HERD SIZE AND UNIT COSTS OF PRODUCTION IN THE ENGLAND AND WALES DAIRY SECTOR

This paper examines the relationship between herd size and unit costs of production in the England and Wales dairy sector. Following the two-stage estimation procedure of Dawson & Hubbard (1987), longrun average cost (LAC) functions are estimated from cross-section data for five separate years between 1976/7 and 1986/7. Results show that the LAC curves are U-shaped but highly skewed, implying that considerable economies of size are present at low output levels but diseconomies at larger levels are much less marked. Over time, technological change in particular has been shifting the LAC curves downward and to the right and away from the sector's long-run equilibrium. The differential shift of cost curves, depending on the size of production, implies that technological change has been biased in favour of larger herds.     

PRODUCTION CHOICE IN THE ENGLAND AND WALES DAIRY SECTOR

This paper seeks to develop the understanding of the ways in which factors other than price influence the production decisions of dairy farmers. A theoretical model based on a profit function is used to emphasise the way in which changes in the farm's technological environment will influence its production choices. The theoretical model is used as the basis of an empirical study of production choice in the England and Wales dairy sector. Elasticities and factor biases are reported.     

LONG-RUN AVERAGE COST CURVES IN THE ENGLAND AND WALES DAIRY INDUSTRY - REPLY

Burton, Ozanne and Collinson (1993) present an interesting comment on the issue of long-run average cost (LAC) in the dairy industry. Since their results essentially substantiate the conclusions of Hubbard (1993), the following points are offered as further thoughts which may be of relevance in any subsequent analysis and estimation.     

MARKETING MARGINS IN THE MEAT SECTOR,ENGLAND AND WALES 1978–1987

The paper presents a basic analysis of price spread data for beef, lamb and pork over the period 1978 to 1987. The results are reviewed in the light of existing margin theory in order to assess how far the characteristics of price and margin behaviour today differ from those highlighted in earlier work. It is concluded that while short run behaviour is well explained, further research is required if we are to fully understand the factors influencing the longer term development of margins in the meat sector.     

GROWTH AND SIZE ECONOMIES OVER SPACE AND TIME: WHEAT-SHEEP FARMS IN NEW SOUTH WALES

Time series and cross-sectional data for 18 years on 26 N.S.W. wheat-sheep properties are combined to test whether farms that grew in size over time reaped the postulated size economies derived from the cross-sectional statistical cost functions. Realised economies of farms that remained in the industry and changed in size during the 18-year period were found to be significantly greater than measured potential economies from 'static' cost functions would have suggested. The 'dynamic economies of growth' differed significantly amongst farms indicating there was no single economy of size curve along which farms moved.     

SIMULTANEITY IN THE UK DAIRY SECTOR*

Because of the high degree of interdependence in the livestock sector, the endogenous variables of econometric models should be simultaneously determined. This paper describes the specification, estimation and evaluation of a model of the UK dairy sector in which the herd size, number of culls, replacement heifer price and milk price are determined simultaneously. The major policy conclusion that emerges from the model is that any attempt to increase the price of milk received by farmers via a structural change in the policy rule used to fix the price will be offset by over 50% as a result of increases in the supply of milk.     

THE EVOLUTION OF AGRICULTURAL EXTENSION IN ENGLAND AND WALES PRESIDENTIAL ADDRESS

This paper traces the evolution of agricultural extension in England and Wales and reflects on the reasons for the changes which have occurred in its structure, direction and funding. It describes the change from an extension to a consultancy organisation, analyses the effects of such a change, and examines some of the early mistakes in undertaking it. Questions are raised about whether advice paid for by the client improves the focus of extension and enhances the effectiveness of the relationship between adviser and client. It also questions whether Government policies towards agriculture could be equally well carried out by contracting out the work of extension to the private sector.     

FORECASTING MILK OUTPUT IN ENGLAND AND WALES*

This paper evaluates the ablility of an autoregressive integrated moving average (arima) model to forecast monthly milk output before and after the imposition of quotas in April 1984. In the post quota period the standard arima model is modified to a ‘discontinuity’ model allowing the quota to be represented explicitly. It is concluded that for a medium term forecast this is preferable to the standard arima model, whilst for one period ahead forecasts the models are equally good.     

