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Off‐farm work and technical efficiency on U.S. dairies

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  • Darlington Sabasi
  • C. Richard Shumway
  • Gregory M. Astill

Abstract

In this study, we investigate the impact of an increase in farm households’ off‐farm work on technical efficiency (TE) of U.S. dairies. We present a theoretical framework that implies that an increase in farm household off‐farm work decreases TE. We use two nationally‐representative samples of U.S. dairies (2010 and 2005 Agricultural Resource Management Surveys) and a parametric approach (stochastic frontier analysis) to empirically test the hypothesis. Results are generally consistent with the hypothesis and show that an increase in off‐farm work by the farm household is associated with a significant decrease in TE. In addition, results show that there is a statistically significant difference in TE between small, medium, and large farms. Small farms are associated with significantly higher off‐farm work and have lower TE than large farms, which implies that less off‐farm work by households with larger farms is at least partially responsible for the evidence of economies of scale in the U.S. dairy industry.

Suggested Citation

  • Darlington Sabasi & C. Richard Shumway & Gregory M. Astill, 2019. "Off‐farm work and technical efficiency on U.S. dairies," Agricultural Economics, International Association of Agricultural Economists, vol. 50(4), pages 379-393, July.
    • Handle: RePEc:bla:agecon:v:50:y:2019:i:4:p:379-393
    DOI: 10.1111/agec.12497
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    Cited by:

    1. S. C. West & A. W. Mugera & R. S. Kingwell, 2022. "The choice of efficiency benchmarking metric in evaluating firm productivity and viability," Journal of Productivity Analysis, Springer, vol. 57(2), pages 193-211, April.
    2. Nathan D. DeLay & Nathanael M. Thompson & James R. Mintert, 2022. "Precision agriculture technology adoption and technical efficiency," Journal of Agricultural Economics, Wiley Blackwell, vol. 73(1), pages 195-219, February.
    3. Garcia, Luis & Laepple, Doris & Dillon, Emma & Thorne, Fiona, 2020. "The role of hired labor in transient and persistent technical efficiency on Irish dairy farms," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304395, Agricultural and Applied Economics Association.
    4. Zhu, Xiaoke & Hu, Ruifa & Zhang, Chao & Shi, Guanming, 2021. "Does Internet use improve technical efficiency? Evidence from apple production in China," Technological Forecasting and Social Change, Elsevier, vol. 166(C).

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