Identifying and assessing intensive and extensive technologies in European dairy farming.

This article focuses on distinguishing and assessing the performance of extensive and intensive dairy farms across France, Ireland, and Austria to inform European Union (EU) agricultural policy aimed at addressing climate change and biodiversity loss. Using a latent class stochastic frontier model (LCSFM) combined with a novel nested metafrontier approach and data from the EU's Farm Accountancy Data Network (FADN), the study identifies farm types based on livestock density, fodder share, and rented land share, revealing that intensive farms exhibit better economic but poorer environmental performance compared to extensive farms. The analysis shows that productivity differences are primarily due to technology gaps between countries and farming intensities rather than inefficiency, highlighting the need for tailored policy instruments within the EU's Common Agricultural Policy (CAP). The proposed methodology offers a framework for designing future green payments that compensate farmers for productivity losses associated with extensification, emphasizing the importance of accounting for technological and regional heterogeneity in policy development.