PRODUCTIVITY OF DAIRY FARMS MEASURED BY NON-PARAMETRIC MALMQUIST INDICES

The productivity of individual dairy farms, decomposed into efficiency and technological change components, was measured annually from 1985 through 1993 from distance functions estimated using nonparametric programming methods. Technology is measured regressively only if it is regressive to all previous periods rather than just the immediate previous period. Average productivity increased 2.8 percent each year, with about half of the gain due to gains in efficiency, and the other half due to technological improvements. Twenty-five percent of the farms failed to increase productivity sufficiently over the period to offset the decreased ratio of output to input prices.