Production risk in multi-output industries: estimates from Norwegian dairy farms
Farmers 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.
|Date of creation:||2008|
|Contact details of provider:|| Web page: http://www.eaae.org|
More information through EDIRC
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.:
- Diewert, W E, 1971. "An Application of the Shephard Duality Theorem: A Generalized Leontief Production Function," Journal of Political Economy, University of Chicago Press, vol. 79(3), pages 481-507, May-June.
- Arne Hallam & Rashid M. Hassan & B. D'Silva, 1989. "Measuring Stochastic Technology for the Multi-product Firm: The Irrigated Farms of Sudan," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 37(3), pages 495-512, November.
- Murat Isik & Stephen Devadoss, 2006. "An analysis of the impact of climate change on crop yields and yield variability," Applied Economics, Taylor & Francis Journals, vol. 38(7), pages 835-844.
- Harvey, A C, 1976. "Estimating Regression Models with Multiplicative Heteroscedasticity," Econometrica, Econometric Society, vol. 44(3), pages 461-465, May.
- Asche, Frank & Tveteras, Ragnar, 1999. "Modeling Production Risk With A Two-Step Procedure," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(02), December.
- Ben Groom & Phoebe Koundouri & Celine Nauges & Alban Thomas, 2008. "The story of the moment: risk averse cypriot farmers respond to drought management," Applied Economics, Taylor & Francis Journals, vol. 40(3), pages 315-326.
- Uri Regev & Nikolaus Gotsch & Peter Rieder, 1997. "Are Fungicides, Nitrogen And Plant Growth Regulators Risk-Reducing? Empirical Evidence From Swiss Wheat Production," Journal of Agricultural Economics, Wiley Blackwell, vol. 48(1-3), pages 167-178.
- C. J. O'Donnell & W. E. Griffiths, 2006.
"Estimating State-Contingent Production Frontiers,"
American Journal of Agricultural Economics,
Agricultural and Applied Economics Association, vol. 88(1), pages 249-266.
- C.J. O'Donnell & W.E. Griffiths, 2004. "Estimating State-Contingent Production Frontiers," Department of Economics - Working Papers Series 911, The University of Melbourne.
- Chris O'Donnell & W.E. Griffiths, 2004. "Estimating State-Contingent Production Frontiers," CEPA Working Papers Series WP022004, School of Economics, University of Queensland, Australia.
- Subal C. Kumbhakar & Ragnar Tveterås, 2003. "Risk Preferences, Production Risk and Firm Heterogeneity," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(2), pages 275-293, 06.
- Lau, Lawrence J, 1972. "Profit Functions of Technologies with Multiple Inputs and Outputs," The Review of Economics and Statistics, MIT Press, vol. 54(3), pages 281-289, August.
- G. H. Wan & J. R. Anderson, 1990. "Estimating Risk Effects In Chinese Foodgrain Production," Journal of Agricultural Economics, Wiley Blackwell, vol. 41(1), pages 85-93.
- Wan, Guang H & Griffiths, William E & Anderson, Jock R, 1992. "Using Panel Data to Estimate Risk Effects in Seemingly Unrelated Production Functions," Empirical Economics, Springer, vol. 17(1), pages 35-49.
- Teresa Serra & David Zilberman & Barry K. Goodwin & Allen Featherstone, 2006. "Effects of decoupling on the mean and variability of output," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 33(3), pages 269-288, September.
- Murat Isik & Madhu Khanna, 2003. "Stochastic Technology, Risk Preferences, and Adoption of Site-Specific Technologies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(2), pages 305-317.
- Isik, Murat & Khanna, Madhu, 2002. "Stochastic Technology, Risk Preferences And Adoption Of Site-Specific Technologies," 2002 Annual meeting, July 28-31, Long Beach, CA 19858, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
- Greg Traxler & Jose Falck-Zepeda & J.I. Ortiz-Monasterio R. & Ken Sayre, 1995. "Production Risk and the Evolution of Varietal Technology," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 77(1), pages 1-7.
- Just, Richard E., 2003. "Risk research in agricultural economics: opportunities and challenges for the next twenty-five years," Agricultural Systems, Elsevier, vol. 75(2-3), pages 123-159.
- Hadar, Josef & Russell, William R, 1969. "Rules for Ordering Uncertain Prospects," American Economic Review, American Economic Association, vol. 59(1), pages 25-34, March.
- Kumbhakar, Sabul C., 1993. "Production risk, technical efficiency, and panel data," Economics Letters, Elsevier, vol. 41(1), pages 11-16.
- Antle, John M, 1983. "Testing the Stochastic Structure of Production: A Flexible Moment-based Approach," Journal of Business & Economic Statistics, American Statistical Association, vol. 1(3), pages 192-201, July.
- Sergio H. Lence, 2000. "Using Consumption and Asset Return Data to Estimate Farmers' Time Preferences and Risk Attitudes," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(4), pages 934-947.
- Mundlak, Yair, 2001. "Production and supply," Handbook of Agricultural Economics,in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 1, pages 3-85 Elsevier.
- Lence, Sergio H., 2000. "Using Consumption and Asset Return Data to Estimate Farmersï¾’ Time Preferences and Risk Attitudes," Staff General Research Papers Archive 1930, Iowa State University, Department of Economics.
- G. Hanoch & H. Levy, 1969. "The Efficiency Analysis of Choices Involving Risk," Review of Economic Studies, Oxford University Press, vol. 36(3), pages 335-346.
- Chavas, Jean-Paul & Holt, Matthew T, 1996. "Economic Behavior under Uncertainty: A Joint Analysis of Risk Preferences and Technology," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 329-335, May.
- Salvatore Di Falco & Jean-Paul Chavas & Melinda Smale, 2007. "Farmer management of production risk on degraded lands: the role of wheat variety diversity in the Tigray region, Ethiopia," Agricultural Economics, International Association of Agricultural Economists, vol. 36(2), pages 147-156, 03.
- Breusch, T S & Pagan, A R, 1979. "A Simple Test for Heteroscedasticity and Random Coefficient Variation," Econometrica, Econometric Society, vol. 47(5), pages 1287-1294, September.
- Howard, Donald D. & English, Burton C. & Larson, James A. & Roberts, Roland K. & Walters, Jeremy T., 2004. "Effects Of Risk, Disease, And Nitrogen Source On Optimal Nitrogen Fertilization Rates In Winter Wheat Production," 2004 Annual Meeting, February 14-18, 2004, Tulsa, Oklahoma 34688, Southern Agricultural Economics Association.
- Just, Richard E. & Pope, Rulon D., 1978. "Stochastic specification of production functions and economic implications," Journal of Econometrics, Elsevier, vol. 7(1), pages 67-86, February.
- Jean-Paul Chavas, 2008. "A Cost Approach to Economic Analysis Under State-Contingent Production Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(2), pages 435-466. Full references (including those not matched with items on IDEAS)