Impact of a milk price decrease on economic results of French dairy farms

Abstract

Since the agreement of Berlin (March 1999), the Common Market Organisation (cmo) of milk, which was not included in the first Common Agricultural Policy (cap) reform (1992), , has been the object of an important debate by public authorities and agricultural professional organisations. The future of milk quotas and the opportunity of an institutional price decrease are two frequently investigated means. In this context, in this article we have tried, thanks to the Farm Accountancy Data Network (fadn), to report on the structural and economic diversity of French dairy farms. A method of classification is proposed which distributes dairy farms into five groups of “economic performances”. The five groups are then crossed with several other parameters, such as production systems, quota level, legal status and location. For each compartment of the typology, the impact of a milk price decrease (10 %) is tested. Among the 132 000 French dairy farms, 18 % have a very weak level of economic performance . These units, which have an average 173 700 kg of milk quota and 8 600 Euros of family farm income, would be particularly weakened by a 10 % decrease in the price of milk (-60 % of the family farm income against 16 % for the most successful 22 000 units).