Structural convergence between the dairy sectors of the EU-27 Member States since the Eastern Enlargement

Cohesion is one of the core goals of European integration. In 2004 and 2007, the EU welcomed twelve new members which added their agricultural sectors to the EU’s single market. Especially their dairy sectors showed substantial competitive disparities to old Member states. We therefore examine structural convergence in farm-gate milk prices, productivity and farm income across EU’s regional dairy sectors since 2004. We find that price dispersion decreased from 2004-2007. Kernel density plots and Markov chain estimates show that there was a high probability for regions to stay in the lower income- and productivity classes