DETERMINANTS OF PERSISTENT AND TRANSIENT TECHNICAL EFFICIENCY OF MILK PRODUCTION IN EU
The evaluation of the competitiveness of different agriculture sectors has, traditionally, been based on the measurement of technical efficiency. We focus on the dairy sector because the EU dairy sector is one of the pivotal agricultural sectors in the EU. The dairy sector currently faces several challenges arising from growing EU and global demand, price volatility, fodder crisis as a result of climate change and the fact that dairy farms are highly specialized, which on the one hand may be an advantage, on the other hand a threat due to higher vulnerability to income shocks. Milk production is carried out on mixed farms or specialized farms. In 2012, the share of the sector covered by specialized farms in the FADN, on which this analysis is based, is more than 80% in the EU-15 (EU members until the 2004 enlargement) and around 50% in the other member states. There are big differences in coverage among EU countries: only 17% of milk production in Slovakia and 19% in the Czech Republic, but full production in Ireland and Finland.
Jméno a příjmení autora:
Gabriela Trnková, Zdeňka Žáková Kroupová
Technical efficiency, transient efficiency, persistent efficiency, four-component model, determinants, milk production
DOI (& full text):
This paper deals with the estimation of technical efficiency of milk production in the EU, its decomposition and the analysis of determinants of transient and persistent efficiency. Attention was…více
This paper deals with the estimation of technical efficiency of milk production in the EU, its decomposition and the analysis of determinants of transient and persistent efficiency. Attention was focused on specialized milk production using FADN data in the period from 2004 to 2017. The analysis is based on the four-component model that represents the most advanced approach to technical efficiency analysis at present and the multi-step estimation procedure extended by technical efficiency determinants. To the best of our knowledge, this is the first application of this model based on the multi-step estimation with the inclusion of technical efficiency determinants on this type of specialization in the EU. The results show that the overall technical efficiency achieves the mean value of 68% and is relatively dense around the mean. The persistent inefficiency poses a greater problem for dairy production and varies considerably across European regions compared to the transient part. Based on the assessment of the development of transient efficiency, it is evident that it is influenced by the situation on the dairy market, in particular by the milk crises. The most effective conversion of inputs to outputs is achieved in the Netherlands, the United Kingdom, and Belgium and is least burdened with institutional and structural rigidities. The results show that transient efficiency is positively influenced by paid labour share, rented land share, level of modernization and level of off-farm activities and negatively by the level of subsidies on livestock. The positive effect of the economies of size on persistent efficiency is not proved. However, specialization, despite the higher vulnerability of specialized farms to price shocks, affects persistent efficiency positively. Localization of farms in LFAs, as expected, has a negative impact on persistent technical efficiency.