An Examination of Milk Quota expansion at EU member State Level with specific emphasis on Ireland

The CAP Health Check in 2008 may result in fundamental changes in EU dairy policy. An expansion of the EU dairy quota is being strongly considered as a prelude to the elimination of the quota mechanism by 2014/15. This paper addresses the implications of such a reform for EU and Irish dairy commodity markets. We use a suite of partial equilibrium multi commodity structural models of EU agricultural commodity markets to project the impact of an expansion in the dairy quota on milk and dairy commodity production, dairy commodity prices and milk prices at an EU and Member State level. A number of experiments are conducted involving differing annual rates of expansion of the milk quota using national quota rents from the literature.