Production risk in multi-output industries: estimates from Norwegian dairy farms

Ragnar Tveterås (), Ola Flaten and Gudbrand D. Lien

No 43958, 2008 International Congress, August 26-29, 2008, Ghent, Belgium from European Association of Agricultural Economists

Abstract: Farmers who produce multiple outputs are portfolio managers in the sense that they use inputs to balance expected economic return and variance of return. This paper estimates the structure of the stochastic multi-output production technology in Norwegian dairy farming, allowing for a more flexible specification of the technology than previous studies. We find that an increase in input levels leads primarily to higher output variability, and that inputs also influence the covariance of shocks between outputs. Risk-reducing effects of inputs on outputs are primarily present in the covariance functions. Technical change leads to shifts in the profit distribution over the data period, but no welfare improvement for risk-averse farmers.

Keywords: Agribusiness; Livestock Production/Industries (search for similar items in EconPapers)
Pages: 14
Date: 2008
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:eaae08:43958

DOI: 10.22004/ag.econ.43958

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