Does planning production expansion have its intended effect in reality? Evidence from the dairy sector in Poland

Abstract

Farmers are being continuously encouraged to adopt entrepreneurial practices with the hope that they will increase their competitiveness. One such practice involves defining clear goals for farm development, which is meant to improve farms' capacity to respond to multi-faceted changes in their environment. However, the question remains whether the assumed plans will actually be achieved and whether they should be seen as a prerequisite for improving farm performance. In this paper, we analyse these issues using unique micro data from the dairy sector in Poland. Our focus is on one specific objective – production expansion – which is often included in farmers’ future plans. We investigate whether declaring production expansion as a goal for the future has any impact on actual output growth. Our findings suggest a very weak relationship between the two, which is contradictory to strong arguments showing how setting clear goals may lead to improved farm performance. We discuss several potential reasons for this result, namely the specific nature of our data, complex regulatory framework, the fact that new profit opportunities in dairy sector might stem not only from increasing the scale of output, or the fact that business planning may be perceived by farmers just as a technical requirement to receive public support.