The effect of operational managerial practices on economic, technical and allocative efficiency at Swedish dairy farms

The article aims to investigate how operational managerial practices can contribute to improved farm level efficiency at dairy farms. Operational managerial practices are defined as animal health, breeding, and feeding practices. The main contribution of the article is that it investigates aspects that can be adjusted in the every day management to improve farm efficiency. Aspects describing each of the considered managerial practices were regressed on farm level data envelopment analysis (DEA) input efficiency scores based on farm level data from Sweden. The DEA efficiency scores were based on 507 farms, and the following regression analyses were based on 169 farms. The results showed that changes in breeding and feeding practices can affect efficiency. Breeding exactly the number of heifers that was needed for replacement of the dairy cows negatively affected long-run technical efficiency (i.e. not over-using inputs). On the other hand, analyzing forage positively affected long-run allocative efficiency (i.e. using the cheapest combination of inputs) and analyzing fodder grain positively affected short-run economic efficiency (i.e. a combined measure of technical and allocative efficiencies). Feeding the cows hay instead of only silage, reduced long-run economic efficiency. No significant effects of animal health practices were found. These results suggest that the farms in the sample are homogeneous in terms of animal health practices and that inefficient farms cannot become more efficient by adapting to the animal health practices of more efficient farms.