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Technical efficiency of US dairy farms and federal government programs

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  • Olga Murova
  • Benaissa Chidmi

Abstract

In this article, Technical Efficiency (TE) of dairy farms is estimated and analysed with two methodologies: Data Envelopment Analysis (DEA) and Stochastic Frontier Analysis (SFA). Using DEA, the TE scores for different states are determined. Further, logistic regression is applied to TE scores to explain how known technical and policy variables affect a farm's probability of being efficient. The second methodology employs SFA to estimate and analyse TE scores. Two federal milk policies are considered in this research: marketing policy and milk income loss policy. Federal milk marketing program has shown a significant and negative impact on TE with both methods. Payments under the milk income loss program have shown a positive significant impact in SFA analysis. Both methodologies produced similar outcomes on regional impacts and on the significance of several considered variables. Categorical representation of some variables in graphs provided some additional insights of their effects on TE.

Suggested Citation

  • Olga Murova & Benaissa Chidmi, 2013. "Technical efficiency of US dairy farms and federal government programs," Applied Economics, Taylor & Francis Journals, vol. 45(7), pages 839-847, March.
  • Handle: RePEc:taf:applec:45:y:2013:i:7:p:839-847 DOI: 10.1080/00036846.2011.613772
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    Cited by:

    1. Asante, Bright Owusu & Villano, Renato A. & Battese, George E., 2014. "The effect of the adoption of yam minisett technology on the technical efficiency of yam farmers in the forest-savanna transition zone of Ghana," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 9(2), April.

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