Date of Graduation

8-2016

Document Type

Thesis

Degree Name

Master of Science in Agricultural Economics (MS)

Degree Level

Graduate

Department

Agricultural Economics and Agribusiness

Advisor

Eric J. Wailes

Committee Member

Bruce L. Dixon

Second Committee Member

Arben Musliu

Third Committee Member

Alvaro Durand-Morat

Abstract

This thesis consists of two studies on the dairy sector in Kosovo. The first study evaluates the effect of the Subsidy per Head Scheme (SPHS) on increasing production, land use, gross income and number of dairy cows on dairy farms in Kosovo. Results from the Propensity Score Matching (PSM) approach using four alternative matching algorithms revealed that SPHS has not had any impact on increasing land use, gross income or the number of dairy cows per farm. Furthermore, SPHS had a negative impact on decreasing land use and number of cows for the participating dairy farmers in the program. In terms of milk production, SPHS has not had any meaningful effect on increasing milk productivity when compared to farms that did not participate in the program. Improvement in milk production per cow was found to be a statistically significant effect for two matching algorithms. However, two other algorithms revealed insignificant effect of SPHS on improving milk productivity.

The second study provides estimates of the technical efficiency level for a random sample of 243 dairy farms in Kosovo over the 2014 farming season. Statistically significant determinants of technical efficiency are identified. A stochastic frontier production function was estimated using a two stage procedure. Results revealed that feeding rates (specifically of concentrates and silage), land use per cow, and the number of days that cows had been kept on pastures have statistically significant impacts on milk productivity per cow. The mean technical efficiency of dairy farms was estimated at 0.72. The major determinants that help to improve the efficiency are breed improvement, intensification of corn production on the farm, improving feeding rates, and using free range production systems. Given the results from the SPHS impact assessment and technical efficiency analysis, it is crucial for the Government of Kosovo to redesign their dairy policy, specifically their direct payment schemes and target technical assistance and investment support based on regional potentials.

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