Decomposing dynamic profit inefficiency of Belgian dairy farms. (21st September 2017)

• Record Type: Journal Article
• Authors: Ang, Frederic; Oude Lansink, Alfons
• Is Part Of: European review of agricultural economics. Volume 45:Number 1(2018)
• Page Start: 81
• Page End: 99
• Publication Date: 2017-09-21
• Subjects: distance function -- dynamic efficiency -- dairy sector; Agriculture -- Economic aspects -- Periodicals; Agriculture -- Economic aspects -- Europe -- Periodicals; 338.109405
• DOI: 10.1093/erae/jbx024
• Languages: English
• ISSNs: 0165-1587

Abstract

Abstract: This paper introduces a nonparametric framework for analysing dynamic profit inefficiency and applies this to a sample of Belgian, specialised dairy farms from 1996 to 2008. Profit inefficiency is decomposed into technical and allocative inefficiency. The paper also decomposes profit inefficiency into the contributions of output, input, and investment. Finally, the paper identifies the contributions of technical and allocative inefficiency in output, input and investment. The results suggest substantial profit inefficiency under the dairy-quota system, mainly driven by allocative inefficiency of variable input use and output production.