The effects of the abolishment of the EU milk quota scheme on the efficiency frontiers of organic and conventional dairy farms in Denmark

TY - ABST

T1 - The effects of the abolishment of the EU milk quota scheme on the efficiency frontiers of organic and conventional dairy farms in Denmark

AU - Aigner, Lorenz Matthias Severin

AU - Asmild, Mette

N1 - Conference code: 16

PY - 2019/6

Y1 - 2019/6

N2 - The present study analyzes the consequences of the abolishment of the EU milk quota scheme in 2015 on the dairy sector in Denmark using a comprehensive data set comprising organic and conventional dairy farms from 2011 to 2017. Initially, we calculate productivity changes over time using the Malmquist index and its components based on efficiency frontier estimates obtained from DEA. Permutation tests are performed to test for statistical significance of these changes in productivity over time. Next, we calculate the differences between the organic and the conventional frontiers in each year, for observations from each of the two groups. Jackknifing is applied to correct for estimation bias. Subsequently, the intersections of the group frontiers can be identified in orderto determine the circumstances under which each technology is superior to the other. Our analysis shows that the drop in the milk prices following the abolishment of the quotas is likely what led to worsened (economic) production possibilities in 2015 and 2016, followed by an improvement in 2017, for both groups, but where the effect experienced by the organic farms was less pronounced. Furthermore, under certain conditions, the organic technology offers better production possibilities even for conventional farms after 2015, which becomes especially clear when correcting for estimation biases.

AB - The present study analyzes the consequences of the abolishment of the EU milk quota scheme in 2015 on the dairy sector in Denmark using a comprehensive data set comprising organic and conventional dairy farms from 2011 to 2017. Initially, we calculate productivity changes over time using the Malmquist index and its components based on efficiency frontier estimates obtained from DEA. Permutation tests are performed to test for statistical significance of these changes in productivity over time. Next, we calculate the differences between the organic and the conventional frontiers in each year, for observations from each of the two groups. Jackknifing is applied to correct for estimation bias. Subsequently, the intersections of the group frontiers can be identified in orderto determine the circumstances under which each technology is superior to the other. Our analysis shows that the drop in the milk prices following the abolishment of the quotas is likely what led to worsened (economic) production possibilities in 2015 and 2016, followed by an improvement in 2017, for both groups, but where the effect experienced by the organic farms was less pronounced. Furthermore, under certain conditions, the organic technology offers better production possibilities even for conventional farms after 2015, which becomes especially clear when correcting for estimation biases.

M3 - Conference abstract in proceedings

SP - 25

BT - XVI European Workshop on Efficiency and Productivity Analysis

T2 - XVI European workshop for efficiency and productivity analysis

Y2 - 10 June 2019 through 13 June 2019

ER -