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Farm Inefficiency Resulting from the Missing Management Input

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  • Byma, Justin P.
  • Tauer, Loren W.

Abstract

We use DEA (Data Envelopment Analysis) techniques to determine if measured inefficiencies are caused by a missing management input. We replace the quantity of operators’ labor with estimates of the value of labor and management, and then with net farm income from the previous year, to determine if those replacements for operator labor changes calculated efficiencies. We calculate not only technical efficiencies, but also cost and revenue efficiencies and decompose them into allocative efficiencies. The empirical results are disappointing, in that our management inputs make little impact on measured inefficiencies. Very few articles have measured technical, cost, and revenue efficiency in the same study, and then not with a 10 year panel data set. Many may be interested in the estimates of DEA efficiencies on these dairy farms over the 10 years using the various specifications.

Suggested Citation

  • Byma, Justin P. & Tauer, Loren W., 2007. "Farm Inefficiency Resulting from the Missing Management Input," Working Papers 127008, Cornell University, Department of Applied Economics and Management.
    • Handle: RePEc:ags:cudawp:127008
    DOI: 10.22004/ag.econ.127008
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    References listed on IDEAS

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    Cited by:

    1. Thomas Triebs & Subal C. Kumbhakar, 2012. "Management Practice in Production," ifo Working Paper Series 129, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.

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