The purpose of this paper is to analyze the cost efficiency of dairy farms in Japan.
The overall cost efficiency measure is decomposed into two components (Fare and
Grosskopf, 1985): (1) the weak cost efficiency measure; (2) the scale efficiency
measure. Linear programming techniques are used in calculating the efficiency
measures for a sample of dairy farms in Japan during the year 1989. The study
demonstrates an overall cost inefficiency, which is not due to scale inefficiency, but
rather to weak cost inefficiency.
