Catching Up or Falling Behind in European Agriculture: The Case of Milk Production

Abstract

The paper explores and analyses the catching up and falling behind processes in the European dairy sector over the period 2004–2011, using a stochastic metafrontier multiple output distance function for 24 EU Member States. The metafrontier estimates reveal considerable productivity differences in milk production across the EU at the regional (NUTS‐2) level. Milk yield per cow is the highest in the old Member States, especially in those regions located in the northwest of the EU, while the lowest productivity is observed in Eastern Europe. The same structure was found for both the TFP (Total Factor Productivity) levels and TFP growth. Moreover, the results for technical change suggest that farm sizes are not optimal in many regions in Central and Eastern Europe from a dynamic perspective. The comparative analysis suggests that in the new compared to the old Member States, fewer farms could benefit from the movement of the frontier. Moreover, there are no signs that poorly performing farms are catching up with the best performing farms in the EU regions/countries.

Productivity and Convergence in European Agriculture

“…Cechura et al . () investigated catching up and falling behind processes in the milk sector for 24 EU Member States over the period 2004–2011. Their metafrontier estimates revealed that there are considerable differences in the productivity of milk production across the EU: productivity is highest in the Old Member States, especially in the north west of the EU.…”

“…Many studies have compared the development of agricultural productivity and efficiency in the EU over the past few decades (e.g. Ball et al ., , ; Brümmer et al ., ; Davidova et al ., ; Fogarasi and Latruffe, ; Swinnen and Vranken, ; Timmer et al ., ; Cechura et al ., ,b; Jansik et al ., ; Jansik and Irz, ). However, most of the findings reported in these studies can be used only for bilateral comparisons (i.e.…”

“…Moreover, earlier studies examined TFP levels across European countries, focusing only on ‘old’ Member States (i.e. the EU‐15) of the EU and the period up to 2007 (except Cechura et al ., ,b). Consequently, there is a clear lack of investigation into the comparison of agricultural TFP levels between the OMS and NMS, and there is limited information about both the agricultural TFP growth and levels in the EU after 2007.…”

“…Sonderman, ), there are, to the best of our knowledge, only a few studies that deal with the convergence of TFP across Member States in the agricultural sector (see, e.g. Sonderman, ; Cechura et al ., ,b). In order to test for convergence, researchers usually apply either a cross‐sectional or a time‐series framework (more specifically, a unit root test framework).…”

The analysis of indiference and the price elasticity of demand between different categories of agricultural products

“…Agriculture is an essential component of the European economy and society (Nazzaro and Marotta, 2016). The example of analysis of milk production in the European Union shows that the size of farms in Central and Eastern Europe is not optimal and that there are problems in the adoption of innovations and structural changes (Cechura, et al, 2016). It can be said that such a conclusion could also be relevant for Serbia.…”