Why considering technological heterogeneity is important for evaluating farm performance?

Abstract

A split-panel latent class stochastic frontier model is applied to account for technological heterogeneity among Swiss dairy farms and to assess the potential performance improvements through technology choice and change over 11 years. Three technology classes with substantially different productivity levels are identified considering the unobserved and observed farm characteristics. Technologies seem on average well adapted to local natural production conditions with low potential for efficiency and productivity increases. Few farms changed technology over time and either an intensification or extensification strategy was observed. Policymakers must be aware of the interlinkages between technology choices and the economic situation of farms.

Heat risks in Swiss milk production

“…First, it can account for nonlinear heat effects because the overall response of the dependent variable is composed of connected piecewise linear responses. Second, the estimated models show the critical heat values from which revenues or costs start to decline or increase, that is, we do not have to make a priori assumptions about critical thermal values as often done in similar studies (e.g., Finger et al, 2018; Mukherjee et al, 2013; Perez‐Mendez et al, 2019; Qi et al, 2015; St‐Pierre et al, 2003). This is important because critical thermal values depend on the cow breed or feed species, environment, management, and interactions of these variables.…”

“…Many of these studies have used a temperature‐humidity‐index (THI) to assess the effects of heat stress on dairy production. For instance, Mayer et al (1999) find a direct negative effect of heat stress on milk production in Australia, Ogundeji et al (2021) in South Africa, Ageeb and Hayes (2000) in Sudan, Hammami et al (2013) in Luxembourg, Finger et al (2018) in Germany and Key and Sneeringer (2014), Mukherjee et al (2013), Qi et al (2015) and St‐Pierre et al (2003) in the United States. Moreover, Perez‐Mendez et al (2019) find no direct effect of heat stress on milk cows in the Spanish region of Asturias, but they find that weather may indirectly affect milk production through reduced feed production.…”

Reconciling the micro‐ and macro‐perspective in agricultural energy efficiency analysis for sustainable development

“…Different farming types apply different practices. Therefore, it is meaningful to carry out efficiency analysis within farming types (Renner et al, 2021) and to compare the utilization of energy resources across the farming types against the global frontier. This corresponds to the ideas of Charnes et al (1981).…”

Animal feed as a lever to reduce methane emissions: a micro-econometric approach applied to French dairy farms

“…The descriptors of input intensity, production specialization or organic farming are either used directly as criteria to divide the sample (Kumbhakar et al 2008) or used to determine the probability of farms belonging to a technological group (Alvarez and del Corral 2010;Sauer and Paul 2013;Renner et al 2021). However, Renner et al (2021) point out that the natural production conditions of the farms constrain them in a specific production technology. This finding implicitly suggests that the heterogeneity of production technologies may stem from the heterogeneity of production conditions.…”

“…Many researchers in the microeconomics of agricultural production have estimated milk production technology. Some of them have estimated a technology of milk production using the stochastic frontier approach to analyse the heterogeneity of the efficiency of dairy farms and its impact on farm performance (Kumbhakar et al 2008;Alvarez and del Corral 2010;Orea et al 2015;Sauer and Paul 2013;Renner et al 2021). Various methods explicitly accommodating the heterogeneity in a dairy production model have been used in the production literature.…”