IDEAS home Printed from https://ideas.repec.org/a/caa/jnlage/v67y2021i6id418-2020-agricecon.html
   My bibliography  Save this article

A DEA approach for merging dairy farms

Author

Listed:
  • Sebastián Lozano

    (Department of Industrial Management, Engineering School, University of Seville, Spain)

  • Belarmino Adenso-Díaz

    (Department of Industrial Engineering, Engineering School, University of Oviedo, Spain)

Abstract

This paper proposes a model for determining the most advantageous merger within a set of dairy farms. It uses data envelopment analysis (DEA) to estimate the total technical efficiency improvement that the merger would produce and for decomposing it into a learning effect and a pure merger effect. A design of experiments has also been carried to test the effects of various factors (the total number of farms, the standard deviation of herd size, the percentage of farms exhibiting increasing returns to scale, the standard deviation of the current technical efficiency of the farms) on different response variables (the percentage of farms involved in the merger, the reduction of herd size and the efficiency improvement obtained by the merger). The results show that the disparity in the herd size of the farms in a region and the percentage of farms that exhibit increasing returns to scale increase the number of farms that enter into the most advantageous merger. The disparity of herd size also increases the number of cows that are not needed after the merger. Finally, the expected efficiency improvement increases with the total number of farms.

Suggested Citation

  • Sebastián Lozano & Belarmino Adenso-Díaz, 2021. "A DEA approach for merging dairy farms," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 67(6), pages 209-219.
    • Handle: RePEc:caa:jnlage:v:67:y:2021:i:6:id:418-2020-agricecon
    DOI: 10.17221/418/2020-AGRICECON
    as

