Dairy farmers’ business strategies in Central and Eastern Europe based on evidence from Lithuania, Poland and Slovenia

Abstract

To evaluate market-oriented strategic decision-making by farmers in Central and Eastern Europe (CEE) farm development paths of dairy farmers in Slovenia, Poland and Lithuania were analysed. The influence of internal strengths and weaknesses, external opportunities and threats, and farmer goals on strategic choices and performance were explored. Principal component, hierarchical cluster and regression analyses were performed to test the conceptual framework. Seven strategic groups emerged with specific development paths, that is, Wait and see, Movers, Chain integrators, Specializers and Diversifiers. The latter two split into cooperative and independent groups. Maximisation of profit and sustainable farming ranked highest as farming goals. Availability of land and labour were weaknesses for all strategic groups in all countries. External opportunities and threats varied between countries and to a lesser degree between strategic groups. The Wait and see and Cooperating diversifier groups gave less optimistic scores than other strategic groups. The attitudes of CEE farmers towards the market and future Common Agricultural Policy remain more negative than those of a group of Western European farmers. The results of this study confirm that internal strengths and weaknesses, external opportunities and threats, together with farmers' goals and strategies influence farmer performance, but independently of each other. Strategies do not appear to be a mediating variable between the internal and external environment of the farm and the performance of the farm. Policy makers, companies and extension workers should take the heterogeneity in strategic development into account when dealing with these and similar groups of farms.

How do dairy farmers wish their future farm?

“…The present study showed this dualisation but also quantified these two tendencies: 46% vs. 26% of producers having high positive and high negative scores respectively on the second dimension. Verhees et al (2018) [13] quantified producers as a function of their strategies of development, but solely regarding specialisation vs. diversification of their activity, 54.3% vs 15.1%…”

“…Similar relationships between characteristics of the farm and current or desired models of farming were observed by others. For Central and Eastern Europe, Verhees et al (2018) [13] showed that land was the most important factor in developing a specific farming strategy. In France, Hostiou et al (2015) [21] observed that intensified farms with higher technology equipment sometimes employed more workers, and were the farms with significantly higher agricultural area, percentage of corn silage, number of cows and milk quota.…”

“…They frequently saw no advantage to self-valorisation and diversification (estimate = 0.27, Table 3). The relation to the consumer was also studied by Verhees et al (2018) [13]. They observed that consumer orientation was more often declared as an opportunity to the profiles of producers considering strategies similar to LBE.…”

“…In southern France, Dufour et al (2007) [33] observed the propensity of farmers with workers, close to the GBI model, to prioritise investment in equipment. Verhees et al (2018) [13] observed that better management, including new technologies, was more cited as an objective for strategy profiles of producers that were more similar to the GBI than LBE models.…”

“…These results can express a fear of producers tending toward the LBE model in considering world markets, contrary to producers tending towards the GBI model who have decided to work with this kind of market. Verhees et al (2018) [13] observed that producers projecting strategies similar to the LBE model consider the market more as a threat than producers projecting strategies similar to the GBI model. Hansson et al (2010) [34] and Weltin et al (2017) [12] explained that this uncertainty and risk perception can explain the choice of diversification, which is a part of the strategy of the LBE model.…”