The Role of Innovation in Farm Economic Sustainability: Generalised Propensity Score Evidence from Irish Dairy Farms

We assess the impact of innovation on Irish dairy farm economic sustainability by focusing on profitability, productivity of land and market orientation. A generalised propensity score method is applied to a representative sample of 342 Irish dairy farms. Our empirical findings reveal that innovation increases economic sustainability, but not in a linear way. More specifically, economic gains depend on the level of innovation. Small efforts to increase innovation can lead to economic gains of over €200 per hectare. The results also reveal that innovative farmers can achieve higher economic gains by further innovation. Overall, our findings support the current focus of the Irish extension system on fostering the uptake of innovative technologies and practices in order to achieve an economically sustainable expansion of the dairy sector.