Determinants of Productivity Variation in the Dairy Sectors

Transcription

1 Determinants of Productivity Variation in the Dairy Sectors Johannes Sauer Professor and Chair Production and Resource Economics Center of Life and Food Sciences Technical University Munich

2 content farm level variation milk sector deregulation technology and investment advanced decomposition: allocative subgroups current work and outlook

3 sector level decomposition decomposition of productivity growth

4 farm level variation decomposing productivity growth at sector level delivers no specific insights in the relative importance of specific determinants at farm level a simple statistical description of various farm characteristics linked to more or less productive farms is misleading as those are potentially highly correlated the estimation of a microeconometric model at farm level for observed and unobserved determinants of productivity variation can help censored regression modelling (Tobit or Tobin s probit) is applied making use of time related information (RE specification)

5 farm level

6 farm level Estonia Netherlands United Kingdom Farm size Number of dairy cow Farm management Milk yield Stocking density (per ha) Purchased feed per cow (EUR) Labour input per cow (hour) Hired labour share (%) Characteristics of manager Age University education na Corporate organization (%) 0 na -- Investment and technological choice Net investment per cow (EUR) Milk robot 0 ++ na Milk parlor na ++ na Adoption of organic practice (%) Natural condition Less favoured area (%) -- na -- Payments and other source of income Share of payments in farm income Non-farm income na Milk quota reform na: not available, ++/-- positive/negative and significant at 1%, +/- positive/negative and significant at 5%

7 farm level all countries: (++) herd size significant positive impact (++) milk yield positive impact by definition and after controlling (++) stocking density (LU/ha) positive impact (--) feed & labor per cow significant negative impacts Estonia: a higher share of hired labor significantly increases productivity farms run by older farmers show lower productivity investment leads to lower productivity (average last 3y) organic farms and farms in lfas are less productive subsidies decrease productivity

8 farm level Netherlands: hired labor has a significantly positive productivity impact younger farmers produce more output per inputs a higher education (uni) does not necessarily pay recent investments (3y) show negative impact but... more innovative technology significantly increases productivity subsidies show also significant productivity impact organic dairy farming and off-farm income lead to lower farm level productivity

9 farm level UK: more labor intensive dairy farming is less productive less hired labor leads to higher farm productivity a non-corporate farm organization as well recent investments (3y) show negative impact organic farms are more productive less favorable areas show lower dairy productivity off-farm income significantly decreases farms productivity

10 % contribution of resource allocation deregulation EU milk sector reform: - deregulation in the dairy sector, effectively implemented in binary variable pre-/-post 08 period - significant productivity increasing effects both in Estonia and the Netherlands, slightly negative effect in UK 35 Estonia The Netherlands UK

11 technology technology and investment: - net investment per cow (av 3y) negative effect: - corresponds to within-farm tfp growth rates (-0.3, 0.9, -0.8) - milking robots significantly positive in NL: - innovative technology requires more developed dairy production environment, complementing techniques/knowledge/advisory etc. - organic production positive in UK: - developing demand and price differential Estonia Netherlands United Kingdom Net investment per cow (EUR) Milk robot 0 ++ na Milk parlor na ++ na Adoption of organic practice (%)

12 Contribution to annual productivity growth (%) subgroups decomposition of productivity growth 1.5 Productivity growth at the farm level Exit and entry Resource reallocation between farms Estonia ( ) Netherlands ( ) UK ( )

13 subgroups subgroup market share productivity MP + + mp - - Mp + - mp - +

14 subgroups Estonia: MP mp Mp mp TFP (Index) Number of dairy cattle Milk yield (kg per cattle per year) Specialization rate (%) Ratio of hired labour (%) Stocking density (cattle per ha) Net investment (EUR) Milk robot (%) Organic (%) Age % ms (2003/2012) 65.3/ / / /17.1 % # (2003/2012) 17.5/ / / /40.2 MP: high market share, highly productive mp: low market share, low level of productivity Mp: high market share, low productivity mp: low market share, highly productive

