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Growth of milk production in German dairy farms: an empirical study based on event history analysis

Authors

  • Tammo Francksen,

    1. Department of Agricultural Economics, Christian-Albrechts-Universität zu Kiel, Olshausenstraße 40, D-24098 Kiel, Germany
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  • Martin Hagemann,

    Corresponding author
    1. Department of Agricultural Economics, Christian-Albrechts-Universität zu Kiel, Olshausenstraße 40, D-24098 Kiel, Germany
      Tel.: +49 4627 1858075; fax: +49 4627 1858075. E-mail address: martin.hagemann@ae.uni-kiel.de (M. Hagemann).
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  • Uwe Latacz-Lohmann

    1. Department of Agricultural Economics, Christian-Albrechts-Universität zu Kiel, Olshausenstraße 40, D-24098 Kiel, Germany
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  • Data Appendix Available Online A data appendix to replicate main results is available in the online version of this article. Please note: Wiley-Blackwell is not responsible for the content or functionality of any supporting information supplied by the authors. Any queries (other than missing material) should be directed to the corresponding author for the article.

Tel.: +49 4627 1858075; fax: +49 4627 1858075. E-mail address: martin.hagemann@ae.uni-kiel.de (M. Hagemann).

Abstract

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.

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