Modelling dairy farm size distribution in Poland using an instrumental variable generalized cross entropy markov chain approach

The aim of this paper is to analyse the evolution of the dairy farm structure of Poland during the post-socialist period. First the paper focuses on how the farm structure has changed over time and what path it is likely to follow in the coming decade. Second, it is tested whether the evolution of farm size is explained by non-stationary effects. Finally, several statistical indicators are computed on farm mobility and on which farms are likely to survive. An instrumental variable generalised cross entropy Markov chain approach which incorporates prior information is applied for estimation. Prior information included general and plausible information on farm mobility and structural adjustments based on independent literature. The projections show that dairy farm numbers will continue to decline, although accompanied by an increase in the number of medium-sized and large farms. Subsistence dairy farms are expected to slowly leave the sector in the coming decade.