Economies of Size and Total Factor Productivity in Alberta Cow-Calf Production

This paper applies both parametric and non-parametric approaches to evaluate Economies of Size and Total Factor Productivity (TFP) in Alberta cow-calf production based on the unbalanced panel data from 196 farmers during the time period from 1995 to 2002. Under the parametric approach, a random parameter translog cost system and a translog cost frontier are constructed and estimated respectively. The results from the cost system estimation suggest that on average, cow-calf production in Alberta exhibits Economies of Size, technical progress and positive TFP. However, exploitable Economies of Size decrease over time, technical change rate and TFP even become negative at 2002. The critical problem, therefore, is how to reverse the trend and maintain good growth pattern. The translog cost frontier is also estimated but the results are unreliable. Therefore, the Non-parametric approach (Malmquist TFP index) is adopted. The results suggest that inefficiency exists in Alberta cow-calf production