A FORECAST OF MILK SUPPLY IN ENGLAND AND WALES

This paper reports the problems encountered in applying Markov Chain analysis to the Permanent sample of milk producers in England and Wales, and presents predictions obtained for producer numbers and milk output, by regions, for the years 1970/71 and 1975/76. As a consequence of the “pool of entrants” problem, dificulties arise both in estimating the required transition probabilities and in forecasting producer numbers. Solutions to these, and to other problems concerned with obtaining prediction of milk output, from those of producer numbers, are proposed. It is forecast that producer numbers will decline by 18 per cent and 33 per cent by 1970/71 and 1975/76 respectively, with the largest proportional decline occurring among smaller producers. Two forecasts are made of milk supply and these are compared with estimates made by the Milk Morltetiiic Board.     

A FURTHER NOTE ON THE MEASUREMENT OF EFFICIENCY AND ECONOMIES OF FARM SIZE

Efficiency has a precise meaning in the case of the optimally conditions associated with the perfectly competitive norm. However, the efficiency concept loses a precise meaning and much of its usefulness under real world conditions of uncertainty and costly information since efficiency is inescapably evaluative and cannot be defined and measured independently of the goals and knowledge of the decision maker. Similarly, the concept ‘economies of size’ is shown to lose its normative significance when specialised resources and other unique aspects of the firm are taken into account. Although the economist has no objective procedure by which to measure the efficiency of entrepreneurial activity, it is argued that in the real world of uncertainty and disequilibrium, there is always scope for entrepreneurial activity in the sense of unexploited profit opportunities.     

AN APPLICATION OF MARKOV CHAINS TO FARM TYPE STRUCTURAL DATA IN ENGLAND AND WALES

Markov Chain methods of projection are applied to farm type structural data derived from the returns in the Annual June Agricultural Census in England and Wales. Three sets of projections, using different assumptions, are made of the numbers of holdings by farm type in 1969 and of the movement of holdings between farm type during 1968/69. These are compared with the actual Census returns for 1969. Use of a four-year average transition probability matrix gives the best overall results on the basis of that comparison and this matirx was then used to project farm type structure in England and Wales for 1971 and 1973. These projections indicate that between June 1969 and June 1973 the number of all holdings with 275 or more standard man days (SMD) will decline; those classified as Mixed, Livestock, and Pigs and Poultry are likely to show the largest proportional declines. Some 50 per cent of holdings are likely to be below the 275 SMD limit. Since the assumptions made may not be fulfilled in every respect, it is unlikely that the outcome in 1971 and 1973 will be precisely as predicted, but the pattern and direction of the projections are likely to hold.     

ANOTHER LOOK AT ECONOMIES OF SIZE IN CATTLE FEEDING*

This article is an outgrowth of a study that failed to find any economies of size in total cost of feeding cattle. It examines a number of cattle feeding studies that reportedly found economies of size and explains why the author is not willing to accept their findings. This article is not concerned with the external economies of size that may or may not exist in cattle feeding Cet article est le résultat ?une recherche qui n'a pas réussit à trouver de grands économics dans le prix total de ?engraissement de bétail. II examine un certain nombre ?étude sur ?engraissement de bétail que rapporterent (dit-on) de grands economies el il explique aussi pourquoi ?auleur n'est pas prêt à accepter leurs conclusions. Cet article ne se concerne pas avec les economies de grandeur extérieur quipeuvent ou nepeuventpas exister dans ?engraissement du bétail.     

RISK AND FARM SIZE IN THE PASTORAL ZONE

Variable performance over time is an important feature of wool growing in the eastern pastoral zone of Australia. An analysis of time series data from the Australian Sheep Industry Survey indicates that standard deviation of net farm income is related more or less linearly to size of firm and increases with size at about the same rate as does average net income. A tentative conclusion is drawn that large farms have had a slight tendency to experience less variable rates of return than small farms. However, it is found that farms that have experienced relatively variable returns have tended to enjoy average rates of return above those of other farms of similar size.