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The Impact of Parcel Structure on the Efficiency of Finnish Dairy Farms

Published online by Cambridge University Press:  15 September 2016

Olli Niskanen  and
Anna-Maija Heikkilä
Olli Niskanen*
Affiliation:
Department of Economics and Society at the Natural Resources Institute Finland
Anna-Maija Heikkilä
Affiliation:
Department of Economics and Society at the Natural Resources Institute Finland
*
Correspondence: Natural Resources Institute Finland ▪ Latokartanonkaari 9, FI-00790 Helsinki ▪ Phone +358.29.532.6000 ▪ Email olli.niskanen@luke.fi.
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Abstract

In Finland, expanding dairy farms often face the problem of additional fields being geographically distant and only available as small parcels. We develop a stochastic production frontier model to estimate the technical efficiency of Finnish dairy farms and simulate the effect of parcel distance and parcel size on the efficiency of an average farm for 2000 through 2009. The overall development of technical efficiency is positive during the study period but increases in distance and decreases in parcel size both significantly reduce farm efficiency. Therefore, efforts to improve the parcel structure are justified.

Keywords

milk productionparcel structurestochastic frontiertechnical efficiency
Type
Research Article
Information
Agricultural and Resource Economics Review , Volume 44 , Issue 1 , April 2015 , pp. 65 - 77
Copyright
Copyright © 2015 Northeastern Agricultural and Resource Economics Association 

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