A prospect of moving towards free milk quota market in Ireland – will milk quota movement follow efficiency?

Quota trade in Ireland is ‘ring fenced’ to milk processors where farmers are not allowed to trade milk quota outside their designated milk processor. This ensures milk production staying within a region but has implications for the efficiency of milk production. In this paper, we simulated a free milk quota market in Ireland and compared the results with a milk quota exchange which was ring fenced to determine if the quota move from an inefficient region to a more efficient region. The results show that quota indeed follow efficiency of production when there is restriction over trade area.