Economic Resilience of EU Dairy Farms: An Evaluation of Economic Viability

Artur Wilczyński,Ewa Kołoszycz

doi:10.3390/agriculture11060510

Abstract

The economic viability of dairy farms is a measure of their ability to survive and grow. Its measurement is particularly important in periods of changes taking place in the environment of these entities. The last decade of the European dairy market was characterized by significant changes in regulations, which resulted in fluctuations in farm gate milk prices and, consequently, impacts on farm income. The main objective of the research was to assess the economic viability of dairy farms located in the European Union. The research area covered the countries that have the most raw cows’ milk delivered to dairies in the EU, and FADN data from 2009 to 2018. A comparative analysis was carried out on the level of temporal viability and permanent viability of farms classified by economic size. The research results showed that better temporal viability was achieved by farms with a larger production scale. On the other hand, the permanent economic viability was lower on farms belonging to a higher economic size class. Most of the analyzed groups of farms were in the survival phase. This means that dairy farms struggled to meet the costs of unpaid labor. Including direct payments in the calculation resulted in an improvement in temporal viability only in farms with the lowest economic size classes.

Highlights

The European Union itself has a 20% share in the world’s milk production and is the largest exporter of milk and dairy products in the world
The research objective was to study the changes in the short-term and long-term economic viability of dairy farms in the EU countries
The only group for which the level of the temporal viability index in 2009–2018 may conclude that it is under the development phase is a group of very large Italian farms

Summary

Introduction

The European Union itself has a 20% share in the world’s milk production and is the largest exporter of milk and dairy products in the world. There are two types of changes occurring on dairy farms in the European Union: concentration and intensification of production [1]. Their consequence is a continuous decrease in the number of farms, biological and technical progress changing the production system, and increasing specialization combined with increasing herds of dairy cows. The economic viability survey provides feedback on how agricultural policy ensures that family farms continue to stay at the heart of the European agricultural model [4]

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Conclusion