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Dynamic Profit Inefficiency: A DEA Application to Belgian Dairy Farms

Frederic Ang and Alfons Oude Lansink ()

No 165693, Working Papers from Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics

Abstract: Using a nonparametric framework, we analyze dynamic profit inefficiency for a sample of Belgian, specialized dairy farms from 1996–2008. Profit inefficiency is decomposed into contributions of output, input, and investment. Moreover, we identify the contributions of technical and allocative inefficiency in each input and output. The results suggest substantial profit inefficiency under the current dairy-quota system, mainly driven by an average underproduction of approximately 50 percent and an average underuse of variable inputs of approximately 60 percent, due to allocative inefficiency. Consequently, abolishing the dairy-quota system in 2015 may considerably increase demand for variable inputs and supply of output.

Keywords: Agribusiness; Farm Management (search for similar items in EconPapers)
Pages: 22
Date: 2014-03
New Economics Papers: this item is included in nep-eff
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Persistent link: https://EconPapers.repec.org/RePEc:ags:kucawp:165693

DOI: 10.22004/ag.econ.165693

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