Diversification economies in dairy farming – empirical evidence from Germany

Stefan Wimmer and Johannes Sauer

European Review of Agricultural Economics, 2020, vol. 47, issue 3, 1338-1365

Abstract: This article explores how farm size is related to economic benefits from diversification. Using a data set pertaining to Bavarian dairy farms (2000–2014), we estimate an input distance function (IDF) to derive cost complementarities between distinct outputs. A Bayesian estimation technique is used to improve the theoretical consistency of the IDF. The results show that small dairy farms are more likely to benefit from diversification between milk and livestock production, while larger farms tend to benefit from diversification between milk and crop production. Both managerial and policy implications are discussed.

Keywords: Bayesian estimation; cost complementarities; farm diversification; input distance function; regularity conditions (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (8)

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