Profitability development of Czech dairy farms
Z. Zakova Kroupovahttps://doi.org/10.17221/131/2015-AGRICECONCitation:Zakova Kroupova Z. (2016): Profitability development of Czech dairy farms. Agric. Econ. – Czech, 62: 269-279.
The paper deals with the development and main determinants of the profitability of Czech dairy farms. The aim of the paper is to evaluate the differences in the dynamics of profitability for two types of milk producers – specialized dairy farms and mixed farms – within the context of the agricultural policy changes. This aim is achieved by decomposing profitability into output growth, output and input price changes, changes in decoupled subsidies, technical change, scale, mark-up, and technical efficiency change components based on input distance function estimation. Based on the panel data obtained from the FADN database in the time period 2004–2011, it was found that the change in profitability was positive in the analysed time period, and slightly higher for the specialized dairy farms than for the mixed ones. The changes in output price, mark-up component and technical change are the main determinants of the development of profitability. Agricultural policy measures had different effects on these components. The strongest correlation was between the operational subsidies and the technical change and technical efficiency change, and this correlation was negative.Keywords:
Czech Republic, dairy, decomposition, input distance function, policy, profitabilityReferences:
Barraquand F., Martinet V. (2011): Biological conservation in dynamic agricultural landscapes: Effectiveness of public policies and trade-offs with agricultural production. Ecological Economics, 70, 910-920 https://doi.org/10.1016/j.ecolecon.2010.12.019Bošková I. (2014): Collaboration in the Czech dairy chain. Agris on-line Papers in Economics and Informatics, 5: 35–45.Coelli T., Singh S., Fleming E. (2003): An input distance function approach to the measurement of technical and allocative efficiency: With application to Indian dairy processing plants [on-line]. Avalaible at https://editorialexpress.com/cgi-bin/conference/download.cgi?db_name=esam2003&paper_id=105 (accessed Mar. 15, 2015).CECHURA Lukas, HOCKMANN Heinrich, MALA Zdenka, MALY Michal (2014): PRODUCTIVITY AND EFFICIENCY DIFFERENCES BETWEEN CZECH AND SLOVAK MILK PRODUCERS. Review of Agricultural and Applied Economics, 17, 17-21 https://doi.org/10.15414/raae.2014.17.02.17-21Doucha T., Foltýn I., Humpál J. (2012): Profitability of dairy and suckler cows breeding on Czech farms. Agricultural Economics – Czech, 58: 397–408.Frelich Jan, Šlachta Martin, Střeleček František, Lososová Jana (2011): Profitability of dairy farming in relation to the type of feeding system. Journal of Agrobiology, 28, - https://doi.org/10.2478/v10146-011-0006-7Foltýn I., Kopeček P., Zedníčková I., Vávra V. (2009): Profitability development of key agricultural commodities in 2002–2006. Agricultural Economics – Czech, 55: 181–199.Gullstrand Joakim, De Blander Rembert, Waldo Staffan (2014): The Influence of Biodiversity Provision on the Cost Structure of Swedish Dairy Farming. Journal of Agricultural Economics, 65, 87-111 https://doi.org/10.1111/1477-9552.12028Henningsen A., Kumbhakar S., Lien G. (2009): Econometric analysis of the effects of subsidies on farm production in the case of endogenous input quantities. In: AAEA & ACCI Joint Annual Meeting, Milwaukee, Wisconsin, July 26–29, 2009.Henningsen A., Kumbhakar S., Lien G. (2011): Econometric analysis of the effects of subsidies on farm production in the case of endogenous input quantities. In: EAAE 2011 Congress ‘Change and Uncertainty’, Zurich, August 30–September 2, 2011.Jondrow James, Knox Lovell C.A., Materov Ivan S., Schmidt Peter (1982): On the estimation of technical inefficiency in the stochastic frontier production function model. Journal of Econometrics, 19, 233-238 https://doi.org/10.1016/0304-4076(82)90004-5Kleinhanß Werner, Murillo Carmen, San Juan Carlos, Sperlich Stefan (2007): Efficiency, subsidies, and environmental adaptation of animal farming under CAP. Agricultural Economics, 36, 49-65 https://doi.org/10.1111/j.1574-0862.2007.00176.xKumbhakar Subal C., Lien Gudbrand (2009): Productivity and profitability decomposition: A parametric distance function approach. Food Economics - Acta Agriculturae Scandinavica, Section C, 6, 143-155 https://doi.org/10.1080/16507541.2010.481898Latruffe L., Bakucs L., Bojnec S., Ferto I., Fogarasi J., Gavrilescu C., Jelinek L., Luca L., Medonos T., Toma C. (2008): Impact of public subsidies on farms’ technical efficiency in new member states before and after EU accession. In: 12th Congress of the European Association of Agricultural Economists – EAAE 2008, Ghent, Aug. 26–29, 2008.Latruffe, L., Bravo-Ureta, B. E., Moreira, V. H., Desjeux, Y., Dupraz, P. (2011): Productivity and subsidies in European Union countries: An analysis for dairy farms using input distance frontiers. In: EAAE 2011 Congress ‘Change and Uncertainty’, Zurich, Aug. 30–September 2, 2011.Lososová J., Zdeněk R. (2014): Key factors affecting the profitability of farms in the Czech Republic. Agris on-line Papers in Economics and Informatics, 4: 21–36.Lovell C.A.K., Richardson S., Travers P., Wood L.L. (1994): Resources and functionings: A new view of inequality in Austria. In: Eichhorn W.: Models and Measurement of Welfare and Inequality. Berlin, Heidelberg, New York: Springer-Verlag: 787–807.Minviel J.J., Latruffe L. (2014): Meta-regression analysis of the impact of agricultural subsidies on farm technical efficiency. In: EAAE 2014 Congress ‘Agri-Food and Rural Innovations for Healthier Societies’. Ljubljana, Slovenia, Aug. 26–29, 2014.Peprný Aleš, Kubíčková Lea (): Method of evaluating the success of the dairy Czech small and medium–sized enterprises. Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 59, 221-230 https://doi.org/10.11118/actaun201159020221Power A. G. (): Ecosystem services and agriculture: tradeoffs and synergies. Philosophical Transactions of the Royal Society B: Biological Sciences, 365, 2959-2971 https://doi.org/10.1098/rstb.2010.0143Rizov Marian, Pokrivcak Jan, Ciaian Pavel (2013): CAP Subsidies and Productivity of the EU Farms. Journal of Agricultural Economics, 64, 537-557 https://doi.org/10.1111/1477-9552.12030Sipiläinen T., Kumbhakar S.C. (2010): Effects of direct payments on farm performance: The case of dairy farms in northern EU countries. Discussion Papers No. 43, Department of Economics and Management, University of Helsinki.Sipilainen T., Kumbhakar S. C., Lien G. (): Performance of dairy farms in Finland and Norway from 1991 to 2008. European Review of Agricultural Economics, 41, 63-86 https://doi.org/10.1093/erae/jbt012Špička Jindřich, Smutka Luboš (2014): The Technical Efficiency of Specialised Milk Farms: A Regional View. The Scientific World Journal, 2014, 1-13 https://doi.org/10.1155/2014/985149Zhu X., Demeter R.M., Lansink A.O. (2012): Technical efficiency and productivity differentials of dairy farms in three EU countries: The role of CAP subsidies. Agricultural Economics Review, 13: 66–92.