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Herd Size And Unit Costs Of Production In The England And Wales Dairy Sector

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  • S. M. Mukhtar
  • P. J. Dawson

Abstract

This paper examines the relationship between herd size and unit costs of production in the England and Wales dairy sector. Following the two‐stage estimation procedure of Dawson & Hubbard (1987), longrun average cost (LAC) functions are estimated from cross‐section data for five separate years between 1976/7 and 1986/7. Results show that the LAC curves are U‐shaped but highly skewed, implying that considerable economies of size are present at low output levels but diseconomies at larger levels are much less marked. Over time, technological change in particular has been shifting the LAC curves downward and to the right and away from the sector's long‐run equilibrium. The differential shift of cost curves, depending on the size of production, implies that technological change has been biased in favour of larger herds.

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  • S. M. Mukhtar & P. J. Dawson, 1990. "Herd Size And Unit Costs Of Production In The England And Wales Dairy Sector," Journal of Agricultural Economics, Wiley Blackwell, vol. 41(1), pages 9-20, January.
    • Handle: RePEc:bla:jageco:v:41:y:1990:i:1:p:9-20
    DOI: 10.1111/j.1477-9552.1990.tb00615.x
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    References listed on IDEAS

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    1. D. R. Harvey & L. J. Hubbard, 1984. "A Comparative Static Analysis of Welfare Impacts of Supply-Restricting Marketing Boards: A Comnent," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 32(3), pages 570-574, November.
    2. Currie, John Martin & Murphy, John A & Schmitz, Andrew, 1971. "The Concept of Economic Surplus and its Use in Economic Analysis," Economic Journal, Royal Economic Society, vol. 81(324), pages 741-799, December.
    3. Ferguson, C E & Saving, Thomas R, 1969. "Long-Run Scale Adjustments of a Perfectly Competitive Firm and Industry," American Economic Review, American Economic Association, vol. 59(5), pages 774-783, December.
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    1. Rosa, Franco & Vasciaveo, Michaela, 2013. "Imperfect Competition in the Italian Dairy Chain: Consequences for the Price Transmission and Welfare Distribution," 2013 International European Forum, February 18-22, 2013, Innsbruck-Igls, Austria 164747, International European Forum on System Dynamics and Innovation in Food Networks.
    2. Hervé Guyomard & Xavier Delache & Xavier Irz & Louis‐Pascal Mane, 1996. "A Microeconometric Analysis Of Milk Quota Transfer: Application To French Producers," Journal of Agricultural Economics, Wiley Blackwell, vol. 47(1‐4), pages 206-223, January.
    3. Rosa, Franco & Weaver, Robert D. & Vasciaveo, Michela, 2015. "Structural Changes and Dairy Chain Efficiency in Italy," International Journal on Food System Dynamics, International Center for Management, Communication, and Research, vol. 6(3), pages 1-21, July.
    4. David Colman & Michael Burton & Dan Rigby & Jeremy Franks, 2002. "Structural Change and Policy Reform in the UK Dairy Sector," Journal of Agricultural Economics, Wiley Blackwell, vol. 53(3), pages 645-663, November.
    5. Loyland, Knut & Ringstad, Vidar, 2000. "Gains and structural effects of exploiting scale-economies in Norwegian dairy production," Agricultural Economics, Blackwell, vol. 24(2), pages 149-166, January.
    6. G. Karagiannis & P. Midmore & V. Tzouvelekas, 2002. "Separating Technical Change from Time-Varying Technical Inefficiency in the Absence of Distributional Assumptions," Journal of Productivity Analysis, Springer, vol. 18(1), pages 23-38, July.
    7. L. J. Hubbard, 1993. "Long‐Run Average Cost Curves In The England And Wales Dairy Sector," Journal of Agricultural Economics, Wiley Blackwell, vol. 44(1), pages 144-148, January.
    8. Fertő, Imre, 2002. "A mezőgazdasági termelés szerkezetének változásai a fejlett országokban, II. Az üzemnagyság és a mérethozadék problémája a mezőgazdaságban [Changes in the structure of agricultural production in th," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(9), pages 760-773.
    9. Bailey, A. & Williams, N. & Palmer, M. & Geering, R., 2000. "The farmer as service provider: the demand for agricultural commodities and equine services," Agricultural Systems, Elsevier, vol. 66(3), pages 191-204, December.
    10. M. P. Burton & A. Ozanne & C. Collinson, 1993. "Long‐Run Average Cost Curves In The England And Wales Dairy Industry‐Comment," Journal of Agricultural Economics, Wiley Blackwell, vol. 44(3), pages 502-506, September.
    11. Wilson, Paul & Harper, Nicholas & Darling, Richard, 2011. "Explaining Variation in Farm and Farm Business Performance in Respect to Farmer Segmentation Analysis," 85th Annual Conference, April 18-20, 2011, Warwick University, Coventry, UK 108783, Agricultural Economics Society.

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