Structural change in the dairy sector: exit from farming and farm type change

Abstract

This paper analyses the factors driving structural change in Swiss dairy farming. We focus on the most important farm type in Switzerland, dairy farms, to examine which factors contribute to a farmer’s decision to abandon farming or change to suckler cow farm type. Swiss dairy farming is characterised by a high proportion of farms with animal welfare programmes and extensive use of grassland. This farm sector can therefore provide a blueprint for sustainable dairy farming, especially in mountain regions. Using administrative data from the agricultural policy information system, the results from logistic regression show that age is a major reason for farm exit. Interestingly, dairy farms that are more specialised reveal higher exit probabilities, whereas farm size in terms of employees and the number of dairy cows as well as the adherence to organic or animal welfare standards reduce the exit probabilities. Changes to the farm type suckler cow occur rather at younger age and by farms that are acquainted with organic and free-range animal husbandry. Finally, there are factors that differently influence farm exit and farm type change. These findings allow for the adjustment of policy instruments to better control structural change of the Swiss dairy farm sector. Given the partly conflicting economic and environmental objectives in agricultural policy, a profound understanding and control of structural development in the agricultural sector is pivotal.