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Explaining Differences in Milk Quota Values: The Role of Economic Efficiency

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  • Antonio Alvarez
  • Carlos Arias
  • Luis Orea

Abstract

This article explores the relationship between milk quota values and economic efficiency in order to analyze government interventions in quota allocations among producers. For this purpose, we estimate quota values using a panel of Spanish dairy farms. Quota values are then decomposed into economic efficiency, price, and scale effects in order to assess the relative influence of these factors. We find that efficiency is important in explaining quota values but is uncorrelated with observable farm characteristics. This casts doubts on the government's ability to allocate quotas to efficient farms. Copyright 2006, Oxford University Press.

Suggested Citation

  • 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.
  • Handle: RePEc:oup:ajagec:v:88:y:2006:i:1:p:182-193
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    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2006.00846.x
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    14. Hung-jen Wang & Peter Schmidt, 2002. "One-Step and Two-Step Estimation of the Effects of Exogenous Variables on Technical Efficiency Levels," Journal of Productivity Analysis, Springer, vol. 18(2), pages 129-144, September.
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    16. Helming, John & Oskam, Arie & Thijssen, Geert, 1993. "A Micro-economic Analysis of Dairy Farming in the Netherlands," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 20(3), pages 343-363.
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    Cited by:

    1. 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.
    2. Alfons Oude Lansink & Arno van der Vlist, 2008. "Non-Parametric Modelling of CO," Journal of Agricultural Economics, Wiley Blackwell, vol. 59(3), pages 487-497, September.
    3. 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.
    4. 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.
    5. Chernoff, Alex W., 2013. "Between a Cap and a Higher Price: The Dairy Quota Trilemma," Working Papers 165804, Canadian Agricultural Trade Policy Research Network.
    6. Van der Straeten, Bart & Buysse, Jeroen & Nolte, Stephan & Lauwers, Ludwig H. & Claeys, Dakerlia & Van Huylenbroeck, Guido, 2011. "Policy intervention in a concentration permit market: efficiency analysis of obligatory manure processing in Flanders," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114832, European Association of Agricultural Economists.
    7. repec:ags:gewipr:260032 is not listed on IDEAS
    8. Maurice Doyon & Virginie Simard & Kent D. Messer & Lota D. Tamini & Harry M. Kaiser, 2008. "An Experimental Analysis of Modifications to the Centralized Milk Quota Exchange System in Quebec," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 56(3), pages 295-312, September.
    9. 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).
    10. repec:oup:erevae:v:45:y:2018:i:1:p:81-99. is not listed on IDEAS
    11. 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.
    12. 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.
    13. Maurice Doyon & Lota Dabio Tamini & Virginie Simard & Kent Messer & Harry M. Kaiser, 2006. "L'économie expérimentale pour l'analyse de modifications au système centralisé de vente du quota laitier au Québec," CIRANO Working Papers 2006s-23, CIRANO.
    14. Casasnovas, Valero L. & Aldanondo, Ana Maria, 2011. "Influence of Animal Feeding on Milk Supply in Navarre," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114316, European Association of Agricultural Economists.

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