Studies of dairy farm structure have neglected issues of vertical organization of the farm. In this study we model and measure the potential for dairy farms to reduce costs of production through vertical integration. We estimate a multi-stage, multi-output cost function to assess vertical economies of scope in organic and conventional dairy farms. We model the cost of producing grains and forages, which are then used as inputs in the production of milk. We find negligible vertical economies of scope for conventional dairy farms. In contrast, we find significant vertical economies of scope in organic dairy production, suggesting that there is an economic incentive for vertical integration into feed production. The large vertical economies of scope for organic dairy farms are consistent with higher costs of obtaining organic feed through market transactions associated with an underdeveloped market for organic feeds.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Length: Date of creation: 2009 Date of revision: Handle: RePEc:ags:aaea09:49409
Contact details of provider: Postal: 555 East Wells Street, Suite 1100, Milwaukee, Wisconsin 53202 Phone: (414) 918-3190 Fax: (414) 276-3349 Email: Web page: http://www.aaea.org More information through EDIRC
For technical questions regarding this item, or to correct its listing, contact: (AgEcon Search).