AN INTERMEDIATE INPUT MODEL OF DAIRY PRODUCTION USING COMPLEX SURVEY DATA

Agricultural production is often characterised by multiple inputs and multiple outputs to multiple production processes. Where an output fro m one process is used as an input to another, this output is called an intermediate product. This is a common situation when a farm produces both crops and livestock. The analysis of production efficiency is im portant for the evaluation of agricultural policy, but until recently, no methods have explicitly included intermediate products. This study applies a non-parametric technique of efficiency measurement which in cludes intermediate products. The data set is a sample of dairy farms drawn using a complex survey design. The use of non-parametric efficie ncy measurement and the subsequent application of bootstrapping and ke rnel density estimation to the results allow inferences to be drawn co ncerning the whole population from which the sample was drawn. We find that the decomposition of production into subproduction processes red uces the dimensions of problem specification, with the effect that a l arger number of variables may be usefully included in the model.