Dairy supply chain modernisation in Poland – what about those not keeping the pace?

Taking into consideration a significant outflow of Polish farmers from dairy sector, we investigate what factors determine their decision to quit milk sales. We also analyse their current revenues and compare with that of similar households that remained in commercial milk production. Using logit model we find that severing relations with the market is mainly determined by worse endowment of farms with dairy specific assets, smaller cow herds and older age of the farm manager. Based on semi-parametric matching methods we find that in terms of revenues farms that decided for subsistence milk production perform worse than those that maintained commercial dairy business. However, more detailed analysis shows that this difference could be attributed to supply chain modernisation and becomes insignificant once subsistence farmers are compared to commercial farms supplying traditional marketing channel.