IDEAS home Printed from https://ideas.repec.org/a/oup/erevae/v49y2022i2p433-471..html
   My bibliography  Save this article

Rationalising inefficiency in dairy production: evidence from an over-time approach

Author

Listed:
  • Birhanu Addisu Adamie
  • Helena Hansson

Abstract

We argue that inefficiency can be part of a strategic self-repositioning adjustment process beyond the general interpretation of poor performance. Based on the rational inefficiency hypothesis, we examine the simultaneous dynamics of efficiency and animal welfare improving investments over time in dairy farms. Using rotating panel data from Swedish dairy farms and implementing multidirectional efficiency analysis and Markov transitional dynamic analysis, the paper provides evidence that for some farms inefficiency is temporary and part of rational decision along their trajectory towards multi-efficiency (high efficiency-high animal welfare). The findings show the importance of time dynamics in efficiency achievements with implications to cross-sectional view.

Suggested Citation

  • Birhanu Addisu Adamie & Helena Hansson, 2022. "Rationalising inefficiency in dairy production: evidence from an over-time approach," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 49(2), pages 433-471.
    • Handle: RePEc:oup:erevae:v:49:y:2022:i:2:p:433-471.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/erae/jbaa034
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    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. Jayson L. Lusk & F. Bailey Norwood, 2011. "Animal Welfare Economics," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 33(4), pages 463-483.
    2. Trip, G. & Thijssen, G. J. & Renkema, J. A. & Huirne, R. B. M., 2002. "Measuring managerial efficiency: the case of commercial greenhouse growers," Agricultural Economics, Blackwell, vol. 27(2), pages 175-181, August.
    3. 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.
    4. Hansson, Helena & Lagerkvist, Carl Johan, 2015. "Identifying use and non-use values of animal welfare: Evidence from Swedish dairy agriculture," Food Policy, Elsevier, vol. 50(C), pages 35-42.
    5. Ioannis Skevas & Grigorios Emvalomatis & Bernhard Brümmer, 2018. "Heterogeneity of Long†run Technical Efficiency of German Dairy Farms: A Bayesian Approach," Journal of Agricultural Economics, Wiley Blackwell, vol. 69(1), pages 58-75, February.
    6. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    7. Carin W. Rougoor & Ger Trip & Ruud B.M. Huirnc & Jan A. Renkema, 1998. "How to define and study farmers' management capacity: theory and use in agricultural economics," Agricultural Economics, International Association of Agricultural Economists, vol. 18(3), pages 261-272, May.
    8. Helena Hansson & Gordana Manevska-Tasevska & Mette Asmild, 2020. "Rationalising inefficiency in agricultural production – the case of Swedish dairy agriculture [Formulation and estimation of stochastic frontier production function models]," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 47(1), pages 1-24.
    9. Sophia Davidova & Laure Latruffe, 2007. "Relationships between Technical Efficiency and Financial Management for Czech Republic Farms," Journal of Agricultural Economics, Wiley Blackwell, vol. 58(2), pages 269-288, June.
    10. Peter Bogetoft & Jens Hougaard, 2003. "Rational Inefficiencies," Journal of Productivity Analysis, Springer, vol. 20(3), pages 243-271, November.
    11. Carl Johan Lagerkvist & Helena Hansson & Sebastian Hess & Ruben Hoffman, 2011. "Provision of Farm Animal Welfare: Integrating Productivity and Non-Use Values," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 33(4), pages 484-509.
    12. Laure Latruffe & Céline Nauges, 2014. "Technical efficiency and conversion to organic farming: the case of France," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 41(2), pages 227-253.
    13. 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, September.
    14. Asmild, Mette & Bogetoft, Peter & Leth Hougaard, Jens, 2013. "Rationalising inefficiency: Staff utilisation in branches of a large Canadian bank," Omega, Elsevier, vol. 41(1), pages 80-87.
    15. Gordana Manevska‐Tasevska & Helena Hansson, 2011. "Does Managerial Behavior Determine Farm Technical Efficiency? A Case of Grape Production in an Economy in Transition," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 32(6), pages 399-412, September.
    16. Mette Asmild & Jens Hougaard & Dorte Kronborg & Hans Kvist, 2003. "Measuring Inefficiency Via Potential Improvements," Journal of Productivity Analysis, Springer, vol. 19(1), pages 59-76, January.
    17. Rougoor, Carin W. & Trip, Ger & Huirne, Ruud B. M. & Renkema, Jan A., 1998. "How to define and study farmers' management capacity: theory and use in agricultural economics," Agricultural Economics, Blackwell, vol. 18(3), pages 261-272, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Laure Latruffe & Andreas Niedermayr & Yann Desjeux & K Herve Dakpo & Kassoum Ayouba & Lena Schaller & Jochen Kantelhardt & Yan Jin & Kevin Kilcline & Mary Ryan & Cathal O’Donoghue, 2023. "Identifying and assessing intensive and extensive technologies in European dairy farming," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 50(4), pages 1482-1519.

