Browsing Agricultural Economics by Author "Lapple, Doris"
The capacity to expand milk production in Ireland following the removal of milk quotasLapple, Doris; Hennessy, Thia (Teagasc, 2012-12)Given the imminent removal of milk quota in 2015, EU dairy farmers will be able to expand production without purchasing milk quota rights for the first time in 30 years. This paper uses Irish National Farm Survey data to simulate the expansion capacity of Irish dairy farms. Specifically, the likelihood of achieving the 50% increase in production target published in the Irish Government’s Food Harvest 2020 Report is explored. Potential milk output is estimated accounting for structural change and the economic viability of production under three price scenarios for 2020. In addition, the number of new entrants that would be required to meet the 50% target is calculated. The results indicate that the 50% output volume growth target set in the Food Harvest report will be difficult to achieve and that future potential milk output depends importantly on the rate of structural change and productivity growth as well as on real milk prices in 2020. A regional analysis reveals that relative to other regions, the south has the greatest expansion capacity. This suggests that quota removal could cause significant regional restructuring of milk production, which is likely to present some challenges to the dairy processing sector.
An economic analysis of the Irish milk quota exchange scheme.Hennessy, Thia; Lapple, Doris; Shalloo, Laurence; Wallace, Michael (Institute of Agricultural Management, 2012-03)In Ireland, the trade of milk quota is subject to regional restrictions and a large variation in quota prices between regions has caused some controversy. This article investigates this issue by analysing the functioning of the Irish milk quota exchange market. For this purpose, the economic value of milk quota is estimated using an optimisation framework. The estimated values are then compared to milk quota prices paid at the exchange market. The analysis reveals that quota is undervalued in the border, midlands and west and south-west regions, while milk quota is overvalued in the east and south regions. This implies that farmers in certain regions overpay for additional quota, while other farmers secure good value for their quota investments. The paper concludes by discussing that the identified regional differences are only partly explained by economic and production factors.