Effects of Switching between Production Systems in Dairy Farming

  1. Antonio Alvarez Pinilla 1
  2. Carlos Arias Sampedro 2
  1. 1 Universidad de Oviedo
    info

    Universidad de Oviedo

    Oviedo, España

    ROR https://ror.org/006gksa02

  2. 2 Universidad de León
    info

    Universidad de León

    León, España

    ROR https://ror.org/02tzt0b78

Revista:
Working papers = Documentos de trabajo (Universidad de León. Departamento de Economía y Estadística)

Any de publicació: 2014

Número: 6

Pàgines: 1-20

Tipus: Article

Resum

The recent trend in the intensification of dairy farming in Europe has sparked an interest in studying the economic consequences of this process. However, classifying empirically farms as extensive or intensive is not a straightforward task. In recent papers, Latent Class Models (LCM) have been used to avoid an ad-hoc split of the sample into intensive and extensive dairy farms. A limitation of current specifications of LCM is that they do not allow farms to switch between different productive systems over time. This feature of the model is at odds with the process of intensification of the European dairy industry in past decades. We estimate a single LCM that allows for changes of production system over time by estimating a single LCM model but splitting the original panel into two periods and find that the probability of using the intensive technology increases over time. Our estimation proposal opens up the possibility of studying the effects of intensification not only across farms but also over time.