Cross-country Comparison of Dairy Farm Productivity Growth
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1 Cross-country Comparison of Dairy Farm Productivity Growth Shingo Kimura OECD Network for Farm-level Analysis, 17 November 2014
2 Current status of productivity measurement project Draft report Dynamics of Dairy Farm Productivity Growth is to be presented at the APM including three countries: EST, NED and UK Dairy Farm Productivity Measurement: Technical Background Report documents methodology and data source Revised report expected in March 2015 PWB proposed to extend the productivity analysis using farm survey data (e.g., other sectors, link with environmental performance).
3 Sector and farm-level TFP Sector level TFP is computed by aggregating farm-level inputs and outputs using sample weight information. Farm-level TFP is computed multilateral Fisher index (EKS adjusted index) to assure comparability of TFP across farm and time.
4 Productivity measurement based on farm-survey data: Fisher Index Method Multilateral Fisher index method is applied to measure both sector and farm-level TFP estimates From Zhao, Sheng and Gray (2012)
5 Dairy sector in three countries Evolution of the specialised dairy farm sector Estonia Number of specialised milk farms (thousand) Milk output (million tonne) Netherlands 1 Number of specialised milk farms (thousand) Milk output (million tonne) United Kingdom (England and Wales) Number of specialised milk farms (thousand) Milk output (million tonne)
6 Average dairy farm in three countries Characteristics of the average specialised dairy farm Estonia Number of dairy cows Full-time equivalent labour input Utilised Area of Land (ha) Milk yield per cow (kg per cow) The Netherlands Number of dairy cows Full-time equivalent labour input Utilised Area of Land (ha) Milk yield per cow (kg per cow) United Kingdom Number of dairy cows Full-time equivalent labour input Utilised Area of Land (ha) Milk yield per cow (kg per cow)
7 Evolution of sector level TFP Average annual productivity growth is the highest in NED. TFP growth is led by the improvement in labour productivity in all three countries Decline in labour input is complemented by increase in capital input in all three countries Average annual % growth rate of productivity of the specialised dairy farm sector Estonia Netherlands United Kingdom Period Total factor productivity Partial factor productivity Labour Land Capital Material Service
8 Evolution of sector level TFP in Estonia Sector expanded significantly after EU accession, but not necessarily accompanied with overall productivity improvement Evolution of input, output and TFP (2003=100) TFP Output Input
9 Evolution of sector level TFP in Netherlands Productivity improved continuously (first led by reduction in input and later by output expansion) Productivity growth dynamics changes after quota reform Evolution of input, output and TFP (2003=100) TFP Output Input
10 Evolution of sector level TFP in UK Productivity remained stable across time, despite variability of output and input Overall declining trend of output Evolution of input, output and TFP (2003=100) TFP Output Input
11 Distribution of Farm-level TFP Average TFP 100 = unweighted average in Average TFP growth (%) Estonia ( ) Unweighted average Market share weighted average Large size farm Middle size farm Small size farm Netherlands ( ) Unweighted average Market share weighted average Large size farm UK Middle size farm Small size farm ( ) Unweighted average Market share weighted average Large size farm Middle size farm Small size farm
12 Change in farm and market structure Number of dairy cows % market share Estonia Large size farm Middle size farm Small size farm Netherlands Large size farm Middle size farm Small size farm United Kingdom Large size farm Middle size farm Small size farm
13 Decomposition of productivity growth in dairy farm sector Dynamic OP decomposition method decompose the sector level productivity change into four components 1. Productivity improvement of continuing farms 2. Resource reallocation between continuing farms 3. Impact of new farm entry 4. Impact of farm exit + [ s it st LP it LP t cont LP t = LP cont,t LP cont,t 1 + [s entry,t LP entry,t LP cont,t entry s it 1 st 1 LP it 1 LP t 1 ] + [s exit,t 1 LP cont,t 1 LP exit,t 1 ] exit ]
14 Contribution to annual productivity growth (%) Decomposition of productivity growth in dairy farm sector Exit and entry Resource reallocation between farms Productivity growth at the farm level Market share weighted productivity growth Estonia ( ) Netherlands ( ) UK ( )
15 Next steps Refining productivity measurement results and analysis Additional country participation for the revision Scoping of the next project plan
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