Analysis of dairy production systems differentiated by location

• Applicant: Professorin Dr. Christine Wieck
• Subject Area: Agricultural Economics, Agricultural Policy, Agricultural Sociology
• Term: from 2012 to 2016
• Project identifier: Deutsche Forschungsgemeinschaft (DFG) - Project number 220350009

• Final Report Year: 2016

Final Report Abstract

This research project focused on the analysis of spatial differences of dairy production systems. The overall objective of theses research activities was to develop a thorough understanding of the processes that govern the spatial dynamics of dairy farm development in different regions in Germany. For this, a nonparametric cost estimation was initiated that should shed light if management system and technological choices differ systematically across local production and market conditions, but also market conditions and spatial differences in the interaction between dairy producers and dairy processors were analyzed. The nonparametric estimation of a richly specified multi-input multi-output theory consistent cost function turned out to be very challenging whereas the theoretical and empirical analysis of oligopolistic market structures and governance of the producer–processor relationship showed that regional differences in market power exist and that the pricing behavior of dairies is more dependent on their legal status than on their spatial competition for raw milk. Thus, spatial differences in raw milk prices do not only result from different market performance of dairies but also are dependent on the legal status of dairies, the spatial competition that dairies face, and are dependent on the contractual design of the producer-dairy relationship. With the liberalization of the milk market and raw milk prices in turmoil, these findings contribute to a better understanding of the spatial dynamics of dairy farm systems.

Publications

• (2015): How can differences in German raw milk prices be explained? An empirical investigation of market power asymmetries. 2014 EAAE International Congress, August 26- 29, 2014, Ljubljana, Slovenia
  Zavelberg, Y., Wieck, C., T. Heckelei
  
• (2015): How can differences in German raw milk prices be explained? An empirical investigation of market power asymmetries. 2015 AAEA Annual Meetings, Washington, DC, July 26-28
  Zavelberg, Y., Wieck, C., T. Heckelei
  
• (2015): Pricing behaviour of cooperatives and investorowned dairies in a spatial market setting. 150th Seminar of the EAAE, October 22-23, 2015, Edinburgh, Scotland
  Zavelberg, Y., Storm, H.
  
• Entry deterring effects of contractual relations in the dairy processing sector. Bio-based and Applied Economics, v. 5, n. 1, p. 83-98, apr. 2016
  Zavelberg, Y., Wieck, C. and T. Heckelei