Economic Resilience of EU Dairy Farms: An Evaluation of Economic Viability

Abstract

The economic viability of dairy farms is a measure of their ability to survive and grow. Its measurement is particularly important in periods of changes taking place in the environment of these entities. The last decade of the European dairy market was characterized by significant changes in regulations, which resulted in fluctuations in farm gate milk prices and, consequently, impacts on farm income. The main objective of the research was to assess the economic viability of dairy farms located in the European Union. The research area covered the countries that have the most raw cows’ milk delivered to dairies in the EU, and FADN data from 2009 to 2018. A comparative analysis was carried out on the level of temporal viability and permanent viability of farms classified by economic size. The research results showed that better temporal viability was achieved by farms with a larger production scale. On the other hand, the permanent economic viability was lower on farms belonging to a higher economic size class. Most of the analyzed groups of farms were in the survival phase. This means that dairy farms struggled to meet the costs of unpaid labor. Including direct payments in the calculation resulted in an improvement in temporal viability only in farms with the lowest economic size classes.