15 subgroups Netherlands: MP mp Mp mp TFP (Index) Number of dairy cattle Milk yield (kg per cattle per year) Specialization rate (%) Ratio of hired labour (%) Stocking density (cattle per ha) Net investment (EUR) Milk robot (%) Organic (%) Age % ms (2001/2012) 56.3/ / / /8.5 %# (2001/2012) 43.9/ / / /15.6 MP: high market share, highly productive mp: low market share, low level of productivity Mp: high market share, low productivity mp: low market share, highly productive

16 subgroups UK: MP mp Mp mp TFP (Index) Number of dairy cattle Milk yield (kg per cattle per year) Specialization rate (%) Ratio of hired labour (%) Stocking density (cattle per ha) Net investment (EUR) Milk robot (%) n.a. n.a. n.a. n.a. Organic (%) Age % ms (2000/2012) 59.4/ / / /12.6 %# (2000/2012) 27.9/ / / /25.5 MP: high market share, highly productive mp: low market share, low level of productivity Mp: high market share, low productivity mp: low market share, highly productive

17 farm level MP - high market share & high productivity... Est: large herds, large share of hired labor, innovative... NL: large herds, high investments, innovation, younger... UK: large herds, large share of hired labor, high investments mp - low market share & low level of productivity... Est: small herds, low specialization, low share of hired lab, low investment, organic and extensive... NL: smaller herds, low hired lab share, low investment, organic and extensive... UK: smaller herds, low share of hired lab, low investment, organic and extensive

18 dynamics Estonia: EU milk quota deregulation MP: high market share, highly productive mp: low market share, highly productive mp: low market share, low level of productivity mp MP mp Mp Mp: high market share, low productivity annual growth in total market share per subgroup (%)

19 dynamics 1.4 Netherlands: EU milk quota deregulation MP: high market share, highly productive mp: low market share, low level of productivity mp: low market share, highly productive Mp: high market share, low productivity mp MP mp Mp annual growth in total market share per subgroup (%)

20 dynamics UK: 1.5 EU milk quota deregulation mp: low market share, low level of productivity mp: low market share, highly productive MP: high market share, highly productive Mp: high market share, low productivity mp MP mp Mp annual growth in total market share per subgroup (%)

21 dynamics inter-group dynamics - main patterns ( , average p.a.) Estonia: mp mp 21.7% of all mp farms moved to mp by increasing productivity MP mp 6.1% of all MP farms moved to mp by decreasing their market share mp mp 13.9% of all mp farms moved to mp by decreasing productivity Mp mp 29.5% of all Mp farms moved to mp by decreasing market share [! this is beside the intra-group dynamics and relative to the average market share and productivity level p.a.!]

22 dynamics inter-group dynamics - main patterns ( , average p.a.) Netherlands: mp Mp 7.6% of all mp farms moved to Mp by increasing market share MP Mp 14.7% of all MP farms moved to Mp by decreasing productivity mp MP 7.1% of all mp farms moved to MP by increasing market share Mp MP 15.3% of all Mp farms moved to MP by increasing productivity [! this is beside the intra-group dynamics and relative to the average market share and productivity level p.a.!]

23 dynamics inter-group dynamics - main patterns ( , average p.a.) UK: mp mp 13.5% of all mp farms moved to mp by increasing productivity MP mp 10.9% of all MP farms moved to mp by decreasing their market share mp MP 15.3% of all mp farms moved to mp by increasing market share Mp mp 8.8% of all Mp farms moved to mp by decreasing market share [! this is beside the intra-group dynamics and relative to the average market share and productivity level p.a.!]

24 summary Estonia successful in resource reallocation by decreasing shares of less productive farms, but some productive farms also loose resources Estonia needs to reallocate resources to small but productive farms (only 0.5% from mp to MP p.a.) Netherlands and UK successful in increasing productivity of small and large farms (within growth) Netherlands and UK, however, also show productive and resourceful farms that loose resources and/or productivity main determinants for MP across countries: scale, commercial orientation, innovativeness

25 current work current analyses: 1. in-depth analysis of covariance between productivity and allocative dynamics (bivariate tobit) 2. innovation clusters of farms and productivity dynamics (latent class distance frontier approach) 3. identification of marginal policy deregulation effects (matching approach: did, me)

26 many thanks!

27 appendix - market shares Estonia 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% mp MP mp Mp

28 appendix - market shares Netherlands 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Mp mp MP mp

29 appendix - market shares UK 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% mp MP mp Mp