Agriculture farms product differentiation assessment in the Czech Republic

Abstract

Farms generally produce products with low differentiation. To reach an increase in the profit and sales, product differentiation is one of the potential strategies that could be successfully applied. This paper identifies "Intermediate Consumption/Total Output" as a simple and user-friendly indicator for farm product differentiation performance and comparison assessment in the Czech Republic, based on a two-step cluster analysis performed on 1 225 farms with different operating conditions and reproduction process characteristics in the Czech Republic. The data are sourced from Farm Accountancy Data Network (FADN CZ). Four farm clusters based on product differentiation levels are identified and described from the point of view of the production process and conditions. The resulting cluster profiles, in general, indicate the production conditions and process affecting the resulting product differentiation. Nevertheless, farms deliver extraordinary product differentiation values in fields with less favourable conditions and production processes. Those have the potential to be an inspiration for farms with lower product differentiation values. The result of this paper provides hope, less favourable conditions are not a limit for formidable performance. This paper result can be practically applied by anyone aiming to easily identify, evaluate, and compare farm product differentiation levels.