Worried by rapidly increasing milk and beef policy costs, but constrained by political considerations, the European Community (EC) Council of Agriculture ministers introduced a milk quota regime effective April 1984. The extent to which a quota regime reduces economic efficiency and influences world trade depends upon how it is implemented. The method of implementation is also a major determinant of the policy's effect on world trade. Regulations favorable to production in grass-based dairy regions will, other things being equal, reduce world cereal demand. Regulations favorable to butterfat production may distort world, animal, and vegetable fat markets.