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Estimation of Firm-Varying, Input-Specific Efficiencies in Dairy Production

Published online by Cambridge University Press:  10 May 2017

Daniel A. Lass  and
Conrado M. Gempesaw II
Daniel A. Lass
Affiliation:
Department of Resource Economics, University of Massachusetts, Amherst
Conrado M. Gempesaw II
Affiliation:
Delaware Agricultural Experiment Station, Department of Food and Resource Economics, College of Agricultural Sciences, University of Delaware, Newark
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Firm-varying production technologies were estimated using random coefficients regression methods for a sample of Massachusetts dairy farms. Results were compared to OLS Cobb-Douglas production function estimates. The random coefficients regression model was found to virtually eliminate conventionally measured firm technical inefficiencies by estimating individual firm technologies and ascribing remaining inefficiencies to specific inputs. Input-specific measures of firm inefficiencies showed hired labor, land, and machinery inputs to be used in excess of efficient levels. Livestock supplies were underutilized by all farms. Efficiencies of feed, crop materials, fuels, and utilities varied, although estimated means were closer to optimal levels.

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Articles
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Northeastern Journal of Agricultural and Resource Economics , Volume 21 , Issue 2 , October 1992 , pp. 142 - 150
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Copyright © 1992 Northeastern Agricultural and Resource Economics Association 

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Footnotes

Published as Miscellaneous Paper no. 1446 of the Delaware Experiment Station. Comments of the editor and two anonymous reviewers are gratefully acknowledged. We also thank Dr. P.A.V.B. Swamy, Federal Reserve Board, for allowing us to use the SWAMSLEY program. This research was partially supported by USDA-ERS cooperative agreement no. 43-3AEM-0-80062.

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