ECONOMIC ANALYSIS OF MILK QUOTA SYSTEM IN THE EUROPEAN UNION AGRICULTURAL POLICY

Abstract

The main aim of this paper is to analyze the effects of the quotas imposed on the milk production in Common Agricultural Policy of the European Union. It is concluded that the quotas system is, in conceptual sense, a weaker solution than a free market solution. However, the situation on the аgricultural market in the time of setting up the quota system in 1984 prescribed the goals which were partly committed: the milk prices have been stabilized; the budget expenses decreased; and the level of farmers revenue have been maintained. The negative effects of that system can be identified: enhanced expenditure of milk production, higher prices of milk and milk products than world prices and stagnation of the export

Keywords

• quota system, milk, milk products, shadow price, quota rent.