    Download full text from publisher

    File URL: http://agricecon.agriculturejournals.cz/doi/10.17221/418/2020-AGRICECON.html
    Download Restriction: free of charge
    File URL: http://agricecon.agriculturejournals.cz/doi/10.17221/418/2020-AGRICECON.pdf
    Download Restriction: free of charge
    File URL: https://libkey.io/10.17221/418/2020-AGRICECON?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Feng Li & Liang Liang & Yongjun Li & Ali Emrouznejad, 2018. "An alternative approach to decompose the potential gains from mergers," Journal of the Operational Research Society, Taylor & Francis Journals, vol. 69(11), pages 1793-1802, November.
    2. Bina Agarwal & Bruno Dorin, 2019. "Group farming in France: Why do some regions have more cooperative ventures than others?," Environment and Planning A, , vol. 51(3), pages 781-804, May.
    3. Laurent Piet & Laure Latruffe & Chantal Le Mouël & Yann Desjeux, 2012. "How do agricultural policies influence farm size inequality? The example of France," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 39(1), pages 5-28, February.
    4. Mugera, Amin W., 2013. "Measuring Technical Efficiency of Dairy Farms with Imprecise Data: A Fuzzy Data Envelopment Analysis Approach," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 57(4), pages 1-19.
    5. Vecdi DEMIRCAN & Turan BINICI & Carl R. ZULAUF, 2010. "Assessing pure technical efficiency of dairy farms in Turkey," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 56(3), pages 141-148.
    6. S Lozano & G Villa, 2010. "DEA-based pre-merger planning tool," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 61(10), pages 1485-1497, October.
    7. Monke, Eric & Avillez, Francisco & Ferro, Manuela, 1992. "Consolidation Policies and Small-Farm Agriculture in Northwest Portugal," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 19(1), pages 67-83.
    8. Peter Bogetoft & Dexiang Wang, 2005. "Estimating the Potential Gains from Mergers," Journal of Productivity Analysis, Springer, vol. 23(2), pages 145-171, May.
    9. Timothy J. Coelli & D.S. Prasada Rao & Christopher J. O’Donnell & George E. Battese, 2005. "An Introduction to Efficiency and Productivity Analysis," Springer Books, Springer, edition 0, number 978-0-387-25895-9, June.
    10. Chien-Ming Chen & Magali A. Delmas, 2012. "Measuring Eco-Inefficiency: A New Frontier Approach," Operations Research, INFORMS, vol. 60(5), pages 1064-1079, October.
    11. Mattsson, Pontus & Tidanå, Claes, 2019. "Potential efficiency effects of merging the Swedish district courts," Socio-Economic Planning Sciences, Elsevier, vol. 67(C), pages 58-68.
    12. Fukuyama, Hirofumi & Weber, William L., 2009. "A directional slacks-based measure of technical inefficiency," Socio-Economic Planning Sciences, Elsevier, vol. 43(4), pages 274-287, December.
    13. Blancard, Stéphane & Boussemart, Jean-Philippe & Chavas, Jean-Paul & Leleu, Hervé, 2016. "Potential gains from specialization and diversification further to the reorganization of activities," Omega, Elsevier, vol. 63(C), pages 60-68.
    14. Michael Zschille, 2015. "Consolidating the water industry: an analysis of the potential gains from horizontal integration in a conditional efficiency framework," Journal of Productivity Analysis, Springer, vol. 44(1), pages 97-114, August.
    15. Zschille, Michael, 2015. "Consolidating the Water Industry: an Analysis of the Potential Gains from Horizontal Integration in a Conditional Efficiency Framework," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 44(1), pages 97-114.
    16. Truc Linh Le & Pai-Po Lee & Ke Chung Peng & Rebecca H. Chung, 2019. "Evaluation of total factor productivity and environmental efficiency of agriculture in nine East Asian countries," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 65(6), pages 249-258.
    17. Desheng Wu & Zhaoxin Zhou & John Birge, 2011. "Estimation of potential gains from mergers in multiple periods: a comparison of stochastic frontier analysis and Data Envelopment Analysis," Annals of Operations Research, Springer, vol. 186(1), pages 357-381, June.
    18. Kristina Holmström & Anna Hessle & Hans Andersson & Karl-Ivar Kumm, 2018. "Merging Small Scattered Pastures into Large Pasture-Forest Mosaics Can Improve Profitability in Swedish Suckler-Based Beef Production," Land, MDPI, vol. 7(2), pages 1-14, May.
    19. Angeliki Flokou & Vassilis Aletras & Dimitris Niakas, 2017. "Decomposition of potential efficiency gains from hospital mergers in Greece," Health Care Management Science, Springer, vol. 20(4), pages 467-484, December.
    20. Ørjan Mydland, 2020. "Lost economies of scope and potential merger gains in the Norwegian electricity industry," Empirical Economics, Springer, vol. 58(6), pages 3077-3100, June.
    21. Laurent Piet & Laure Latruffe & Chantal Le Mouël & Yann Desjeux, 2012. "How do agricultural policies influence farm size inequality? The example of France," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 39(1), pages 5-28, February.
