Farm Inefficiency Resulting from the Missing Management Input
Byma, Justin P.; Tauer, Loren W.
We use DEA (Data Envelopment Analysis) techniques to determine if measured inefficiencies are caused by a missing management input. We replace the quantity of operators’ labor with estimates of the value of labor and management, and then with net farm income from the previous year, to determine if those replacements for operator labor changes calculated efficiencies. We calculate not only technical efficiencies, but also cost and revenue efficiencies and decompose them into allocative efficiencies. The empirical results are disappointing, in that our management inputs make little impact on measured inefficiencies. Very few articles have measured technical, cost, and revenue efficiency in the same study, and then not with a 10 year panel data set. Many may be interested in the estimates of DEA efficiencies on these dairy farms over the 10 years using the various specifications
WP 2007-06 April 2007
Charles H. Dyson School of Applied Economics and Management, Cornell University
dairy farms; data envelopment analysis; efficiency; management input