“Management options within a quota regime”

Extract

The introduction of milk quotas within the European Economic Community may not have been a popular choice in 1984 but with the benefit of hindsight, few dairy farmers in the UK would now advocate their removal.

Contrary to expectations, profitability on dairy farms since 1984 appears to have improved, admittedly from a very low base. Farmers have been compelled to re-consider their management practices and have concentrated on the priority of lowering production costs. Price factors have also worked in favour of margins and agricultural suppliers have been forced to compete for a reducing market through keen price competition. At the same time quotas have themselves become a substantial asset without any investment on behalf of the original owner.

There can be no guarantee that quotas will continue indefinitely as political policies can change at short notice. It Is, however, self evident that such a mechanism does work at least in terms of controlling milk supply. Most observers therefore take the view that quotas will remain a long term constraint within which dairy farmers must manage their businesses.