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| Volume 1, No. 2,
August 2002
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| Post-Reform
Substitution and Cost Efficiency in the New Zealand Agricultural
Sector |
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| Catherine J. Morrison Paul and Warren
E. Johnston |
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Department of Agricultural
and Resource Economics, University of California, U.S.A. |
| Gerald A. G. Frengley |
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Department of Farm Management,
Lincoln University, New Zealand |
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| Abstract |
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| A
recent study suggested that output composition rather than technical
efficiency changes were the primary result of dramatic regulatory
reforms imposed on the New Zealand sheep and beef farming sector
in the 1980s. These results raise important questions about the
substitutability and cost efficiency patterns underlying these changes.
Although standard measures of returns and biases do not reflect
these production characteristics, indicators can be developed, based
on marginal rates of transformation and technical substitution,
to facilitate such an analysis. We compute such measures and find
that output substitutability, even given the product jointness inherent
in pastoral production, supported cost efficient output compositional
changes in response to reform. However, limited substitutability
and rigidities for inputs restricted input responses and imposed
significant costs on farmers in their attempts to adapt to the post-reform
economic incentives. |
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Key words: cost
efficiency; allocative efficiency; agriculture; regulatory reform |
| JEL
classification:
O0; Q1 |
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