Efficiency Aspects of Transferable Dairy Quotas in New South Wales: A Linear Programming Approach

In July 1990 the New South Wales Dairy Corporation altered the regulations governing the transferability of market milk supply quotas. These changes allow producers to trade in milk quotas to suit their individual production patterns. In this study, a farm-level analysis of the effects of changes in dairy quota policy in New South Wales was undertaken. In addition, an indication of the effectiveness of these changes, with respect to the original objectives of the policy makers, is provided. This research was based on a linear programming model designed to select the optimal farm plan, including quota transactions and milk production patterns. It was found that a farm could produce more milk for less cost, under a transferable quota scheme, than under the previous fixed quota scheme. This would indicate that transferable quotas can increase the efficiency of dairy production in New South Wales