Production risk in multi-output industries: estimates from Norwegian dairy farms
AbstractFarmers who produce multiple outputs are portfolio managers in the sense that they use inputs to balance expected economic return and variance of return. This paper estimates the structure of the stochastic multi-output production technology in Norwegian dairy farming, allowing for a more flexible specification of the technology than previous studies. We find that an increase in input levels leads primarily to higher output variability, and that inputs also influence the covariance of shocks between outputs. Risk-reducing effects of inputs on outputs are primarily present in the covariance functions. Technical change leads to shifts in the profit distribution over the data period, but no welfare improvement for risk-averse farmers.
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Bibliographic InfoPaper provided by European Association of Agricultural Economists in its series 2008 International Congress, August 26-29, 2008, Ghent, Belgium with number 43958.
Date of creation: 2008
Date of revision:
Multi-output technologies; production risk; dairy farming; Agribusiness; Livestock Production/Industries;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-11-25 (All new papers)
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