Determinants of technical efficiency among dairy farms in Wisconsin

The US dairy sector is facing structural changes in-cluding a geographical shift in dairy production and a tendency toward the implementation of more intensive production systems. These changes might significantly affect farm efficiency, profitability, and the long-term economic sustainability of the dairy sector, especially in more traditional dairy production areas. Consequently, the goal of this study was to examine the effect of prac-tices commonly used by dairy farmers and the effect of intensification on the performance of the farms. We used a sample of 273 Wisconsin dairy farms to estimate a stochastic production frontier simultaneously with a technical inefficiency model. The empirical analysis showed that at a commercial level the administration of bovine somatotropin hormone to lactating cows in-creased milk production. In addition, we found that production exhibits constant returns to scale and that farm efficiency is positively related to farm intensifica-tion, the level of contribution of family labor in the farm activities, the use of a total mixed ration feeding system, and milking frequency. Key words: technical inefficiency, stochastic produc-tion frontier, intensification