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Efficient Innovation in Dairy Production - Empirical Findings for Germany


  • Sauer, Johannes
  • Latacz-Lohmann, Uwe


This empirical study aims to shed light on the dynamic linkages between innovation and efficiency at individual farm level. We use a comprehensive dataset for dairy farms in Germany for the period 1995 to 2010. Based on a directional distance function framework we estimate the changes in efficiency, technical change and productivity over the period considered. In a second step we then investigate possible factors for technically efficient milk production at farm level before we finally try to identify those farms that are capable of translating investments in innovative technologies into actual efficiency gains over time applying a multinomial logit approach. Our empirical findings reveal that investments in innovative dairy technologies are only reflected in higher profitability if sufficient Know-How for the efficient use of these innovations is available.

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  • Sauer, Johannes & Latacz-Lohmann, Uwe, 2012. "Efficient Innovation in Dairy Production - Empirical Findings for Germany," 52nd Annual Conference, Stuttgart, Germany, September 26-28, 2012 137386, German Association of Agricultural Economists (GEWISOLA).
  • Handle: RePEc:ags:gewi12:137386

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    References listed on IDEAS

    1. Johannes Sauer & Matthew Gorton & John White, 2012. "Marketing, cooperatives and price heterogeneity: evidence from the CIS dairy sector," Agricultural Economics, International Association of Agricultural Economists, vol. 43(2), pages 165-177, March.
    2. Foster, Andrew D & Rosenzweig, Mark R, 1995. "Learning by Doing and Learning from Others: Human Capital and Technical Change in Agriculture," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1176-1209, December.
    3. Kim, Kwansoo & Chavas, Jean-Paul, 2003. "Technological change and risk management: an application to the economics of corn production," Agricultural Economics, Blackwell, vol. 29(2), pages 125-142, October.
    4. Rolf Färe & Carlos Martins-Filho & Michael Vardanyan, 2010. "On functional form representation of multi-output production technologies," Journal of Productivity Analysis, Springer, vol. 33(2), pages 81-96, April.
    5. Cornelis Gardebroek, 2006. "Comparing risk attitudes of organic and non-organic farmers with a Bayesian random coefficient model," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 33(4), pages 485-510, December.
    6. Rolf Färe & Shawna Grosskopf, 2000. "Theory and Application of Directional Distance Functions," Journal of Productivity Analysis, Springer, vol. 13(2), pages 93-103, March.
    7. Johannes Sauer & David Zilberman, 2012. "Sequential technology implementation, network externalities, and risk: the case of automatic milking systems," Agricultural Economics, International Association of Agricultural Economists, vol. 43(3), pages 233-252, May.
    8. Furtan, William Hartley & Sauer, Johannes, 2008. "Determinants of Food Industry Performance – Empirical Evidence Based on a Survey," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6422, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    9. Bernhard Brümmer & Thomas Glauben & Geert Thijssen, 2002. "Decomposition of Productivity Growth Using Distance Functions: The Case of Dairy Farms in Three European Countries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(3), pages 628-644.
    10. Chambers, Robert G. & Chung, Yangho & Fare, Rolf, 1996. "Benefit and Distance Functions," Journal of Economic Theory, Elsevier, vol. 70(2), pages 407-419, August.
    11. Johannes Sauer, 2010. "Deregulation and dairy production systems: a Bayesian distance function approach," Journal of Productivity Analysis, Springer, vol. 34(3), pages 213-237, December.
    12. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-332.
    13. Kumbhakar,Subal C. & Lovell,C. A. Knox, 2003. "Stochastic Frontier Analysis," Cambridge Books, Cambridge University Press, number 9780521666633, March.
    14. Awudu Abdulai & Hendrik Tietje, 2007. "Estimating technical efficiency under unobserved heterogeneity with stochastic frontier models: application to northern German dairy farms," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 34(3), pages 393-416, September.
    15. Feder, Gershon & Just, Richard E & Zilberman, David, 1985. "Adoption of Agricultural Innovations in Developing Countries: A Survey," Economic Development and Cultural Change, University of Chicago Press, vol. 33(2), pages 255-298, January.
    16. Scott E. Atkinson & Rolf Färe & Daniel Primont, 2003. "Stochastic Estimation of Firm Inefficiency Using Distance Functions," Southern Economic Journal, Southern Economic Association, vol. 69(3), pages 596-611, January.
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    More about this item


    Innovation; Efficiency; Dairy Farming; Microeconometrics; Innovation; Effizienz; Milchproduktion; Mikroökonometrie; Livestock Production/Industries; Q12; D24; C23;

    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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