U.S. Dairy Farm Cost Efficiency
A stochastic cost efficiency equation was estimated for the U.S. dairy industry using national data from the production year 2000. The cost of producing a unit of milk was estimated into separate frontier and efficiency components, with both components estimated as a function of causation variables. Variables that might influence the cost of production and cost efficiency of an individual dairy farm were entered as impacting the frontier component as well as the efficiency component of the stochastic curve since a prior both components could be impacted. The factor that has the greatest impact on the cost curve frontier is the number of hours a day the milking facility is used. Using the milking facility more hours per day decreased frontier costs. However, inefficiency increased with increased hours of milking facility use, such that there was no net reduction in costs. Thus farmers can decrease costs with increased utilization of the milking facility, but only if they are efficient in this strategy. Age increased cost of production since older farmers were less efficient. Parlors used for milking as compared to stanchion milking did not decrease frontier costs, but did decrease costs because of increased efficiency, as did the use of a feed nutritionist. Use of rotational grazing decreased frontier costs but also increased fixed cost inefficiency, with a net reduction in cost of production per cwt. of milk sold.
|Date of creation:||2005|
|Date of revision:|
|Contact details of provider:|| Postal: Warren Hall, Ithaca NY 14853|
Web page: http://aem.cornell.edu/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Tauer, Loren W. & Mishra, Ashok K., 2003.
"Can the Small Dairy Farm Remain Competitive in U.S. Agriculture?,"
127239, Cornell University, Department of Applied Economics and Management.
- Tauer, Loren W. & Mishra, Ashok K., 2006. "Can the small dairy farm remain competitive in US agriculture?," Food Policy, Elsevier, vol. 31(5), pages 458-468, October.
- Wang, Hung-jen & Schmidt, Peter, 2001.
"One-step and two-step estimation of the effects of exogenous variables on technical efficiency levels,"
31075, University Library of Munich, Germany, revised Mar 2002.
- Hung-jen Wang & Peter Schmidt, 2002. "One-Step and Two-Step Estimation of the Effects of Exogenous Variables on Technical Efficiency Levels," Journal of Productivity Analysis, Springer, vol. 18(2), pages 129-144, September.
- Hung-Jen Wang, 2002.
"Heteroscedasticity and Non-Monotonic Efficiency Effects of a Stochastic Frontier Model,"
Journal of Productivity Analysis,
Springer, vol. 18(3), pages 241-253, November.
- Wang, Hung-Jen, 2002. "Heteroscedasticity and non-monotonic efficiency effects of a stochastic frontier model," MPRA Paper 31076, University Library of Munich, Germany.
- Aigner, Dennis & Lovell, C. A. Knox & Schmidt, Peter, 1977. "Formulation and estimation of stochastic frontier production function models," Journal of Econometrics, Elsevier, vol. 6(1), pages 21-37, July.
- Jondrow, James & Knox Lovell, C. A. & Materov, Ivan S. & Schmidt, Peter, 1982. "On the estimation of technical inefficiency in the stochastic frontier production function model," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 233-238, August.
When requesting a correction, please mention this item's handle: RePEc:ags:cudawp:127079. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If references are entirely missing, you can add them using this form.