Reducing Non-allocative Costs on Danish Dairy Farms: Application of Non-parametric Methods

Mogens Lund, Brian Jacobsen and Lars C E Hansen

European Review of Agricultural Economics, 1993, vol. 20, issue 3, 327-41

Abstract: Non-allocative costs for 248 Danish dairy farms are evaluated against the "best management practice" using Farrell-type efficiency ratings. The average potential cost saving is estimated to 134,800 kr., or 19 percent of the total non-allocative costs per dairy farm. The findings suggest that pure cost inefficiencies are far more important for dairy farms than inefficiencies due to sub-optimal farm size. Non-proportional reductions are shown to be as important as reductions due to scale economies. The paper closes with a discussion of the implications for farm policy and management practice. Copyright 1993 by Oxford University Press.

Date: 1993
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