Productivity Change Analysis of Polish Dairy Farms After Poland’s Accession to the EU – An Output Growth Decomposition Approach

The aim of this study is to assess changes in productivity of Polish dairy farms after Poland’s accession to the EU. In order to do so a new decomposition of output growth is proposed in a stochastic frontier framework. We show 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 now disaggregated to its three generic sources: total scale change, real technical change and efficiency change. The analysis of 1,191 Polish dairy farms between 2004-2011 has revealed that production growth (3.91%) is mostly due to inputs accumulation (3.4%) rather than productivity growth (0.51%.) Further decomposition indicates that productivity component is driven by real technical growth (1%) and changes in scale elasticity, which have had a negative effect on productivity (-0.81%). Technical efficiency growth (0.36%) played a rather minor role.