"marketing boards set prices for milk and milk products based on production costs that aren’t grounded in market reality. Milk production is strictly controlled by quotas that guarantee farmers an annual income...  there is limited market incentive to be as efficient as possible."

Nonsense.
Farmers' production costs are indeed based on market realities. Dairy farmers pay the same prices as other farmers for electricity, diesel fuel, grain & feed supplements, tractors & equipment, etc. 

Farmers are not guaranteed an annual income. They receive a price that is based on an averaged cost of production. If there is no increase in production costs there is no increase in the price farmers receive. Their net farm income is of course the difference between their costs and their milk cheque. Consequently, there is every incentive to be as efficient as possible.