Vertical Economies of Scope for Organic and Conventional Dairy Farms in the United States
Carlos D. Mayen,
Joseph Balagtas () and
No 49409, 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin from Agricultural and Applied Economics Association
Studies of dairy farm structure have neglected issues of vertical organization of the farm. In this study we model and measure the potential for dairy farms to reduce costs of production through vertical integration. We estimate a multi-stage, multi-output cost function to assess vertical economies of scope in organic and conventional dairy farms. We model the cost of producing grains and forages, which are then used as inputs in the production of milk. We find negligible vertical economies of scope for conventional dairy farms. In contrast, we find significant vertical economies of scope in organic dairy production, suggesting that there is an economic incentive for vertical integration into feed production. The large vertical economies of scope for organic dairy farms are consistent with higher costs of obtaining organic feed through market transactions associated with an underdeveloped market for organic feeds.
Keywords: Livestock Production/Industries; Production Economics (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://ageconsearch.umn.edu/record/49409/files/AAE ... 0United%20States.pdf (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea09:49409
Access Statistics for this paper
More papers in 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin from Agricultural and Applied Economics Association Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().