Explaining the variability in the Economic Performance of Irish Dairy Farmers 1998-2006

Paul Smyth (), Anne Marie Butler and Thia Hennessy
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Paul Smyth: Rural Economy and Development Programme, Teagasc, Athenry, Co. Galway, Ireland
Anne Marie Butler: School of Agriculture, Food Science and Veterinary Medicine, University College Dublin, Ireland
Thia Hennessy: Rural Economy and Development Programme, Teagasc, Athenry, Co. Galway, Ireland

No 817, Working Papers from Rural Economy and Development Programme,Teagasc

Abstract: This paper reviews the economic performance of Irish dairy farms over the period 1998 to 2006 with the objective of identifying the factors influencing cost structure. Initial analysis reveals that a large variation in cost structure exists in the Irish dairy farming sector, and that this variation has increased over time. Econometric techniques are employed to examine the variation in cost structures and to identify the factors affecting farm profitability. National Farm Survey data from Ireland are used to analyse production costs. Average cost curves are shown for the Irish dairy industry and are compared to the results of similar analysis conducted for England and Wales. The results show that increasing yield per cow and stocking rate decreases costs implying that scale and improving efficiency is key to reducing cost. An analysis of cost mobility showed that cost structure was quite sticky, and that relative cost management improved little over the period, with the majority of high cost farmers remaining high cost.

Pages: 20 pages
Date: 2008
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