Title: Efficiency and Economic Performance: An Application of the MIMIC Model
Abstract: Using measures of allocative, technical, and overall efficiency as indicators of a latent variable, and a set of farm operating ratios as indicators of the amount of effort to improve the quality of feeding, breeding, and labor productivity, we employ a multiple-indicator, multiple-cause (MIMIC) model of Alberta dairy production to determine the factors that contribute to economic performance. Gains in performance may be made through increased milk yield, herd size, breedingprogram quality, and labor quality, but not by operator experience or increased expenditures on feeding programs. Consequently, the industry trend toward larger dairy herds may indeed improve the economic performance of dairy operators.