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Abstract

This paper evaluates the distribution of short- and long-run marginal costs and quota rents across the EU-15 milk producers, by estimating a system of cost and input share equations on a panel data of dairy farms from 1996 to 2001. Regional and geographical location and the size of milk operations have been considered as the major factors affecting marginal costs. The results on quota rents highlights that Italian and Greek dairy farmers receive the highest economic rent (260 €/ton), while in Portugal the lowest (101 €/Kg) at least in the short-run. This is an indication that Italian and Greek milk supply would be the least 'sensitive' to a reduction in the intervention price. Several countries show negative long-run quota rents, indicating that in the long-run current market prices influence dairy farm's production plans.

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