IDEAS home Printed from https://ideas.repec.org/p/ags/aaea16/237347.html
   My bibliography  Save this paper

Evaluation of Dairy Farm Technical Efficiency: Production of Milk Components as Output Measures

Author

Listed:
  • Zeng, Shuwei
  • Gould, Brian
  • Du, Xiaodong

Abstract

Under the Federal Milk Marketing Order (FMMO) and California milk pricing systems, minimum milk values are determined by the value of components important in dairy product manufacturing. This implies that milk values will vary across farms due to different solids composition (fat, protein and other solids) delivering to the same processing plant. Milk composition can be managed by farm operators by a number of management activities such as: breed choice, number of lactations to keep a cow in the milking herd, ration formulations, feeding management, whether to milk 2 or 3 times daily, and cow comfort. Given the milk pricing systems used for a majority of raw milk in the U.S., dairy farm operators are faced with an environment of maximize profits via a multi-output production function, (i.e., production of milk components). Previous analysis of dairy farm efficiency has typically used the total amount of milk produced (cwt of lbs) as a measure of output, not the production of its components. In this paper, we use hedonic aggregation functions to generate output indices in the evaluation of an input-oriented distance function. We use data from the 2005 USDA Agricultural Resource Management Survey (ARMS)-Dairy Survey for this analysis. A unique feature of the 2005 survey is that it contains information on the annual amount of milkfat and protein produced by the milking herd. From this analysis we find that the estimated technical efficiency when using component amounts as output measures has less variance, but larger range, compared to the method using milk yield as output. A majority of dairy operations generate technical efficiency measures of more than 9.0 (with 1.00 being the possible maximum.

Suggested Citation

  • Zeng, Shuwei & Gould, Brian & Du, Xiaodong, 2016. "Evaluation of Dairy Farm Technical Efficiency: Production of Milk Components as Output Measures," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 237347, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea16:237347
    DOI: 10.22004/ag.econ.237347
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/237347/files/Zeng_%20Gould%20and%20Du_2016.pdf
    Download Restriction: no

    File URL: https://libkey.io/10.22004/ag.econ.237347?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

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


    Cited by:

    1. Zeng, Shuwei & Gould, Brian & Thorne, Fiona & Laepple, Doris, "undated". "EU Milk Quota Elimination: Has the Productivity of Irish Dairy Farms Been Impacted?," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 261218, Agricultural and Applied Economics Association.
    2. Zeng, Shuwei & Du, Xiaodong & Gould, Brian, "undated". "Input/Output Measures and Implication for Productivity Estimates," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 261217, Agricultural and Applied Economics Association.

    More about this item

    Keywords

    Farm Management; Industrial Organization; Livestock Production/Industries; Production Economics; Productivity Analysis;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:ags:aaea16:237347. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaeaaea.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.