This Research Briefing outlines the results of a recent analysis of the dairy sector with the aim of examining the relationship between policy, market prices and technical change.
The analysis of a panel of English and Welsh dairy farmers from 2001-2010 shows that productivity has tended to stay stable over time, with an average growth rate of 1% per annum for this sector, although there were large fluctuations in 2004-2006. Technical efficiency and scale efficiency show little change over the decade, while technical change seems the most radically affected by CAP reform. In general it seems that lower prices inspire adoption of technical innovation while higher prices inspire changes in structures to gain economies of scale.
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2012: Dairy farming efficiency, innovation and the price of milk