Intensification and Technical Efficiency in Dairy Farming: Evidence from the Baltic States and Poland

The European Union’s Common Agricultural Policy promotes extensive farming to achieve sustainability goals, yet dairy production in the Baltic states and Poland has continued to intensify, particularly after the abolition of milk quotas in 2015. This study assesses the technical efficiency of intensive and extensive dairy farms in Lithuania, Latvia, Estonia, and Poland over the period 2015–2022, using Data Envelopment Analysis (DEA) combined with a meta-frontier framework that explicitly accounts for technological heterogeneity across production systems. Farms are classified as intensive or extensive based on stocking density relative to forage area, applying the threshold of one livestock unit per hectare. Results show that in all Baltic countries intensive farms exhibit higher meta-frontier technical efficiency than extensive farms, with the gap increasing over time, especially in Lithuania. Technology Gap Ratio results indicate convergence between production systems in Estonia and Latvia, while in Lithuania intensive farms became technologically closer to the national frontier after 2020. In contrast, Poland shows a different pattern: intensive farms operated closer to the meta-frontier but achieved lower efficiency, suggesting managerial constraints. Regression analysis confirmed that production intensity is a positive and statistically significant determinant of meta-frontier technical efficiency in all Baltic countries. These findings suggest that current economic conditions favour intensification and that extensification policies can only be effective if they adequately compensate for the efficiency disadvantage faced by extensive farms.