Abstract
Dairy quotas were introduced in April 1984. Since then, producers have been adjusting their production systems to cope with a constraint on milk output. In this paper, stochastic production functions are used to examine both allocative efficiency of input use and technical efficiency in the industry during the post-quota period. The results indicate that producers have successfully adjusted the use of the variable input, feed, to optimal levels but are finding it more difficult to adjust quasi-fixed inputs such as labour, land, machinery and the herd size. Technical efficiency has remained relatively constant.
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