Return on Equity in Dairy Farms from Selected EU Countries: Assessment Based on the DuPont Model in Years 2004–2020

Andrzej Parzonko, Anna Justyna Parzonko (), Piotr Bórawski and Ludwik Wicki
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Andrzej Parzonko: Department of Economics and Organization of Enterprises, Faculty of Economics, Institute of Economics and Finance, Warsaw University of Life Science SGGW-Warsaw, 02-787 Warszawa, Poland
Anna Justyna Parzonko: Department of Tourism, Social Communication and Consulting, Faculty of Economics, Institute of Economics and Finance, Warsaw University of Life Science SGGW-Warsaw, 02-787 Warszawa, Poland
Piotr Bórawski: Department of Agrotechnology and Agribusiness, Faculty Agriculture and Forestry, University of Warmia and Mazury in Olsztyn, 10-719 Olsztyn, Poland
Ludwik Wicki: Department of Economics and Organization of Enterprises, Faculty of Economics, Institute of Economics and Finance, Warsaw University of Life Science SGGW-Warsaw, 02-787 Warszawa, Poland

Agriculture, 2023, vol. 13, issue 7, 1-16

Abstract: The European Union dairy sector plays a significant role in supplying dairy products to consumers all over the world. The aim of this study was to examine changes in the return on equity as one of the main financial indicators determining the economic viability of EU dairy farms in the years 2004–2020. The analysis based on the DuPont model was used to determine the main drivers of return on equity in dairy farms from the five studied EU countries. The research results show that (1) the lowest return on equity in the years 2004–2020 was calculated for average farms from the Netherlands, and the reason for this phenomenon was the use of significant assets in the production, mainly resources that are very expensive in the Netherlands—land and human labor; (2) the highest return on equity was characteristic of dairy farms from France, and the factor strongly determining the favorable value of this ratio was the high degree of financing assets with low-interest loans and credits; (3) despite the lowest production potential and small scale of milk production, average Polish farms in the years 2004–2020 were characterized by a relatively high return on equity, which ranged from 4.97% to 14.9%.

Keywords: EU countries; dairy farms; return on equity; DuPont model (search for similar items in EconPapers)
JEL-codes: Q1 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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