Dairy Farming from a Production Economics Perspective: An Overview of the Literature

The purpose of this chapter is to give a broad overview of the published empirical work on the production economics of dairy farming as well as an outlook on future challenges for this area of research. This chapter shows that the vast production economics literature on dairy farming has been used to address a wide variety of topics including efficiency and productivity, technology adoption, economies of size, scale and scope, the effects of government intervention policies in the sector, the effect of risk and uncertainty, and issues relating to sustainability including climatic effects, animal welfare, and environmental efficiency. Dairy farming faces important challenges, particularly with regard to environmental sustainability, animal welfare, structural changes, and input and output price volatility, all of which provide fertile ground for future production economics research in dairy. The conceptual frameworks and empirical analyses reviewed in this chapter show that production economists have several tools at their disposal to carry out studies related to these challenges and thereby contribute to policy analyses and formulation. Moreover, the role of production economists, working with scientists in various other disciplines, will be paramount in the search for avenues to improve the overall productivity of dairy farming while offering policymakers sound advice on sustainable technologies and tools to deal with greater risk and uncertainty.