    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. Schulte, Hinrich D. & Armbrecht, Linda & Bürger, Rasmus & Gauly, Matthias & Musshoff, Oliver & Hüttel, Silke, 2018. "Let the cows graze: An empirical investigation on the trade-off between efficiency and farm animal welfare in milk production," Land Use Policy, Elsevier, vol. 79(C), pages 375-385.
    2. Kelly, E & Shalloo, L & Geary, U & Kinsella, A. & Thorne, F & Wallace, M, 2013. "An analysis of the factors associated with technical and scale efficiency of Irish dairy farms," International Journal of Agricultural Management, Institute of Agricultural Management, vol. 2(3), pages 1-11, April.
    3. Nicola GALLUZZO, 2023. "An Analysis Of Crop Costs In Italian Nitrate Vulnerable Areas And Agri-Environmental Subsidies," Agricultural Economics and Rural Development, Institute of Agricultural Economics, vol. 20(1), pages 15-28.
    4. Leduc, Gaëlle & Billaudet, Larissa & Engström, Ebba & Hansson, Helena & Ryan, Mary, 2023. "Farmers' perceived values in conventional and organic farming: A comparison between French, Irish and Swedish farmers using the Means-end chain approach," Ecological Economics, Elsevier, vol. 207(C).
    5. Läpple, Doris & Osawe, Osayanmon Wellington, 2022. "Animal Welfare, Altruism and Policy Support," 96th Annual Conference, April 4-6, 2022, K U Leuven, Belgium 321212, Agricultural Economics Society - AES.
    6. Mohamed Ghali & Laure Latruffe & Karine Daniel, 2016. "Efficient Use of Energy Resources on French Farms: An Analysis through Technical Efficiency," Energies, MDPI, vol. 9(8), pages 1-15, July.
    7. repec:cmj:journl:y:2013:i:27:popovicimc is not listed on IDEAS
    8. Mergenthaler, Marcus & Schröter, Iris, 2020. "Institutionelle Grenzen und Perspektiven bei der ökonomischen Bewertung und der Bereitstellung von Tierwohl," 60th Annual Conference, Halle/ Saale, Germany, September 23-25, 2020 305598, German Association of Agricultural Economists (GEWISOLA).
    9. Galluzzo Nicola, 2020. "A Technical Efficiency Analysis of Financial Subsidies Allocated by the Cap in Romanian Farms Using Stochastic Frontier Analysis," European Countryside, Sciendo, vol. 12(4), pages 494-505, December.
    10. Silvia Macchia, 2022. "Unbundling the information needs of new-generation agricultural companies," MANAGEMENT CONTROL, FrancoAngeli Editore, vol. 2022(2 Suppl.), pages 117-141.
    11. Hampf, Benjamin, 2017. "Rational inefficiency, adjustment costs and sequential technologies," European Journal of Operational Research, Elsevier, vol. 263(3), pages 1095-1108.
    12. Yiorgos Gadanakis & Jorge Campos-González & Philip Jones, 2024. "Linking Entrepreneurship to Productivity: Using a Composite Indicator for Farm-Level Innovation in UK Agriculture with Secondary Data," Agriculture, MDPI, vol. 14(3), pages 1-23, March.
    13. de Souza Filho, Hildo Meirelles & Carrer, Marcelo José & Saes, Maria Sylvia Macchione & Gomes, Leonardo Augusto de Vasconcelos & Nicolella, Alexandre Chibebe, 2019. "Performance heterogeneity and strategic orientation: An analysis of small farmers of an agrarian reform project in Brazil," Land Use Policy, Elsevier, vol. 86(C), pages 23-30.
    14. Mergenthaler, Marcus & Schröter, Iris, 2020. "Institutionelle Grenzen und Perspektiven bei der ökonomischen Bewertung und der Bereitstellung von Tierwohl," 60th Annual Conference, Halle/ Saale, Germany, September 23-25, 2020 305598, German Association of Agricultural Economists (GEWISOLA).
    15. Baležentis, Tomas & De Witte, Kristof, 2015. "One- and multi-directional conditional efficiency measurement – Efficiency in Lithuanian family farms," European Journal of Operational Research, Elsevier, vol. 245(2), pages 612-622.
    16. Mihăiță-Cosmin M. POPOVICI, 2013. "A Survey On Bank Efficiency Research With Data Envelopment Analysis And Stochastic Frontier Analysis," SEA - Practical Application of Science, Romanian Foundation for Business Intelligence, Editorial Department, issue 1, pages 134-142, June.
    17. Asmild, Mette & Matthews, Kent, 2012. "Multi-directional efficiency analysis of efficiency patterns in Chinese banks 1997–2008," European Journal of Operational Research, Elsevier, vol. 219(2), pages 434-441.
    18. Galanopoulos, Konstantinos & Aggelopoulos, Stamatis & Kamenidou, Irene & Mattas, Konstadinos, 2006. "Assessing the effects of managerial and production practices on the efficiency of commercial pig farming," Agricultural Systems, Elsevier, vol. 88(2-3), pages 125-141, June.
    19. Julia A. Schreiner & Sebastian Hess, 2017. "The Role of Non-Use Values in Dairy Farmers’ Willingness to Accept a Farm Animal Welfare Programme," Journal of Agricultural Economics, Wiley Blackwell, vol. 68(2), pages 553-578, June.
    20. Lucyna Błażejczyk-Majka & Radosław Kala & Krzysztof Maciejewski, 2012. "Productivity and efficiency of large and small field crop farms and mixed farms of the old and new EU regions," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 58(2), pages 61-71.
    21. Asmild, Mette & Kronborg, Dorte & Matthews, Kent, 2016. "Introducing and modeling inefficiency contributions," European Journal of Operational Research, Elsevier, vol. 248(2), pages 725-730.

    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:oup:erevae:v:49:y:2022:i:2:p:433-471.. 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: Oxford University Press (email available below). General contact details of provider: https://edirc.repec.org/data/eaaeeea.html .

    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.