Aggregate Efficiency Dynamics in Lithuanian Dairy Farms

In this paper, we attempt to identify the major groups of decision making units (dairy farms) contributing to the aggregate efficiency change. We also suggest identifying influential peers in order to gain more insights into possible development strategies within a sector. The empirical application focuses on specialist dairy farms in Lithuania. The farm-level data cover the period 2004-2016. The results indicate the pres-ence of structural changes and resulting shifts in the aggregate efficiency. Based on the results of decom-position of the covariance term and identification of the influential peers, two models can be followed by Lithuanian dairy farms, namely “pure” family farms with lower operational scale and large farms involv-ing hired labour.