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Herd growth, farm organisation and subsidies in the dairy sector of Russia and Kazakhstan

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  • Petrick, Martin
  • Götz, Linde

Abstract

Initially taken as a template for farm restructuring after the demise of collective agriculture, the ‘Western family farm model’ has taken root in the former Soviet countries only belatedly and incompletely. We examine dairy structures in Russia and Kazakhstan and analyse the drivers of recent herd growth. We are specifically interested in the role of farm management and organisation, vertical integration, and the role of policy. Regression analysis based on a sample of 180 randomly selected commercial dairy farms, using an innovative simultaneous equation framework, shows that better herd management and access to milk marketing contracts were more effective in stimulating herd growth than current subsidy payments. We do not find evidence that milking plants belonging to corporate entities or even supra-regional agroholdings grow more substantially than medium-sized individual farms. Twenty-five years after the end of central planning, structural change among commercial dairy farms in Russia and Kazakhstan appears similar in many ways to the patterns observed in the West more recently: smaller farms catch up in terms of herd growth and classical family-run operations coexist with or even emulate vertically integrated agribusinesses based on hired labour. In moving toward this ‘new normal’ of farming structures, commercial dairy farms in Russia may even be a few steps ahead of their Western counterparts. At the same time, the still sizeable but stagnating group of subsistence producers in rural households finds no equivalent in the West.

Suggested Citation

  • Petrick, Martin & Götz, Linde, 2019. "Herd growth, farm organisation and subsidies in the dairy sector of Russia and Kazakhstan," EconStor Open Access Articles, ZBW - Leibniz Information Centre for Economics, pages 789-811.
  • Handle: RePEc:zbw:espost:201556
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    References listed on IDEAS

    as
    1. Petrick, Martin & Wandel, Jürgen & Karsten, Katharina, 2013. "Rediscovering the Virgin Lands: Agricultural investment and rural livelihoods in a Eurasian frontier area," EconStor Open Access Articles, ZBW - Leibniz Information Centre for Economics, pages 164-179.
    2. Christoph R. Weiss, 1999. "Farm Growth and Survival: Econometric Evidence for Individual Farms in Upper Austria," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(1), pages 103-116.
    3. Swinnen, Johan F.M. & Rozelle, Scott, 2006. "From Marx and Mao to the Market: The Economics and Politics of Agricultural Transition," OUP Catalogue, Oxford University Press, number 9780199288915.
    4. Lerman, Zvi, 1998. "Does Land Reform Matter? Some Experiences from the Former Soviet Union," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 25(3), pages 307-330.
    5. Tietz, Andreas & Forstner, Bernhard & Weingarten, Peter, 2013. "Non-Agricultural and Supra-Regional Investors on the German Agricultural Land Market: An Empirical Analysis of their Significance and Impacts," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 62(02), pages 1-13, May.
    6. Daniel A. Sumner, 2014. "American Farms Keep Growing: Size, Productivity, and Policy," Journal of Economic Perspectives, American Economic Association, vol. 28(1), pages 147-166, Winter.
    7. Jeremy D. Foltz, 2004. "Entry, Exit, and Farm Size: Assessing an Experiment in Dairy Price Policy," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(3), pages 594-604.
    8. Sarris, Alexander H & Doucha, Tomas & Mathijs, Erik, 1999. "Agricultural Restructuring in Central and Eastern Europe: Implications for Competitiveness and Rural Development," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 26(3), pages 305-329, August.
    9. Petrick, Martin, 2014. "Modernising Russia's cattle and dairy sectors under WTO conditions: Insights from East Germany," IAMO Discussion Papers 184335, Institute of Agricultural Development in Transition Economies (IAMO).
    10. repec:zbw:iamodp:184335 is not listed on IDEAS
    11. Roberto Mosheim & C.A. Knox Lovell, 2007. "Scale Economies and Inefficiency of U.S. Dairy Farms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(3), pages 777-794.
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    More about this item

    Keywords

    dairy farming; herd growth; transitional agriculture; vertical coordination;

    JEL classification:

    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • P23 - Economic Systems - - Socialist Systems and Transition Economies - - - Factor and Product Markets; Industry Studies; Population
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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