Productivity of Czech Milk Production in European Comparison

Abstract

The aim of the paper is to evaluate the development and main characteristics of Czech milk production productivity and to compare Czech development with the situation in the European Union. From a methodological point of view, a parametric approach in the form of stochastic frontier analysis was applied, the input distance function was estimated, and total factor productivity was examined. The analysis used an unbalanced panel data set, which describes TF14-45 specialist milk production from 27 member states of the European Union in the period 2004-2016 collected in the FADN database. The results showed that in the Czech Republic, the average value of technical efficiency was 94.01% during the analysed time period. Compared to EU member states, this figure was above the EU-13 average (93.71%). Czech milk production in the analysed period and the milk production of almost all other EU countries was characterized by increasing returns to scale. Examination of total factor productivity (TFP) showed that the scale effect and technical efficiency change effect can be considered the main components of TFP changes in Czech milk production. However, the scale effect was more significant in EU-15 countries than the Czech milk sector.

Productivity and Efficiency in European Milk Production: Can We Observe the Effects of Abolishing Milk Quotas?

“…However, the degree of diseconomies of scale differs among the countries substantially. These findings are in line withČechura et al [46] and Žáková Kroupová et al [15]. The technological change was found to be negative in most of the countries.…”

“…This suggests that milk producers in these countries are characterised by a cost increase over the analysed period, evaluated on sample means. The predominance of technological regress was also found by Žáková Kroupová et al [15]. Moreover, the technological regress in Czechia, Finland, and Ireland was found to be accelerating over the analysed period at the 5% level of significance.…”

“…The absolute value of the sum of output elasticities is lower than 1 in all the analysed countries. In other words, the diseconomies of scale in European milk production become apparent, as was also found byČechura et al [46] by applying stochastic frontier analysis on farm-level data from 2004-2011 and by Žáková Kroupová et al [15] using SFA and regional data for the period 2004-2016. Among all the countries under consideration, the sum of the IDF elasticities with respect to outputs is the highest for Czechia and East Germany, whereas the lowest value belongs to Austria, evaluated on country sample means.…”

“…Because the concept of economies of scale is very close to the concept of economies to size [61], we can conclude that Czech sample agricultural holdings and especially East German milk producers tend to be close to the optimal size. The agricultural holdings in the rest of the countries have a substantial potential to improve their productivity by changing scales of operations, since moving to a technically optimal size would bring cost savings to EU dairy producers, as noted by Žáková Kroupová et al [15]. Technological change (estimated using a time trend as a proxy variable) is statistically significant at the 5% level in: Belgium, Czechia, Finland, West and East Germany, Ireland, Italy, Spain, and the United Kingdom (see parameter δ t in Table 3).…”

“…As stated by Philippidis and Waschik [11], technological change is connected with structural change and has an effect on both the agricultural milk production sector and the dairy processing sector, in perfect competition as well as imperfect competition. Sobczyński et al [14] consider the use of advanced technology to be a key factor in achieving a higher yield per cow in a chosen region of Poland, and, according to Žáková Kroupová et al [15], it influences the total factor productivity change.…”