Production Rigidity, Input Lumpiness, Efficiency, and the Technological Hurdle of Quebec Dairy Farms

Larue, Bruno; Singbo, Alphonse; Pouliot, Sébastien

doi:10.1111/cjag.12156

Cited by 9 publications

(6 citation statements)

References 41 publications

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“…One would then expect unconstrained higher productivity farms to strive to operate under DRS. Larue, Singbo, and Pouliot (2017) argue that the lumpiness of fixed inputs and constraints in adjusting outputs and/or other inputs create long periods over which farmers operate with excess capacity. The above arguments are compelling in explaining temporary scale inefficiency, but why would farmers remain scale inefficient over decades?…”

Section: Asra and Scale Efficiencymentioning

confidence: 99%

“…The above result is interesting because it sheds new light on how technical efficiency relates to scale efficiency. Most studies treat the concepts as independent of one another, but Larue et al (2017) does not. From the proposition, IRS production by competitive firms or farms can be explained by the combination of technical inefficiency and risk aversion.…”

Section: Asra and Scale Efficiencymentioning

confidence: 99%

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Total factor productivity change in hog production and Quebec's revenue insurance program

Singbo

Larue

Tamini

2020

Canadian J Agri Economics

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Quebec's hog industry is supported by a revenue insurance program that guarantees a minimum price, but it also faces strict environmental constraints. Under price volatility, risk‐averse farms may contract their output enough to produce under increasing returns. We show that the subsidy and downside risk reduction effects of the revenue insurance program tend to stimulate output and increase the likelihood of production under increasing returns. Environmental constraints that raise the cost of manure management and limit areas under cultivation also increase the likelihood of decreasing returns. Scale efficiency and technical efficiency measures are obtained through a parametric decomposition of total factor productivity (TFP) obtained from the estimation of an output distance function. As in hog studies pertaining to other countries, we found a TFP average annual growth of 5.2% between 2004 and 2012. Scale efficiency is much lower than in other countries, as per our prior about the program's distortions and environmental constraints. Integrating annual TFP gains into the setting of the minimum guaranteed price could reduce program costs by $12 million per year. About $70–80 million per year could be saved by investing in extension activities that would bring increase the level of technical efficiency of inefficient farms to the provincial average. A metatechnology frontier approach allowing for an endogenous input was also implemented to assess the robustness of the scale efficiency results.

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Section: Asra and Scale Efficiencymentioning

confidence: 99%

Section: Asra and Scale Efficiencymentioning

confidence: 99%

Total factor productivity change in hog production and Quebec's revenue insurance program

Singbo

Larue

Tamini

2020

Canadian J Agri Economics

Self Cite

View full text Add to dashboard Cite

show abstract

“…In addition, Larue et al. (2017) focus on how trading production quotas affect Canadian dairy efficiency. They show that low quota trading constrains production adjustments.…”

Section: Introductionmentioning

confidence: 99%

“…They also report that the input-mix effect is the main driver of productivity growth. In addition, Larue et al (2017) focus on how trading production quotas affect Canadian dairy efficiency. They show that low quota trading constrains production adjustments.…”

Section: Introductionmentioning

confidence: 99%

An economic analysis of production efficiency: Evidence from Irish farms

Chavas

Läpple

Barham

et al. 2022

Canadian J Agri Economics

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The objective of this paper is to investigate the economics of production efficiency of dairy farms, with a specific focus on the role of agricultural policy. Our analysis is based on a representative sample of Irish dairy farms, ranging from 2000 to 2018, which includes a period of major change in EU dairy policy. Based on a multi-input multi-output production system, we first estimate technical, allocative, scale and scope efficiencies. We find significant heterogeneity in technical and allocative efficiencies, which change over time. We also calculate shadow prices of milk quota, which suggest that milk quotas restricted many farmers and limited their ability to produce milk. Finally, we explore determinants of technical, allocative, scale and overall inefficiencies using random panel-data censored regression. We find that subsidies are positively associated with farm efficiency, but the effects vary over distinct quota abolition periods. Overall, our empirical findings indicate that agricultural policy had important effects on the managerial effectiveness of farmers.

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“…While consumers in Canada can depend on a somewhat stable cost of milk when planning their monthly grocery budget, they can also expect to spend much more at the grocery store than their American neighbors. From 1997 to 2011, the price of milk in eastern Canada averaged CAD 63.05/hL, while the U.S. Midwest price averaged CAD 39.42/hL and New York/New Jersey averaged CAD 44.31/hL [ 56 ]. More recent estimates come from an article published on 2 December 2019 in the Toronto Sun, which was based on a study that confirms that Canadians pay almost 30 cents more per liter of milk [ 57 ].…”

Section: Introductionmentioning

confidence: 99%

Supply Management 2.0: A Policy Assessment and a Possible Roadmap for the Canadian Dairy Sector

Charlebois

Bowdridge

Lemieux

et al. 2021

Foods

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Many believe the current Canadian Dairy supply management system is outdated. Examining a recent consumer survey suggests consumers, especially among the younger generations, have mixed feelings about how the Canadian dairy industry is good for the environment or whether animals in the sector are humanely treated. The general Canadian public strongly supports financial stability for farmers, though is not fully educated about how supply management works. Issues regarding the centralization and amalgamation of the industry, making many regions underserved; recent milk dumping due to a strong shift in demand caused by COVID-19; and the popularity of dairy alternatives, show that the dairy sector in Canada is ill-prepared for major change. Dairy farmers are receiving compensation for trade deals recently ratified by the federal government, creating a precedent that will lead to an overcapitalized industry. The aim of this paper is to review the industry’s current state and suggest a roadmap for a more prosperous future.

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Production Rigidity, Input Lumpiness, Efficiency, and the Technological Hurdle of Quebec Dairy Farms

Cited by 9 publications

References 41 publications

Total factor productivity change in hog production and Quebec's revenue insurance program

Total factor productivity change in hog production and Quebec's revenue insurance program

An economic analysis of production efficiency: Evidence from Irish farms

Supply Management 2.0: A Policy Assessment and a Possible Roadmap for the Canadian Dairy Sector

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