Abstract

The economic situation of EU dairy farms is unstable and differs strongly between member countries. Most studies addressing the EU’s agricultural sector focus on selected countries or selected groups of operators. Conversely, this paper seeks to determine the economic situation of dairy farms in EU countries grouped into types according to their production potential. The analysis relied on data collected and processed in the FADN (Farm Accountancy Data Network). The farms were classified based on a hierarchical clustering routine. The agglomerative technique was used. Distances between clusters were calculated using the Ward’s method. In turn, the distance between countries was calculated as the Euclidean distance. This study enabled the identification of five different types of dairy farms in the EU. On an EU-wide basis, medium and large-sized highly specialized intensive farms play a key role in milk production. Despite their profitability being somehow restricted, they report high levels of labor productivity thanks to an advantageous production potential. In turn, an insufficient potential is among the main restrictions faced by other dairy farms in the EU; their advantageous financial indicators often fail to provide satisfactory levels of income which could drive investment and consumption opportunities.

Highlights

  • Milk is among the key food products consumed by humans in many countries around the world [1]

  • Operators covered by the FADN are farms of an adequate economic size which account for at least 90% of the production volume in the European Union country concerned [34]

  • The cluster analysis enabled the identification of five different types of dairy farms in the European Union (EU)

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Summary

Introduction

Milk is among the key food products consumed by humans in many countries around the world [1]. Population growth, together with an increase in incomes, results in increased consumption of milk products. Milk is among the essential products of the agricultural market [3], and the key agricultural product for the European Union (EU) [2]. Considering its share in the turnover or its contribution to the value added of production, the dairy industry plays a more important role in EU countries than in the United. Exports of milk products play an important role in total agri-food trade in most EU countries and in the global trade in dairy products [4].

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