The system of milk quotas was introduced in 1984 to curb the overproduction of milk on the EU market. Both before and after the introduction of quotas the prices of milk in the analysed countries kept growing until 1989. The annual growth in prices was more dynamic in the 1974-1983 than in the 1984-1989 period. Up to 1984 growth in milk prices was highly correlated with the increasing target price of milk and with the rising costs of production (mainly the costs of feed concentrates). After 1984 milk prices continued to grow despite the freezing of the rise in the target price (in fact this price was lowered), fast decline in the cost of the means production (in particular concentrated feeds and energy) and dynamic growth in intervention reserves. Taking into consideration the fall in the world prices in 1984-1989 it can be concluded that the system of milk quotas introduced in 1984 helped maintain the rise in milk prices until 1989 and that it also prevented a drastic slump in these prices after the reform of the intervention system conducted in 1989 and after Mc Sharry's reform conducted in 1992.
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