Technical, Allocative, and Economic Efficiency in Swedish Dairy Farms: The Data Envelopment Analysis Versus the Stochastic Frontier Approach

Helena Johansson

38 citations0/0 files storedRePEc: Research Papers in Economics

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Efficiency Analysis Using DEA Agricultural economics and policies Sustainable Agricultural Systems Analysis

Abstract

Technical, allocative, and economic input efficiency scores were estimated for an unbalanced panel of Swedish dairy farms, using data envelopment analysis (DEA) and the stochastic frontier approach (SFA). By comparing the results it was concluded that when the entire dairy farm is studied the DEA is more appropriate to use since it does not require any particular parametric form to be chosen. The average DEA technical, allocative and economic efficiency indices were eventually found to be 0.77, 0.57, and 0.43 respectively. The influence of size on the efficiency scores was analyzed and significant evidence indicating a positive relationship between size and efficiency was found. Finally it was concluded that the main challenge facing the Swedish dairy farms is to enhance their cost minimizing skills.

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References

1978Measuring the efficiency of decision making units 1957The Measurement of Productive Efficiency 1977Formulation and estimation of stochastic frontier production function models 1998An Introduction to Efficiency and Productivity Analysis 1992Frontier production functions, technical efficiency and panel data: With application to paddy farmers in India 1995RECENT DEVELOPMENTS IN FRONTIER MODELLING AND EFFICIENCY MEASUREMENT 1999A comparison of parametric and non-parametric distance functions: With application to European railways 1997Evaluating the cost-efficiency of the Italian banking system: What can be learned from the joint application of parametric and non-parametric techniques

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