Multi-output Technical Efficiency for Argentinean Dairy Farms Using Stochastic Production and Stochastic Distance Frontiers with Unbalanced Panel Data

Abstract

This paper uses stochastic production frontiers (SPF) and stochastic distance frontiers (SDF) to measure technical efficiency for a sample of dairy farms in Abasto Sur, Argentina. The data is a highly unbalanced panel including 46 farmers from 1997/98 to 2001/02 with a total of 82 observations. Four alternative models based on the Battese and Coelli framework are evaluated. Average technical efficiency across the four models ranges from 67.2% to 88.4% while the correlation coefficient for technical efficiency scores ranges from 0.632 to 0.976. There is significant technological regress, with an annual average of 16.8% and 17.7% for the two “best” models. The results indicate that alternative specifications can have a significant impact on the results, specifically on mean efficiency figures.