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J. Dairy Sci. 2008. 91:3693-3698. doi:10.3168/jds.2008-1123
© 2008 American Dairy Science Association ®
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Does Intensification Improve the Economic Efficiency of Dairy Farms?

A. Alvarez*, J. del Corral*, D. Solís{dagger},1 and J. A. Pérez{ddagger}

* Department of Economics, University of Oviedo, Oviedo 33006, Spain
{dagger} Division of Marine Affairs and Policy, Rosenstiel School of Marine and Atmospheric Science, University of Miami, Miami, FL 33149
{ddagger} Department of Accounting, University of Oviedo, Oviedo 33006, Spain

1 Corresponding author: d.solis{at}miami.edu

In recent decades, the dairy sector has shown a global tendency toward intensification. This structural change may have significant effects on farm efficiency and, consequently, on the economic results of the farms. The goal of this study was to offer an empirical analysis of the effect of intensification on dairy farming. To do this, we first classified a sample of dairy farms according to their level of intensification by using a cluster analysis. We then estimated independent stochastic cost frontiers for each group of farms to calculate their levels of efficiency. The methodology used in this study allowed for the presence of different technologies within a sample, which is a methodological issue frequently avoided in the agricultural economics literature. The empirical results showed that intensive farms were closer to their cost frontier than extensive ones, suggesting a positive relationship between intensification and efficiency.

Key Words: cluster analysis • efficiency • intensification • stochastic cost frontier






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