Evaluation of the impact of milk quota - case study Germany

At the time of the introduction of the quota system the structure of dairy production in Germany was rather unfavourable. Since 1993, German policy generally aimed at improving quota mobility. The introduction of transfers without land in 1993 facilitated farm growth and the transfer of resources and production to the better farm managers and to locations best suited for dairy production; however the latter was restricted by the regional limitations of the trading zones. The quota auctions introduced in 2000 significantly improved the transparency of quota markets. Larger regional shifts in production will be enabled by the recent reduction of the number of trading zones. Overall, structural change in dairy production has been strong (halving the number of dairy farms every ten years) despite the limitations by the quota system. Still many regions in Germany, notably the case study region of Bavaria, are characterised by small farm structure, where the main share of milk production is still realised by small and medium sized farms.