The factors of milk revenue change in Lithuania: index decomposition analysis based on the Shapley value

The paper aims to analyse the main driving forces behind the changes in milk revenue in Lithuania during 1993–2013 by the virtue of the index decomposition analysis. Specifically, an index decomposition model based upon Shapley value is introduced to account for dynamics in endogenous and exogenous factors underlying dynamics of the revenue. Particularly, the number of cows, average milk yield, market integration, milk composition, and milk price are considered as the main factors causing variation in milk revenue. The country level data are used for the analysis. Results show that such practices as animal recording and application of improved fodder have increased milk revenue by 67 million EUR and 75 million EUR during 1993–2004 and 2004–2013, respectively, due to increase in milk yield and fat. JEL codes: C43, Q11.