Unveiling Determinants of Successful Dairy Farm Performance from Dairy Exporting EU Countries

Abstract

The dairy sector is the second largest agricultural sector in the EU and Lithuania. It faces economic challenges (price volatility, farm consolidation and downsizing, etc.), but its importance outstrips other agricultural sectors (combining agro-systems and providing valuable food products for people). The aim of the study is to identify the vulnerabilities of dairy farms and to consider how to improve their performance after analysis of dairy farms in dairy exporting EU countries. As the problem of the study is complex, a set of indicators was analysed, including farm size, milk yield per cow, number of cows per annual work unit (AWU), milk production per fodder area, feed autonomy, milk price, total operating costs, depreciation, farm net value added per AWU, milk production per capita, and GDP at current prices per capita. The analysis was carried out using data from the Farm Accountancy Data Network (FADN) for 2017–2019. As Lithuania’s dairy sector is export-oriented, EU countries with more than 100% milk self–sufficiency (18 countries in total) were chosen for the comparison. The multi-criteria decision-making methods (MCDM) were used for the study. The multi-criteria evaluation revealed that countries that are leaders in dairy exports obtained the best values of dairy farm performance. These countries (Denmark, Netherlands, Ireland, and Belgium) have the highest farm size, production scale, productivity, and income indicators. While Slovenian, Latvian, and Lithuanian dairy farms performed poorly in terms of productivity and economic indicators, these countries achieve competitiveness in the dairy sector through lower milk prices, higher utilisation of own resources, and higher levels of public support.

Keywords

• dairy farms
• economic analysis
• multi-criteria decision-making methods