TY - JOUR
T1 - Does the Milk Income Loss Contract program improve the technical efficiency of US dairy farms?
AU - Chang, H. H.
AU - Mishra, A. K.
N1 - Funding Information:
The authors acknowledge the helpful comments received from anonymous referees and the section editor. H. H. Chang's time on this paper was supported by the College of Bioresources and Agriculture at the National Taiwan University. A. K. Mishra's time on this project was supported by the USDA Cooperative State Research Education and Extension Service, Hatch project # 0212495 and Louisiana State University Experiment Station project # LAB 93872. The views expressed here are not necessarily those of the Economic Research Service or the US Department of Agriculture or the College of Bioresource and Agriculture at the National Taiwan University.
PY - 2011/6
Y1 - 2011/6
N2 - Due to volatility in the income of dairy farmers, the 2002 farm bill introduced the Milk Income Loss Contract (MILC) payments that were extended in the 2008 farm bill. It has been argued that MILC payments would help large dairy farms and squeeze out small dairy operations. This paper contributes to this policy issue by empirically assessing the effect of MILC payments on the technical efficiency of US dairy farms. Using a large-scale dairy farm survey containing information from 2005, we apply a data envelopment analysis method to estimate technical efficiency of the dairy farms. A Tobit regression model was estimated to examine the roles of human capital of the farm operator, different farming practices, farm sizes, and MILC payments on technical efficiency of the dairy farms. Results indicate that the effects of the MILC payments were heterogeneous among farms of different sizes. Significant effects of MILC payments were only evident among large farms. In contrast, no significant effects were found for medium and small farms.
AB - Due to volatility in the income of dairy farmers, the 2002 farm bill introduced the Milk Income Loss Contract (MILC) payments that were extended in the 2008 farm bill. It has been argued that MILC payments would help large dairy farms and squeeze out small dairy operations. This paper contributes to this policy issue by empirically assessing the effect of MILC payments on the technical efficiency of US dairy farms. Using a large-scale dairy farm survey containing information from 2005, we apply a data envelopment analysis method to estimate technical efficiency of the dairy farms. A Tobit regression model was estimated to examine the roles of human capital of the farm operator, different farming practices, farm sizes, and MILC payments on technical efficiency of the dairy farms. Results indicate that the effects of the MILC payments were heterogeneous among farms of different sizes. Significant effects of MILC payments were only evident among large farms. In contrast, no significant effects were found for medium and small farms.
KW - Data envelopment analysis
KW - Milk income loss contract payments
KW - Milk production
KW - Technical efficiency
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U2 - 10.3168/jds.2010-4013
DO - 10.3168/jds.2010-4013
M3 - Article
C2 - 21605764
AN - SCOPUS:79956274810
SN - 0022-0302
VL - 94
SP - 2945
EP - 2951
JO - Journal of Dairy Science
JF - Journal of Dairy Science
IS - 6
ER -