AN ECONOMETRIC DECOMPOSITION OF DAIRY OUTPUT GROWTH

Fixed effects production functions and stochastic production frontiers are estimated and used to decompose dairy farm output growth into tec hnological progress, technical efficiency, and increased input use or the size effect. Unbalanced panel data for ninety-six Vermont dairy fa rmers for the 1971-84 period are utilized. The results show a 2.5% ave rage annual increase in milk output. About 56% of this growth is attri buted to the size effect and the remaining 44% to productivity growth. Technological progress contributed about 94% to total productivity gr owth, while improvements in technical efficiency accounted for only 6% .