Management Theory and Studies for Rural Business and Infrastructure Development, Volume 37, Number 2

The trends in efficiency of Lithuanian dairy farms: a semiparametric approach

Tomas Baležentis, Tianxiang Li, Alvydas Baležentis

Abstract

This study aims at analysing the trends in efficiency of Lithuanian dairy farms and thus identifying the prospective development paths. The semiparametric approach based on nonparametric regression and Stochastic Frontier Analysis is applied for the analysis. The research relies on Farm Accountancy Data Network and covers family farms. The period of 2004–2011 is considered. In order to identify the underlying trends in dairy farming, we focus on such features as technical efficiency, partial elasticities, and elasticity of scale. The semiparametric approach yielded rather high efficiencies. Specifically, the average technical efficiency of 89% was observed. A decline in technical efficiency during 2004–2011 is present for both point estimates and associated bounds of the confidence interval. Analysis of the elasticity of scale implies that most of the farms could still increase their scale of operation. The obtained results were confirmed by a parametric random coefficients model.

JEL codes: C14, D24, Q12.

Keyword(s): dairy farms, efficiency, semiparametric analysis, production frontier, stochastic frontier analysis


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DOI: http://dx.doi.org/10.15544/mts.2015.15

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Management Theory and Studies for Rural Business and Infrastructure Development eISSN 2345-0355

This journal is published under the terms of the Creative Commons Attribution-Noncommercial 3.0 Unported License. Responsible editor: Dr Audrius Gargasas.