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Reducing Non-allocative Costs on Danish Dairy Farms: Application of Non-parametric Methods

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  • Lund, Mogens
  • Jacobsen, Brian H
  • Hansen, Lars C E

Abstract

Non-allocative costs for 248 Danish dairy farms are evaluated against the "best management practice" using Farrell-type efficiency ratings. The average potential cost saving is estimated to 134,800 kr., or 19 percent of the total non-allocative costs per dairy farm. The findings suggest that pure cost inefficiencies are far more important for dairy farms than inefficiencies due to sub-optimal farm size. Non-proportional reductions are shown to be as important as reductions due to scale economies. The paper closes with a discussion of the implications for farm policy and management practice. Copyright 1993 by Oxford University Press.

Suggested Citation

  • Lund, Mogens & Jacobsen, Brian H & Hansen, Lars C E, 1993. "Reducing Non-allocative Costs on Danish Dairy Farms: Application of Non-parametric Methods," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 20(3), pages 327-341.
    • Handle: RePEc:oup:erevae:v:20:y:1993:i:3:p:327-41
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    Cited by:

    1. Fousekis, Panos & Spathis, Pavlos & Tsimboukas, Konstantinos, 2001. "Assessing the Efficiency of Sheep Farming in Mountainous Areas of Greece. A Non Parametric Approach," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 2(2), pages 1-11, August.

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