A Note on Victoria's Hen Quota Transfer System

Hen quotas were virtually freely transferable within Victoria when they were first introduced in 1975. The 1980's have witnessed a series of changes to regulations over quota transfers. Initially these changes were components of a plan to phase out quotas but that is no longer on the policy agenda. Quotas remain but without the advantages of free transferability. It is well established that restrictions on quota transfers in general lead to production inefficiencies. Another undesirable side-effect is that the value of quota and magnitude of quota rent are more difficult to measure when quota transfers are restricted, adding to the difficulties of assessing the effects of the regulations. In the Victorian egg industry these general problems are confounded by some features of the tender market for quota. The purpose of this note is to describe and analyse the effects of the Victorian hen quota transfer system on the efficiency of quota allocation and on the market price for quota.