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Identifying efficient dairy producers using data envelopment analysis.

J R Stokes1, P R Tozer, J Hyde

  • 1Department of Agricultural Economics and Rural Sociology, The Pennsylvania State University, University Park 16802, USA. jstokes@psu.edu

Journal of Dairy Science
|April 14, 2007
PubMed
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Pennsylvania dairy farms can improve efficiency by benchmarking against DEA-efficient producers. Optimal resource allocation, not maximum output, is key for efficient production and business management.

Area of Science:

  • Agricultural Economics
  • Operations Research

Background:

  • Dairy farm efficiency is crucial for profitability and sustainability.
  • Understanding factors influencing production and business management is essential for improvement.

Purpose of the Study:

  • To calculate the efficiency of Pennsylvania dairy farms.
  • To identify factors contributing to production and business management efficiency.

Main Methods:

  • Data Envelopment Analysis (DEA) was employed to estimate efficiency.
  • Two DEA models were developed: one for physical inputs/outputs, another including economic inputs/outputs.
  • Models assessed the efficient use of land, cows, labor, debt capital, milk, butterfat, and income.

Main Results:

Related Experiment Videos

  • Approximately 29% of surveyed dairy farms were found to be DEA-efficient.
  • No single combination of inputs was universally optimal for efficient producers.
  • DEA successfully identified efficient producers for benchmarking by inefficient ones.

    • Conclusions:

    • Dairy producers should benchmark against efficient peers identified via DEA.
    • Efficient production involves optimal resource combination, not necessarily maximum output.
    • Strategic allocation of land, labor, cows, and debt capital is vital for efficiency.