Description

Introduction of a local / regional / national maximum quota that producers of a certain product (e.g. milk or sugar) can produce or that processors (e.g. dairies) can process. Non-observance of the quota is punishable with fines.

The establishment of quota exchanges enables producers and processors who have been allocated a quota or who have acquired one to trade it and receive ‘quota rents’.

Direct quantity control in the domestic market involves a very high administrative burden.

Requirements

• A properly functioning country-wide administration and monitoring system with access to the relevant information and sufficient technical and human capacities for its design, implementation and monitoring
• Clear and coherent political strategy and targets for policy-makers and public authorities
• Clear responsibilities in public authorities
• Close cooperation and knowledge sharing with research institutions
• Compatible regional and world trade law (WTO conformity)
• Constant market surveying and forecasting
• Market price information systems
• Regulatory framework
• Sanction mechanisms

Possible Negative Effects

• Market distortion
• Risk of corruption and lack of transparency
• High macroeconomic costs if quotas set too high or too low