Competitiveness of the EU dairy industry

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Competitiveness of the EU dairy industry

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objective. Then, some descriptive statistics are given to understand the nature

of the data and to lay the foundation for further econometric analysis. In addition

entry-exit demography, concentration and financial performance of firms are

analysed.

Country Selection

Due to time constraints to cover all EU member countries, six countries have

been selected for the study sample. The sample includes countries characterised

by Small and Medium Enterprises (SMEs) and countries characterised by

large enterprises. The selection criteria are:

a. countries characterised by a large proportion of SMEs and countries with

large companies;

b. new versus old EU member state. Most new member states have a milk

production below 1% of the EU-27 total. Among these countries only Poland

and Hungary have a significant share of milk production. Hungary has 1.2%

and Poland 6%. We propose to incorporate Poland to represent the industrial

structure of the new EU member states;

c. northern versus southern countries. Northern countries (except for Germany)

are characterised by a high concentration of dairy enterprises.

Based on the above criteria Italy, France, the Netherlands, UK, Germany,

and Poland have selected in the study sample. Italy and France are southern

EU countries with a large number of SMEs that are characterised by strong

competition (Wjnands et al., 2007). France and The Netherlands each have 2 or

3 firms in the top 20 world dairy players. In terms of shares of total EU milk production

Germany, with a share of 21%, and France with a share of 11%, are

large producers. The other countries that follow are the UK (11%), Italy (8%), the

Netherlands (8%) and Poland (6%). These six countries contribute to a total

share of 61% of EU 27 milk production (Wijnands et al., 2007).

EU firm size definition

It is important to define the size class of firms in order to analyse the dynamics

among different size classes of firms. The classification of firm size into small,

medium, and large is usually based on number of employees, turnover, and total

asset (Europa, 2005). The EU official website (EUROPA) definition of micro,

small, medium, and large enterprises is given in the table 2.1.

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