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Structural Change in the Dairy Sectors of Germany and The Netherlands - A Markov Chain Analysis

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  • Huettel, Silke
  • Jongeneel, Roelof A.

Abstract

With the milk quota announced to be abolished in the future, the dairy sector is going to face a significant policy regime shift. This paper sets out to analyze the impact of milk quotas on the dairy farm structure of two important milk producing member states : Germany and the Netherlands. Based on proper behavioral assumptions, non stationary Markov chain models are specified and estimated using a generalized cross entropy procedure, which takes into account both sample and prior information. Moreover four mobility indicators characterizing structural change are developed and calculated. Structural change in the dairy sector as measured by the mobility measures is faster in West Germany than in the Netherlands. However, in the transition region East Germany structural change outpaces that of the traditional German and Dutch dairy sectors by a factor two or more. The introduction of milk quotas as of April 1, 1984 reduced overall farm mobility for the Netherlands, but increased mobility in West Germany. However, in both cases the milk quotas lead to an increase in upward mobility.

Suggested Citation

  • Huettel, Silke & Jongeneel, Roelof A., 2008. "Structural Change in the Dairy Sectors of Germany and The Netherlands - A Markov Chain Analysis," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 43659, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaae08:43659
    DOI: 10.22004/ag.econ.43659
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    2. Silke Huettel & Anne Margarian, 2009. "Structural change in the West German agricultural sector," Agricultural Economics, International Association of Agricultural Economists, vol. 40(s1), pages 759-772, November.
    3. Francksen, Tammo & Hagemann, Martin & Latacz-Lohmann, Uwe, 2011. "Eine empirische Untersuchung zum Wachstum von Milchviehbetrieben mittels der Ereignisanalyse," 51st Annual Conference, Halle, Germany, September 28-30, 2011 114494, German Association of Agricultural Economists (GEWISOLA).
    4. Alexander Gocht & Norbert Röder & Sebastian Neuenfeldt & Hugo Storm & Thomas Heckelei, 2012. "Modelling farm structural change: A feasibility study for ex-post modelling utilizing FADN and FSS data in Germany and developing an ex-ante forecast module for the CAPRI farm type layer baseline," JRC Research Reports JRC75524, Joint Research Centre.
    5. Mosnier, Claire & Wieck, Christine, 2010. "Determinants of spatial dynamics of dairy production: a review," Discussion Papers 162896, University of Bonn, Institute for Food and Resource Economics.
    6. Hagemann, M. & Francksen, T. & Latacz-Lohmann, U., 2012. "Determinants of internal farm growth in milk production: An investigation using event history analysis," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 47, March.

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