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An econometric approach to estimating the unit cost of procducing milk in the South African dairy industry
MScAgric
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| Other Authors: | |
| Format: | Thesis |
| Language: | English |
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Stellenbosch : University of Stellenbosch
2009
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| _version_ | 1867613984635486208 |
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| access_status_str | Open Access |
| author | Mndeme, Shafii Hussein |
| author2 | Mkhabela, T. S. |
| author_browse | Mkhabela, T. S. Mndeme, Shafii Hussein |
| author_facet | Mkhabela, T. S. Mndeme, Shafii Hussein |
| author_sort | Mndeme, Shafii Hussein |
| collection | Thesis |
| dc_rights_str_mv | University of Stellenbosch |
| description | MScAgric |
| format | Thesis |
| id | oai:scholar.sun.ac.za:10019.1/2227 |
| institution | Stellenbosch University (South Africa) |
| language | English |
| last_indexed | 2026-06-10T12:44:50.018Z |
| license_str | Other — see source repository |
| provenance_str_mv | Harvested via OAI-PMH from SUNScholar — Stellenbosch University Repository |
| publishDate | 2009 |
| publishDateRange | 2009 |
| publishDateSort | 2009 |
| publisher | Stellenbosch : University of Stellenbosch |
| publisherStr | Stellenbosch : University of Stellenbosch |
| record_format | dspace |
| source_str | SUNScholar — Stellenbosch University Repository |
| spelling | oai:scholar.sun.ac.za:10019.1/2227 An econometric approach to estimating the unit cost of procducing milk in the South African dairy industry Mndeme, Shafii Hussein Mkhabela, T. S. University of Stellenbosch. Faculty of Science. Dept. of Agricultural Economics. Econometric approach Unit cost Milk trade -- South Africa -- Costs Dairy industry Dairying -- Economic aspects -- South Africa Dissertations -- Agricultural economics Theses -- Agricultural economics MScAgric ABSTRACT: Small dairy farms in South Africa are observed to have higher costs than larger farms, and whether those higher costs are due to technology or inefficiency has implications for policy. This research focused on finding the curve that best represents the relationship between average cost and level of output. That was done by relating average cost to actual output. However, it was found to be more appropriate to relate average cost to planned output on the basis that costs are more likely to reflect what the farmer expects output to be. As a result, a pragmatic two-step procedure was adopted. In the first step, the farmer’s planned output was determined by estimating a production function based on the farmer’s actual use of inputs, i.e., land, number of cows in the herd, labour, feed and veterinary costs. In the second step, the long-run average cost (LAC) curve was estimated where average cost is calculated as total cost divided by planned output and this is then related to the level of planned output. To identify the determinants of production cost thus the drivers of higher costs on small farms, the cost of milk production by farm size was decomposed into frontier and efficiency components with a stochastic cost curve and long run cost curve using data from dairy farms in KwaZulu-Natal (South Africa). Financial data of 37 farms for the period 1999 to 2007 were used in econometrics estimation of long run average cost curve (LAC) function for different level of production (as a proxy of planned output). Results show that average cost curves exhibiting variation in unit cost with output thus suggesting the existence of economies of size with larger farms being able to produce any given level of output at lower costs compared to their smaller counterparts. The study found that long-run average cost curve (LAC) for the sample of dairy farms is L-shaped rather than U-shaped. Masters 2009-11-12T12:36:50Z 2010-06-01T08:43:47Z 2009-11-12T12:36:50Z 2010-06-01T08:43:47Z 2009-12 Thesis http://hdl.handle.net/10019.1/2227 en University of Stellenbosch application/pdf Stellenbosch : University of Stellenbosch |
| spellingShingle | Econometric approach Unit cost Milk trade -- South Africa -- Costs Dairy industry Dairying -- Economic aspects -- South Africa Dissertations -- Agricultural economics Theses -- Agricultural economics Mndeme, Shafii Hussein An econometric approach to estimating the unit cost of procducing milk in the South African dairy industry |
| title | An econometric approach to estimating the unit cost of procducing milk in the South African dairy industry |
| title_full | An econometric approach to estimating the unit cost of procducing milk in the South African dairy industry |
| title_fullStr | An econometric approach to estimating the unit cost of procducing milk in the South African dairy industry |
| title_full_unstemmed | An econometric approach to estimating the unit cost of procducing milk in the South African dairy industry |
| title_short | An econometric approach to estimating the unit cost of procducing milk in the South African dairy industry |
| title_sort | econometric approach to estimating the unit cost of procducing milk in the south african dairy industry |
| topic | Econometric approach Unit cost Milk trade -- South Africa -- Costs Dairy industry Dairying -- Economic aspects -- South Africa Dissertations -- Agricultural economics Theses -- Agricultural economics |
| url | http://hdl.handle.net/10019.1/2227 |
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