Economic Resilience of EU Dairy Farms: An Evaluation of Economic Viability
Round 1
Reviewer 1 Report
This study aims at exploring the level of temporal viability and permanent viability of farms classified by three economic sizes. I’ve arranged my comments by the order in which they were motivated while reading the manuscript:
Introduction
A strong motivation statement is missing here. In other words, the authors did not elaborate on how and what this study add to the existing body of knowledge. For example, in the second paragraph, the authors indicated that changes occurring on dairy farms cause many problems related to “environmental protection, ensuring animal welfare, increasing risk of farming and eliminating family farms from the dairy sector”, therefore, it is important to identify dairy farms’ economic viability. There is a missing link in this motivation statement since it is not clear how those problems are related to economic viability.
(Line 42) What exactly is “The economic viability survey” referred to?
The authors spent most of time in this section taking about the definition and measurement of “economic viability”. However, none of the dispute or inconsistency concerning the definition or measurement of economic viability was commented on. Those paragraphs, therefore, are misplaced.
(Line 101) What does “FADN” stand for? What is the meaning of “agricultural holding 45”?
One of the major problem in this article is that there are a number of places have numbers following general terms. The first example is “agricultural holding 45” here. It is very difficult to figure out the meaning of the numbers following the general term which make the understanding of the ideas even more difficult.
Materials and Methods
(110-111) “Groups of farms have been classified to the economic size class (ES6).” -> Again, what is the meaning of the number following abbreviation for economic size?
Table 1 is very confusing. What does the number in the parenthesis, for example, “Medium-small farms (3)” stand for?
(118-119) “Firstly, for a small number of countries with low scale farms (medium-small) have a significant share in the structure of farms specialising dairy.” -> Table 1 does contain information on the share of each farm sale, what is the ground for this observation?
(120-121) “Secondly, the FADN database contain data from the highest economic classes farms in Belgium and Denmark.” -> In the “Very large farms (6)” group, there are in total eight countries: Germany, France, United Kingdom, Netherlands, Italy, Spain, Denmark, Belgium”. What is the reason for the emphasis of Belgium and Denmark?
Results
The results presented in this paper are basically descriptive. For example, based on Figure 2, the authors indicated that “most of the analysed groups of farms remained in the survival phase of farm life cycle”. (Line 272-273) At least some statistical tests need to be carried out in order to reach similar conclusion.
Author Response
Response to Comment 1.
Authors acknowledge that the importance of studying the economic viability of dairy farms and "linking" this term to changes in the dairy sector was not emphasized. The continuity of the article's content was disrupted by the leap of thought used by authors. The Reviewer's remark made us aware that such an action may cause negative consequences for the proper ordering and perception of the article content.
The study of economic viability allows diagnosing the condition of farms and their development potential. Determining its level allows us to determine whether farms have resilience to changes occurring in the farm environment. This resilience determines the adaptive capacity of farms to cope with changes in climate, market, and risk management of agricultural activity.
Response to Comment 2.
(Line 42)
The introduction was expanded to include missing comments on consistency of definitions and on measuring economic viability.
A review of the literature shows that there is consistency among definitions of economic viability. As more studies appear, previously developed definitions are used, which gives rise to the conclusion that there is no problem with terminology. The situation is different when it comes to methods of measuring economic viability. The methods used to determine its level are diverse. Special attention can be paid to approaches related to the valuation of opportunity costs. This applies to the determination of the value of the cost of equity and family labour force. Often we can see that there are repeated attempts to find the best way to value these costs. International comparisons of farm economic viability should seek to consider the specific economic conditions of the countries included in the analysis. Hence, in recent years, approaches based on the use of average gross wages in the national economy for the stock of family labour and, in the case of equity, the return on long-term government bonds have prevailed.
Response to Comment 3.
(line 101)
Information on FADN has been completed - the full name and what the organization focuses on is given. Readers can find more information in the publication, which can be found in footnote [25] at the end of the paragraph.
The Farm Accountancy Data Network (FADN) observes the economic situation of European Union farms and their activities. The FADN is the source of microeconomic data based on harmonized bookkeeping rules providing comparability of farms organizational and economic parameters. It covers EU farms that can be considered marketable. The FADN methodology provides representative data by three categories: region, economic size and type of farming.
Authors resigned from the numerical designation of the type of analyzed farms in order not to make it difficult for the reader to understand the idea of the study, which was pointed out by the reviewer.
Response to Comment 4.
(lines 110-111)
Authors wanted to keep the designations used in the FADN database. Line 116 includes a footnote to the literature [25], which details the methodology used by the FADN including how farms are grouped.
Response to Comment 5.
(Table 1)
Authors have completed the information about the meaning of the digits in brackets (next to the name of the farm group) under the tables. These digits indicate an alternative way of indicating the economic size of farms according to the methodology used by FADN. They are used in many studies, which provides the possibility of easy comparison of results. Authors use these symbols in the description of the results and in the conclusions.
