Productivity change analysis in dairy farms following Polish accession to the EU - An output growth decomposition approach

The aim of this study was to assess changes in productivity of dairy farms after Poland's accession to the European Union using a new decomposition of output growth within a stochastic frontier framework. We demonstrate how changes in economies of scale can be isolated, which leads to redefined components of output growth and a better measure of productivity growth. The productivity component is disaggregated to its three generic sources: total scale change, real technical change and efficiency change. An analysis of 1191 dairy farms based on data from 2004 to 2011 reveals that production growth (3.91%) is mostly due to input accumulation (3.4%) rather than productivity growth (0.51%.). Further decomposition indicates that the productivity component is driven by real technical growth (1%) and changes in scale elasticity, which had a negative effect on productivity (-0.81%). Conversely, technical efficiency growth (0.36%) played a minor role.