Heterogenous effects of milk price volatility on French dairy farms economic viability: roles technological equipment uses

In a context of increased milk price volatility and dairy farm modernization, our study aims to shed light on whether the costs associated with the financial investments made when acquiring technologies and their maintenance costs exacerbate the damage suffered when the price becomes volatile, or whether the expected productivity gains actually help to cope with this market hazard. To do this, we distinguish three farm categories according to three separate variables that approximate the level of technological tools used. Then, we estimate the variation in the level of viability of each group when price volatility changes. We apply fixed effect ordered logistic regression on data gathered from the French farm accountancy data network from 2002 to 2020. Sample is divided into three categories according to their levels of intensification and use of technological tools. We estimated separately the viability models of each category to check for heterogeneity. Our results show positive roles of low intensification and moderate use of technological equipment in mitigating the impact of an increase of milk price volatility on dairy farm viability. These contribute to provide insights on farmers’ coping strategies effectiveness and the extent to which modernization is advantageous.