Dairy producers in the Netherlands are struggling to stay in business due to
increased environmental legislation, population density, intensity of farming systems,
costs of production and quota restrictions. One option available to Netherlands dairy
farmers is to liquidate the value of their assets, put the money into an international bank,
and buy an established dairy farm in the United States. The primary objective of this
research is to compare the economic viability of a Netherlands dairy farmer staying in
the Netherlands versus moving to the United States, assuming they will bring over all of
their equity to put towards the purchase of a U.S. farm.
The hypothesis that a Dutch dairy farmer would have a greater probability of
economic success by relocating to the U.S was tested using a whole farm simulation
model (FLIPSIM) to simulate the economic activity of a representative dairy farm in the
Netherlands and 23 representative U.S. dairy farms in the major dairy producing regions
over the 2002-2011 planning horizon. FLIPSIM generated an empirical probability
distribution for net present value to rank the representative farms using stochastic
efficiency with respect to a function (SERF) for risk neutral and risk averse decision
makers.
The FLIPSIM results showed that six of the twenty-three U.S. dairy farms would
give the Dutch farmer a 99% chance of economic success. The added risk on income in
the U.S. would result in these U.S. farms having a 1 to 99% chance of negative ending
cash reserves (ECR) and a 1 to 99% chance of negative net cash farm income (NCFI).
In a complete SERF analysis, seventeen of the twenty-three U.S. farms were preferred
over the Dutch farm. In conclusion, the research shows Dutch dairy farmers with
adequate equity would be financially better off by relocating to the U.S. if they desire to
continue dairying, rather than staying in the Netherlands.
| Identifer | oai:union.ndltd.org:tamu.edu/oai:repository.tamu.edu:1969.1/1410 |
| Date | 17 February 2005 |
| Creators | Duncan, Anthony Ray |
| Contributors | Klinefelter, Danny A., Richardson, James W. |
| Publisher | Texas A&M University |
| Source Sets | Texas A and M University |
| Language | en_US |
| Detected Language | English |
| Type | Book, Thesis, Electronic Thesis, text |
| Format | 390372 bytes, electronic, application/pdf, born digital |
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