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

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  • Lehtonen, Heikki

Abstract

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.

Suggested Citation

  • Lehtonen, Heikki, 2008. "Impact Of Phasing Out Milk Quotas On Structure And Production Of Finnish Dairy Sector," 107th Seminar, January 30-February 1, 2008, Sevilla, Spain 6465, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaa107:6465
    DOI: 10.22004/ag.econ.6465
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    1. Z Bouamra Mechemache & V Réquillart, 2000. "Analysis of EU dairy policy reform," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 27(4), pages 409-430, December.
    2. 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, July.
    3. 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.
    4. Zohra Bouamra-Mechemache & K. Dartigues & Vincent V. Requillart, 2002. "EU dairy policy reform and future WTO negotiations [Réforme de la politique laitière européenne et nouvelles négociations de l'OMC]," Post-Print hal-02670390, HAL.
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    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.
    2. Anthony N. Rezitis, 2019. "Investigating price transmission in the Finnish dairy sector: an asymmetric NARDL approach," Empirical Economics, Springer, vol. 57(3), pages 861-900, September.
    3. Joanna Sredzinska & Pawel Sieminski & Monika Godek, 2021. "Income Situation of Dairy Farms in European Union Countries: A Synthetic Approach," European Research Studies Journal, European Research Studies Journal, vol. 0(3B), pages 993-1011.

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