    22. Jindřich ŠPIČKA & Ondřej MACHEK, 2015. "Change in the production efficiency of European specialized milk farming," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 61(1), pages 1-13.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chang, Tsung-Sheng & Lin, Ji-Gang & Ouenniche, Jamal, 2023. "DEA-based Nash bargaining approach to merger target selection," European Journal of Operational Research, Elsevier, vol. 305(2), pages 930-945.
    2. Contreras, I. & Lozano, S., 2022. "Size efficiency, splits and merger gains, and centralized resource reallocation of Spanish public universities," Socio-Economic Planning Sciences, Elsevier, vol. 81(C).
    3. Ying Li & Yung-Ho Chiu & Tai-Yu Lin & Tzu-Han Chang, 2020. "Pre-Evaluating the Technical Efficiency Gains from Potential Mergers and Acquisitions in the IC Design Industry," International Journal of Information Technology & Decision Making (IJITDM), World Scientific Publishing Co. Pte. Ltd., vol. 19(02), pages 525-559, April.
    4. Jianhui Xie & Xiaoxuan Zhu & Liang Liang, 2020. "A multiplicative method for estimating the potential gains from two-stage production system mergers," Annals of Operations Research, Springer, vol. 288(1), pages 475-493, May.
    5. Yan He & Yung-ho Chiu & Bin Zhang, 2020. "Prevaluating Technical Efficiency Gains From Potential Mergers and Acquisitions in China’s Coal Industry," SAGE Open, , vol. 10(3), pages 21582440209, July.
    6. Biresh K. Sahoo & Kaoru Tone, 2022. "Evaluating the potential efficiency gains from optimal industry configuration: A case of life insurance industry of India," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 3996-4009, December.
    7. Wanke, Peter & Maredza, Andrew & Gupta, Rangan, 2017. "Merger and acquisitions in South African banking: A network DEA model," Research in International Business and Finance, Elsevier, vol. 41(C), pages 362-376.
    8. Subhash C. Ray & Shilpa Sethia, 2022. "Nonparametric measurement of potential gains from mergers: an additive decomposition and application to Indian bank mergers," Journal of Productivity Analysis, Springer, vol. 57(2), pages 115-130, April.
    9. Angeliki Flokou & Vassilis Aletras & Dimitris Niakas, 2017. "Decomposition of potential efficiency gains from hospital mergers in Greece," Health Care Management Science, Springer, vol. 20(4), pages 467-484, December.
    10. Xiao Shi & Yongjun Li & Ali Emrouznejad & Jianhui Xie & Liang Liang, 2017. "Estimation of potential gains from bank mergers: A novel two-stage cost efficiency DEA model," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 68(9), pages 1045-1055, September.
    11. Agrell, Per J. & Teusch, Jonas, 2020. "Predictability and strategic behavior under frontier regulation," Energy Policy, Elsevier, vol. 137(C).
    12. Per J. Agrell & Pontus Mattsson & Jonas Månsson, 2020. "Impacts on efficiency of merging the Swedish district courts," Annals of Operations Research, Springer, vol. 288(2), pages 653-679, May.
    13. Graziano Abrate & Clementina Bruno & Fabrizio Erbetta & Giovanni Fraquelli & Anna Giolitti, 2017. "Efficiency in the Consolidation of the Italian Water Sector," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 31(8), pages 2447-2463, June.
    14. Mattsson, Pontus & Tidanå, Claes, 2019. "Potential efficiency effects of merging the Swedish district courts," Socio-Economic Planning Sciences, Elsevier, vol. 67(C), pages 58-68.
    15. Arocena, Pablo & Saal, David S. & Urakami, Takuya & Zschille, Michael, 2020. "Measuring and decomposing productivity change in the presence of mergers," European Journal of Operational Research, Elsevier, vol. 282(1), pages 319-333.
    16. Gholam R. Amin & Ali Emrouznejad & Said Gattoufi, 2017. "Modelling generalized firms’ restructuring using inverse DEA," Journal of Productivity Analysis, Springer, vol. 48(1), pages 51-61, August.
    17. Chen, Zhongfei & Wanke, Peter & Tsionas, Mike G., 2018. "Assessing the strategic fit of potential M&As in Chinese banking: A novel Bayesian stochastic frontier approach," Economic Modelling, Elsevier, vol. 73(C), pages 254-263.
    18. He, Xi, 2018. "Bigger Farms and Bigger Food Firms-The Agricultural Origin of Industrial Concentration in the Food Sector," 2018 Annual Meeting, August 5-7, Washington, D.C. 274206, Agricultural and Applied Economics Association.
    19. Yung‐ho Chiu & Tai‐Yu Lin & Tzu‐Han Chang & Yi‐Nuo Lin & Shih‐Yung Chiu, 2021. "Prevaluating efficiency gains from potential mergers and acquisitions in the financial industry with the Resample Past–Present–Future data envelopment analysis approach," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(2), pages 369-384, March.
    20. Hellwig, Michael & Polk, Andreas, 2021. "Do political links influence water prices? Determinants of water prices in Germany," Utilities Policy, Elsevier, vol. 70(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:caa:jnlage:v:67:y:2021:i:6:id:418-2020-agricecon. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ivo Andrle (email available below). General contact details of provider: https://www.cazv.cz/en/home/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.