size; investments; Demand and Price Analysis; International Relations/Trade; Livestock Production/Industries;

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  1. Bouamra-Mechemache, Zohra & Jongeneel, Roel & Réquillart, Vincent, 2007. "The Dairy Industry in an Expending European Union: Policies and Strategies," IDEI Working Papers 478, Institut d'Économie Industrielle (IDEI), Toulouse.
  2. Bouamra-Mechemache & Réquillart, 2000. "Analysis of EU dairy policy reform," Working Papers 156175, Institut National de la Recherche Agronomique, France.
  3. Zohra Bouamra-Mechemache & Jean-Paul Chavas & Tom Cox & Vincent Réquillart, 2002. "EU Dairy Policy Reform and Future WTO Negotiations: a Spatial Equilibrium Analysis," Journal of Agricultural Economics, Wiley Blackwell, vol. 53(2), pages 233-257.
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Cited by:
  1. Antimiani, Alessandro & Finizia, A. & Henke, Roberto & Manfredi, G. & Merciai, S., 2008. "The impact of the reform of the milk quota regime on the Italian dairy sector," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 43658, European Association of Agricultural Economists.


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