Income situation of dairy farms in European Union countries : a synthetic approach

Abstract

PURPOSE: The purpose of this paper is to determine the market position of Polish milk producers based on a synthetic assessment of the profitability of dairy farms compared to their business partners in the European Union in 2013–2017.

DESIGN/METHODOLOGY/APPROACH: Source materials used in this analysis was 2013–2017 data for the “dairy cows” type of farming, as retrieved from the FADN. A synthetic characteristic was used to carry out a summary assessment of dairy farms’ income situation; its value was determined without making a reference to an ideal solution.

FINDINGS: This study revealed the large complexity and heterogeneity of income situation of Union’s milk producers. Only some farms engaged in milk production have enough income to be able to continue or develop milk production in the coming years. At the same time, a significant part of dairy farms find themselves in a poor income situation, as confirmed by a negative production profitability ratio. These farms will face considerable development challenges in the future. It follows from this study that some of the Polish dairy farms face major restructuring and modernization challenges. Also, a part of them are likely to discontinue milk production in the future.

PRACTICAL IMPLICATIONS: Findings from this study can be used by the Union’s agricultural policymakers and by agricultural producers and their associations. The results identify the countries where dairy farms are likely to be competitive in the future and those where dairy farms face major development challenges.

ORIGINALITY/VALUE: The results of this comparative analysis supplement previous research on the profitability of dairy farms. This paper proposes the use of linear ordering in assessing the profitability of dairy farms.