Analyzing the sources of technical efficiency among heterogeneous dairy farms: A quantile regression approach

Abstract

An unbalanced panel data including 1,151 farm observations from 2004 to 2008 was used to analyze the
determinants of technical efficiency (TE) for dairy farms in the State of Wisconsin. To account for farm
heterogeneity in our analysis we implemented a two-step framework using a stochastic production
frontier and a quantile regression analysis. The results show that the determinants of TE affected
farmers with different levels of TE in a very specific ways. This outcome is of significant importance
from an empirical point of view. Farmers could use this knowledge to find alternatives to improve their
specific level of performance. Additionally, Policy makers could use this information to improve the
effectiveness of their policies by targeting specific agricultural services and aid to group of farmers
with similar levels of TE