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The Welfare Economics of Dismantling Dairy Quota in a Confederation of States

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  • van Kooten, Gerrit Cornelis

Abstract

Supply-restricting marketing boards shift the costs of agricultural support payments from the treasury to consumers. Canada, Australia and the European Union adopted quota regimes in dairy, but Australia and the EU subsequently dismantled their programs, while providing milk producers with compensation, but the dairy quota system remains entrenched in Canada. In this paper, dairy policies in the aforementioned jurisdictions, plus the U.S. and New Zealand are reviewed, and a stylized description of the EU reform is provided. An applied welfare economics framework based on the EU experience is then used to investigate potential mechanisms for reforming Canada’s dairy quota regime. The main issue regards producers’ compensation. The analysis shows that one has to be careful not to overcompensate producers, which could make a reform program prohibitively expensive on the treasury. The analysis provides a framework within which policy discussions regarding compensation can take place.

Suggested Citation

  • van Kooten, Gerrit Cornelis, 2017. "The Welfare Economics of Dismantling Dairy Quota in a Confederation of States," Working Papers 256743, University of Victoria, Resource Economics and Policy.
    • Handle: RePEc:ags:uvicwp:256743
    DOI: 10.22004/ag.econ.256743
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    More about this item

    Keywords

    Agricultural and Food Policy; Farm Management; Livestock Production/Industries;
    All these keywords.

    JEL classification:

    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade

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