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Modelling efficiency with farm-produced inputs: dairying in KwaZulu-Natal, South Africa

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Author Info

  • Mkhabela, Thulasizwe S.
  • Piesse, Jenifer
  • Thirtle, Colin G.
  • Vink, Nick

Abstract

This paper models dairy farms in KwaZulu-Natal, South Africa, emphasising the complexities unique to this multi-product industry. Net and gross output approaches to measuring production are discussed and then tested using panel data from 37 dairy farms in KwaZulu-Natal from 1999 and 2007. Production functions for the three outputs: milk production, animals and farm-produced feed, are fitted as a simultaneous system to model the farms’ production activities. This simultaneous model is complemented by a single equation reduced form that is fitted as a frontier, which allows estimation of the relative efficiencies of the individual farms. The results show that, with data this detailed, it is possible to refine the model until it fits very tightly. Indeed, in the gross output model that includes cows there is nothing left to call inefficiency and what was clearly a frontier becomes a mean response function.

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File URL: http://purl.umn.edu/61999
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Bibliographic Info

Article provided by Agricultural Economics Association of South Africa (AEASA) in its journal Agrekon.

Volume (Year): 49 (2010)
Issue (Month): 1 (March)
Pages:

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Handle: RePEc:ags:agreko:61999

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Web page: http://www.aeasa.org.za/
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Related research

Keywords: Dairy farms; production; frontiers; efficiency; Production Economics;

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Cited by:
  1. du Toit, J.P. & Ortmann, Gerald F. & Ramroop, S., 2010. "Factors influencing the long-term competitiveness of commercial milk producers: evidence from panel data in East Griqualand, South Africa," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 49(1), March.
  2. Temesgen Tadesse Deressa, 2011. "Effects of climatic conditions and agro-ecological settings on the productive efficiencies of small-holder farmers in Ethopia," Working Papers 223, Economic Research Southern Africa.

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