Are high labour costs destroying the competitiveness of danish dairy farmers? evidence from an international benchmarking analysis

TY - UNPB

T1 - Are high labour costs destroying the competitiveness of danish dairy farmers?

T2 - evidence from an international benchmarking analysis

AU - Asmild, Mette

AU - Nielsen, Kurt

AU - Bogetoft, Peter

PY - 2012

Y1 - 2012

N2 - This paper analysis the competitiveness of Danish dairy farmers relative to dairy farmers in other Northern European countries. We use individual farm accounts data from the European Commission’s Farm Accountancy Data Network (FADN) and have an average of 1665 observations per year in the period from 2002 to 2008. In all years, the hourly pay for labour is highest in Denmark and the di¿erence is increasing, especially in 2007 and 2008. We apply Data Envelopment Analysis in a new way to capture the e¿ect on the competitiveness from these di¿erences in labour costs.We compare the distributions of e¿ciency scores in di¿erent countries to assess their relative competitiveness. To analyze the e¿ect of labour costs we apply two di¿erent DEA models; one including the labour input as hours worked and the other including labour costs. This way we capture the e¿ect of labour costs on the di¿erences in average e¿ciencies between countries.The results shows that the Danish dairy farmers, on average, were the most economically e¿cient in Northern Europe in 2007 and 2008. We ¿nd that the e¿ect of labour costs for the Danish dairy farmers is decreasing during the study period despite of the salary di¿erences increasing. In 2002 the negative impact of having the highest hourly pay was an average 4.7 percentage points whereas it in 2008 was only 0.6 percentage 1points.This indicates that the Danish dairy farmers have been highly successful in adapting to having the highest, and increasing, hourly labour costs in Northern Europe.

AB - This paper analysis the competitiveness of Danish dairy farmers relative to dairy farmers in other Northern European countries. We use individual farm accounts data from the European Commission’s Farm Accountancy Data Network (FADN) and have an average of 1665 observations per year in the period from 2002 to 2008. In all years, the hourly pay for labour is highest in Denmark and the di¿erence is increasing, especially in 2007 and 2008. We apply Data Envelopment Analysis in a new way to capture the e¿ect on the competitiveness from these di¿erences in labour costs.We compare the distributions of e¿ciency scores in di¿erent countries to assess their relative competitiveness. To analyze the e¿ect of labour costs we apply two di¿erent DEA models; one including the labour input as hours worked and the other including labour costs. This way we capture the e¿ect of labour costs on the di¿erences in average e¿ciencies between countries.The results shows that the Danish dairy farmers, on average, were the most economically e¿cient in Northern Europe in 2007 and 2008. We ¿nd that the e¿ect of labour costs for the Danish dairy farmers is decreasing during the study period despite of the salary di¿erences increasing. In 2002 the negative impact of having the highest hourly pay was an average 4.7 percentage points whereas it in 2008 was only 0.6 percentage 1points.This indicates that the Danish dairy farmers have been highly successful in adapting to having the highest, and increasing, hourly labour costs in Northern Europe.

M3 - Working paper

T3 - MSAP Working Paper Series

SP - 1

EP - 18

BT - Are high labour costs destroying the competitiveness of danish dairy farmers?

PB - Institute of Food and Resource Economics, University of Copenhagen

ER -