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Decomposing dynamic profit inefficiency of Belgian dairy farms

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  • Frederic Ang
  • Alfons Oude Lansink

Abstract

This paper introduces a nonparametric framework for analysing dynamic profit inefficiency and applies this to a sample of Belgian, specialised dairy farms from 1996 to 2008. Profit inefficiency is decomposed into technical and allocative inefficiency. The paper also decomposes profit inefficiency into the contributions of output, input, and investment. Finally, the paper identifies the contributions of technical and allocative inefficiency in output, input and investment. The results suggest substantial profit inefficiency under the dairy-quota system, mainly driven by allocative inefficiency of variable input use and output production.

Suggested Citation

  • Frederic Ang & Alfons Oude Lansink, 2018. "Decomposing dynamic profit inefficiency of Belgian dairy farms," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 45(1), pages 81-99.
    • Handle: RePEc:oup:erevae:v:45:y:2018:i:1:p:81-99.
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    File URL: http://hdl.handle.net/10.1093/erae/jbx024
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    5. Ioannis Skevas & Alfons Oude Lansink, 2020. "Dynamic Inefficiency and Spatial Spillovers in Dutch Dairy Farming," Journal of Agricultural Economics, Wiley Blackwell, vol. 71(3), pages 742-759, September.
    6. Magambo, Isaiah Hubert & Dikgang, Johane & Gelo, Dambala & Tregenna, Fiona, 2021. "Dynamic Technical and Environmental Efficiency Performance of Large Gold Mines in Developing Countries," EconStor Preprints 235859, ZBW - Leibniz Information Centre for Economics.
    7. Theodoros Skevas & Ioannis Skevas & Victor E. Cabrera, 2021. "Examining the Relationship between Social Inefficiency and Financial Performance. Evidence from Wisconsin Dairy Farms," Sustainability, MDPI, vol. 13(7), pages 1-14, March.
    8. Frederic Ang & Pieter Jan Kerstens, 2018. "Superlative approximation of the Luenberger-Hicks-Moorsteen productivity indicator: Theory and application," IFRO Working Paper 2018/10, University of Copenhagen, Department of Food and Resource Economics.
    9. F. Ang & K. H. Dakpo, 2021. "Comment: Performance measurement and joint production of intended and unintended outputs," Journal of Productivity Analysis, Springer, vol. 55(3), pages 185-188, June.
    10. Lin Gan & Takahashi Yoshifumi & Nomura Hisako & Yabe Mitsuyasu, 2024. "The short‐ and long‐term impacts of overinvestments on the profitability of agri‐food processing firms in China," Agribusiness, John Wiley & Sons, Ltd., vol. 40(1), pages 227-247, January.
    11. Ang, Frederic & Kerstens, Pieter Jan, 2020. "A superlative indicator for the Luenberger-Hicks-Moorsteen productivity indicator: Theory and application," European Journal of Operational Research, Elsevier, vol. 285(3), pages 1161-1173.
    12. Scarlett Wang & Frederic Ang & Alfons Oude Lansink, 2023. "Mitigating greenhouse gas emissions on Dutch dairy farms. An efficiency analysis incorporating the circularity principle," Agricultural Economics, International Association of Agricultural Economists, vol. 54(6), pages 819-837, November.
    13. Frederic Ang & Simon M. Mortimer & Francisco J. Areal & Richard Tiffin, 2018. "On the Opportunity Cost of Crop Diversification," Journal of Agricultural Economics, Wiley Blackwell, vol. 69(3), pages 794-814, September.

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