DAIRY FARM EFFICIENCY MEASUREMENT USING STOCHASTIC FRONTIERS AND NEOCLASSICAL DUALITY

This paper presents a stochastic efficiency decomposition model based on Kopp and Diewert's deterministic methodology. The stochastic model is used to analyze technical, economic, and allocative efficiency for a sample of New England dairy farms. The results suggest that mean economic efficiency for the farmers in the sample is about 70% and that, on average, there is little difference between technical (83.0%) and allocative (84.6%) efficiency. Analyses of the relationship between efficiency and four socioeconomic variables-farm size, education, extension, and experience-reveal that, despite some statistically significant associations, efficiency levels are not markedly affected by these variables.