This report follows on from studies looking at dairy farming in different countries and regions of Europe. It looks at the various interpretations being applied in each country with regard to quota operation and management. Farmers throughout Europe appear to have adapted and responded remarkably well to the restrictions imposed. All countries studied were within 2% of quota for both 1984/85 and 1985/86. There were differences in the method of calculating levy liability, with the UK, Denmark, Ireland and France opting for the dairy base and the GFR and the Netherlands the farm base. Temporary arrangements to exchange quota have allowed countries to take advantage of quota shortfalls in some areas. In all countries transfer of quota has been a problem due to the rigidity of attachment to land. The farm management response has been to reduce cow numbers and yield per cow in varying degrees. The main variable input cost, purchased feed, has universally been reduced. Due to these changes and the subsequent improvement in efficiency, margin over purchased feed improved. This improvement was considerably added to by increases in the milk price and/or a fall in purchase feed prices. Whole farm profit increased in 4 regions and fell slightly in 3 others. For the future it appears likely that quotas will remain and increase in severity. This will have a greater effect on profits than has been apparent so far and lead to a continuing squeeze on dairy farm incomes.