Efficiency and economic performance: An application of the MIMIC model

Using measures of allocative, technical, and overall efficiency as indicato rs of a latent "performance" variable, and a set of farm operating ratios a s indicators of the amount of effort to improve the quality of feeding, bre eding, and labor productivity, we employ a multiple-indicator, multiple-cau se (MIMIC) model of Alberta dairy production to determine the factors that contribute to economic performance. Gains in performance may be made throug h increased milk yield, herd size, breeding-program quality, and labor qual ity, but not by operator experience or increased expenditures on feeding pr ograms. Consequently, the industry trend toward larger dairy herds may inde ed improve the economic performance of dairy operators.