Structural Change and Dynamic Efficiency of German Dairy Farms

• Applicant: Professor Dr. Martin Odening
• Subject Area: Agricultural Economics, Agricultural Policy, Agricultural Sociology
• Term: from 2007 to 2015
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 53162462

The objective of the research is to improve the understanding of structural change in the German dairy sector. The relevance of this topic emanates from the dynamics of dairy production, which has characterized dairy production in the past, in conjunction with the value that the dairy sector adds to farm income in Germany and the European Union (EU). The aim of this subproject is twofold. The first major objective focuses on the impact of the milk quota scheme on structural change at the farm level. Of particular interest are the main drivers of the decision to cease milk production, thereby the specific role of the milk quota scheme will be explored. The second major objective of this research is to investigate the relation between efficiency and structural change in the German dairy sector. Only efficient farms can be competitive in the long run. Thus it can be conjectured that structural change occurs faster in the presence of inefficient farms; however, in reality differences in economic performance and efficiency are persistent and solid empirical work is necessary for explaining this observed heterogeneity. Finally, both objectives are combined with the goal of understanding if efficiency is a crucial determinant of farm closure.

• DFG Programme: Research Units
• Subproject of: FOR 986: Structural Change in Agriculture
• Participating Person: Professorin Dr. Silke Hüttel