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Are dairy farms becoming more intensive? Impact on farm efficiency

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  • Álvarez, Antonio
  • Arias, Carlos

Abstract

The recent trend in the intensification of dairy farming in Europe has sparked an interest in studying the economic consequences of this process. However, classifying empirically farms as extensive or intensive is not a straightforward task. In recent papers, Latent Class Models (LCM) have been used to avoid an ad-hoc split of the sample into intensive and extensive dairy farms. A limitation of current specifications of LCM is that they do not allow farms to switch between different production systems over time. This feature of the model is at odds with the process of intensification of the European dairy industry in past decades. We allow for changes of production systems over time by estimating a single LCM model but splitting the original panel into two periods and find that the probability of using the intensive technology increases over time. Our estimation proposal opens up the possibility of studying the effects of intensification not only across farms but also over time.

Suggested Citation

  • Álvarez, Antonio & Arias, Carlos, 2013. "Are dairy farms becoming more intensive? Impact on farm efficiency," Efficiency Series Papers 2013/01, University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG).
    • Handle: RePEc:oeg:wpaper:2013/01
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    References listed on IDEAS

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    Cited by:

    1. Antonio Alvarez & Carlos Arias, 2014. "A selection of relevant issues in applied stochastic frontier analysis," Economics and Business Letters, Oviedo University Press, vol. 3(1), pages 3-11.
    2. Martinez Cillero, Maria & Breen, James & Thorne, Fiona & Wallace, Michael & Hennessy, Thia, 2016. "Technical efficiency and technology heterogeneity of beef farms: a latent class stochastic frontier approach," 90th Annual Conference, April 4-6, 2016, Warwick University, Coventry, UK 236351, Agricultural Economics Society.

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