Explaining Differences in Farm Sustainability: Evidence from Flemish Dairy Farms

An important objective of European agricultural policy is to have a sustainable, efficient farming sector, which uses environmentally-friendly production methods. Agricultural policy makers aim to combine strong economic performance with a sustainable use of natural resources. There is thus a need for tools allowing quantification of farm sustainability as well as for empirical research assessing, analysing and explaining differences in farm sustainability. Using a large dataset of dairy farms, we apply the concept of sustainable value creation to benchmark farm sustainability performance. An effect model captures the determinants of the differences in sustainability among Flemish dairy farms. Our empirical model shows that both managerial and structural farm characteristics are significant in explaining differences in sustainability performance and that the most important factors are farm size, farmer's age and the dependency on support payments. Furthermore, we observe a high sustainability performance on farms with higher levels of economic efficiency