Economic Sustainability of Dairy Farms in the EU

Abstract

Purpose: The objective of this research is to evaluate changes in the economic sustainability of dairy farms in the European Union (EU) countries during 2007-2016 when dairy quotas were being removed in the EU. We wanted to answer the question what is the economic sustainability of dairy farms in the EU, and how has the economic sustainability in the EU countries changed after the accession of new member states in 2004 and 2017. Design/Approach/Methodology: An economic sustainability assessment of farms was conducted using the Farm Accountancy Data Network (FADN) census data with several economic efficiency indicators. We analyzed variables using the Hellwig method. Findings: Results indicate that milk production increased in almost all the countries of the EU, as did their economies. The largest annual increase in standard output (SO) was in Denmark, Slovakia, Czech Republic, Sweden and United Kingdom. In turn, the smallest annual increase in SO was in Lithuania, Bulgaria, Latvia and Poland. Dairy farms in the Czech Republic and Denmark had the highest economic sustainability, while dairy farms in had the lowest economic sustainability. Practical Implications: While not providing a comprehensive assessment, the indicators used do provide important information about economic impacts related to the scale and distribution of production, difference in labor cost, sources of income and maintenance of farms. Originality/Value: Modern dairy farms must have production efficiency and environmental compliance to achieve sustainability. Much of the current literature focuses on the efficiency and environmental aspects of sustainability and there is a lack of data that assesses economic sustainability.