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Growth of milk production in German dairy farms: an empirical study based on event history analysis
Article first published online: 17 JUL 2012
© 2012 International Association of Agricultural Economists
Volume 43, Issue 6, pages 671–685, November 2012
How to Cite
Francksen, T., Hagemann, M. and Latacz-Lohmann, U. (2012), Growth of milk production in German dairy farms: an empirical study based on event history analysis. Agricultural Economics, 43: 671–685. doi: 10.1111/j.1574-0862.2012.00611.x
- Issue published online: 5 NOV 2012
- Article first published online: 17 JUL 2012
- Received 18 August 2011; received in revised form 2 January 2012; accepted 11 February 2012
- Event history analysis;
- Dairy farms;
- Determinants of growth
This article investigates determinants of growth of milk production in German dairy farms with the use of event history analysis. This methodology enables the analysts to consider time as a proxy for not measurable effects on growth. The likelihood of a farm's moving from a nongrowth episode into a growth episode is estimated and the impact of various covariates on that likelihood is assessed. The analysis is based upon a balanced panel of annual farm accounts from 616 specialized dairy farms in Germany, covering the financial years 1995/1996–2008/2009. The results from event history analyses are presented for low and high growth rates. For both groups, it was found that the probability of entering a growth episode, defined as the event to be analyzed, increases over time, e.g., as a consequence of an increasing need to improve competitiveness. Moreover, several covariates, such as the share of subsidies in returns, farmer's age, and milk price, had a significant impact on growth in a farm's milk production. The analysis revealed, however, that the effect-direction of some explanatory variables differed between the two groups.