Response to Comment 6.
(lines 118-119)
Table 1 does not contain information on the share of each farm sale.
Table 1. contains information on farms from specific countries compared within a specific economic size and is the starting point for the comparative analysis performed.
Response to Comment 7.
(lines 120-121)
The sentence is indeed unintelligible. Authors' intention was to highlight the differences in the structure of dairy farms in the countries studied, due to their size and scale of production.
The content in the article has been corrected and completed: Secondly, there are countries such as Belgium and Denmark, for which the FADN only collects data from farms in the highest economic classes. This means that these countries are dominated by farms with large herds of dairy cows.
Response to Comment 8.
(Results)
Authors eliminated terms identified by the reviewer that were objectionable and could suggest the use of statistical tests in the study.
Reviewer 2 Report
The paper deals with the estimation and assessment of the economic viability of dairy farms in selected EU countries. The paper is original and relevant to the scope of the journal. Structure of the paper is logical, the language is free of significant grammar errors, the text is understandable and easy to read.
The literature review is well structured, it summarizes a description of conceptual departures with a focus on the definition and estimation of the farm viability. The authors discussed various approaches of measuring economic viability and purpose the indicators for short-term and long-term economic viability. The viability was calculated for different economic size of farms using FADN 2009-2018. The comparison of outcomes is based on a pure comparison without any specific methodology (such as statistical or econometric methods). On the other hand, the value added of the article is the economic evaluation itself, i. e. the choice of viability indicators, outcomes reached. The authors highlighted that better short-term viability was obtained in the group of farms with a larger production scale. In addition, the long-term viability was observed in group of farms with larger economic size. The conclusion summarizes the most important findings including recommendations.
Specific remarks:
Lines 22-23: In the Abstract the authors mentioned that “Including direct payments in the calculation resulted in a significant improvement in temporal viability…”. What is meant by “significant”? The authors did not use any statistical methods adequate to assess “significant” improvement. Does the “significant” word mean their personal/private opinion? Regarding this – what is and what is not “significant” change?
Table 3: the results presented in the table are “per farm”. I understand that there are compared farms with the same economic size, on the other hand there is a quite high variation of farm size (hectare size) across countries the authors evaluated. I would recommend adding information about average size (hectares of UAA) for each group.
Author Response
Response to Comment 1.
(lines 22-23)
The term was used inappropriately because authors did not use statistical methods to assess "significant" improvement. The word "significant" was used in the sense of "large impact" in authors' subjective assessment. This word has been eliminated from the content so as not to mislead the reader.
Response to Comment 2.
Farms within economic size differ in many parameters. One of them is the size of the cow herd and the UR area. The reviewer suggested adding information about the average UR area for each group in Table 3. Authors agree that this information can enrich the characteristics of the farm groups, but they suggest including it in Table 2. regarding the overall characteristics of the farms. This seems to be a better solution due to the fact that only economic parameters that are components of economic viability are included in Table 3.
Round 2
Reviewer 1 Report
(Line 22) “Including direct payments in the calculation resulted in a significant improvement in temporal…” -> “a improvement” should be “an improvement”.
In response to my comment concerning the use of some numbers in the parenthesis, for example, what does “Medium-small farms (3)” stand for in Table 1, the authors responded by noting “These digits indicate an alternative way of indicating the economic size of farms according to the methodology used by FADN. They are used in many studies, which provides the possibility of easy comparison of results.”
I disagree with the reason for using this confusing way of presentation, i.e., “they are used in many studies.” Even they’re used in many studies as claimed by the authors, it is still quite confusing since it is not reasonable to expect the readers to read those studies using similar way of presentation. It is the author’s responsibility to provide all the information necessary to facilitate the reader’s understanding of the results listed in the Tables.
Moreover, I do not think the “symbols” or numbers is needed for comparison purpose. For the purpose of comparison, what is important is whether the rule used to categorize, for example, “medium-small farms”, is consistent with other studies, not the “symbols” or numbers.
Footnote in Table 1: “Numbers in brackets are an alternative indication of the economic size class (identical in Tables 2 and 3). -> The numbers are in parentheses instead of “brackets”. Also, it’s better to add “(classification according to FADN: ES6)” as in the text into the footnote.
The same footnote needs to be added to Tables 2-3 and Figures 2-3 to facilitate readers' understanding.
Author Response
Response to Comment 1.
(Line 22)
The authors corrected a language error pointed out by the reviewer.
Response to Comment 2.
Authors understand that the numeration used in parentheses next to the names of economic size classes of farms may not be clear to the reader or may disturb the interpretation of the results. Due to comments, authors decided to remove these numbers and use only descriptive names. Corrections were made in tables, figures and the text of the article.
