The EU milk quotas - new benefits from cooperation in milk production sector in Latvia
2004
Gulbe, I. (Latvian State Inst. of Agrarian Economics, Riga (Latvia)) | Strumpe, D. (Latvian State Inst. of Agrarian Economics, Riga (Latvia))
Usually the profitability is one way to measure the efficiency of participants of free market economy. The purpose of this paper is to prove that cooperation in Latvian milk sector might increase the profitability of local milk producers when Latvia will join the European Union. Milk quotas limit the milk production volumes in the EU. In general, increase of production volumes and price and reduction of production and marketing costs boost profits. In the EU milk production environment with strict quotas, only increase of price and reduction of costs might raise profits. Price increase requires high market power of producers and high quality of produced milk but cost reduction calls for the efficient use of production means and outsourced services. Thus one of the ways to increase profitability of milk sector in the EU environment is cooperation, which might solve the previously mentioned dilemmas.
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