Deregulation and Productivity – Empirical Evidence on Dairy Production

Fabian Frick and Johannes Sauer

No 236032, 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts from Agricultural and Applied Economics Association

Abstract: We investigate productivity development and its relation to resource reallocation effects in the dairy sector in southeast Germany during the phasing-out of the European Union milk quota. We use a farm level dataset containing financial accounting data for a period of 15 years. Farm-level productivity is estimated by applying a proxy approach recently introduced in the literature. We compare this approach to other estimation approaches as well as an index based analysis. After aggregation we decompose sector productivity into unweighted mean productivity and a covariance term measuring the allocation of resources toward more productive farms. We observe an increase in the covariance term coinciding with a period of rather volatile milk prices. Therefore, we hypothesize that reallocation of production resources due to market deregulation is triggered or even enforced by extreme price levels. We seek to find support for this hypothesis by a regression analysis linking the measure for the potential covariance between resource reallocation and productivity on the one hand and price variability on the other. In this analysis we find some empirical evidence for this hypothesis.

Keywords: Agricultural and Food Policy; Productivity Analysis (search for similar items in EconPapers)
Pages: 46
Date: 2016
New Economics Papers: this item is included in nep-agr and nep-eff
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea16:236032

DOI: 10.22004/ag.econ.236032

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