Dynamic impacts of farm-level technology adoption on the Brazilian dairy supply chain
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Agricultural technology adoption that increases individual firm productivity is generally assumed to improve competitiveness and profitability. However, technology that is adopted by many firms in an industry can shift the basic supply relationship, increasing total production while lowering farm prices. While generally beneficial to consumers, this result can reduce (or completely offset) benefits for farmers, especially late or non-adopters. Our objective is to assess the market dynamics of alternative assumptions about exogenous productivity-enhancing technology adoption by Brazilian dairy farms. Of particular interest is the distributional impact on farm incomes and on the proportion of milk production for different farm size classes. To achieve this objective, we developed an empirical System Dynamics model that evaluates market and farm profitability impacts from 2006 to 2016. We simulated six counterfactual scenarios comprising three rates of adoption (slow, medium and fast) by two farm size categories (small and large). Technology adoption impact differs in the short- and long-term and depending on the assumed rates and farm sizes. Non-adopters of technology can experience lower incomes and a smaller production and income shares when other farms adopt. The underlying causal structure of farm profitability and the herd management decisions suffices to explain the potential market exclusion of non-adopting farms (especially small-scale farms) when others adopt.
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Supplementary Materials
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Dynamic impacts of farm-level technology adoption on the Brazilian dairy supply chain
In: International Food and Agribusiness Management ReviewSearch for other papers by Andre Rozemberg Peixoto Simões in
Current site
Google Scholar
PubMed
Search for other papers by Charles Frederick Nicholson in
Current site
Google Scholar
PubMed
Search for other papers by Andrew M. Novakovic in
Current site
Google Scholar
PubMed
Search for other papers by Roberto Max Protil in
Current site
Google Scholar
PubMed
Agricultural technology adoption that increases individual firm productivity is generally assumed to improve competitiveness and profitability. However, technology that is adopted by many firms in an industry can shift the basic supply relationship, increasing total production while lowering farm prices. While generally beneficial to consumers, this result can reduce (or completely offset) benefits for farmers, especially late or non-adopters. Our objective is to assess the market dynamics of alternative assumptions about exogenous productivity-enhancing technology adoption by Brazilian dairy farms. Of particular interest is the distributional impact on farm incomes and on the proportion of milk production for different farm size classes. To achieve this objective, we developed an empirical System Dynamics model that evaluates market and farm profitability impacts from 2006 to 2016. We simulated six counterfactual scenarios comprising three rates of adoption (slow, medium and fast) by two farm size categories (small and large). Technology adoption impact differs in the short- and long-term and depending on the assumed rates and farm sizes. Non-adopters of technology can experience lower incomes and a smaller production and income shares when other farms adopt. The underlying causal structure of farm profitability and the herd management decisions suffices to explain the potential market exclusion of non-adopting farms (especially small-scale farms) when others adopt.
| All Time | Past 365 days | Past 30 Days | |
|---|---|---|---|
| Abstract Views | 0 | 0 | 0 |
| Full Text Views | 368 | 212 | 27 |
| PDF Views & Downloads | 390 | 199 | 16 |
