Diversification economies in dairy farming - Empirical evidence from Germany

Stefan Wimmer, Johannes Sauer

Research output: Contribution to journalArticlepeer-review

18 Scopus citations

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.

Original languageEnglish
Pages (from-to)1338-1365
Number of pages28
JournalEuropean Review of Agricultural Economics
Volume47
Issue number3
DOIs
StatePublished - 15 Jun 2020

Keywords

  • Bayesian estimation
  • cost complementarities
  • farm diversification
  • input distance function
  • regularity conditions

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