The impact of the reform of the milk quota regime on the Italian dairy sector

This paper analyses the impact of the milk quota regime reform, actually under discussion, on the European countries with a detailed focus on the Italian milk and dairy sector. The dismantling of the milk quota regime is already on the EU agenda, but how and when to do it is still matter of debate. A possibility is to enlarge gradually the size of the national quotas, up to the full dismantling in 2015 (“soft landing”). Meanwhile, the discussion on Health Check of the CAP is under way. In this work we analyse the possible impacts of the reform of the milk quota regime on the basis of a Computable General Equilibrium (CGE) approach, using two models in sequence: the Global Trade Analysis Project (GTAP) model is used to evaluate the impacts of different scenarios of milk quota reform on the EU market and to compute the price changes outside Italy; these, in turn, are used as inputs for the MEG-D model, that focuses on the Italian milk and dairy market. The two models were run together with two specific objectives: the first was to avoid, in evaluating the impacts of reform of the milk sector regime in Italy, running the model with rough price estimates taken for secondary sources; the second, to have more specific results on the outcome at the national level. Particularly, the model takes in account the particular relevance of quality products (GDO) in Italian diary sector. In order to evaluate the impact of the “soft landing” reform scenario, we run a “comparison” scenario where the milk quotas are fully abolished in the 2009.