United States Meat Goat Production Economic Performance Measures: A Stochastic Production Frontier Analysis

Abstract

The meat goat industry is relatively a newcomer to the U.S. agricultural production and one of the fastest growing livestock industries in the U.S. Despite the growth of the meat goat industry, little is known about meat goat production economics. Information is needed concerning the drivers of production efficiency, optimum size of operation, and scope economies in the industry. A nationwide mail survey of U.S. meat goat producers who advertise their meat goat production via the internet for this efficiency analysis was conducted. Costs and returns data for 2011 expenses from those meat goat producers were collected. This survey was a follow-up to an earlier survey that focused on the marketing, technology, farmer attitudes and farm/farmer characteristics associated with U.S. meat goat production. Since the motivations for the follow-up costs and returns survey were to estimate U.S. meat goat farm efficiency and determine the efficiency drivers, we also used demographics and farm characteristics from the first meat goat survey. The input distance function analysis showed that the impact of specialization of farm production (percentage of income from the goat enterprise), the effect of production system, and the effect of targeted market on meat goat farm technical efficiency were significant. Off-farm work, education, experience, age and gender (female) have impacts on the technical efficiency of U.S. meat goat farms. Increasing returns to scale on U.S. meat goat farms suggests that producers can increase the size of their operations, resulting in less overall input usage per unit produced. Scope economies in Southeastern U.S. meat goat production suggest reduced long run average cost of production via diversification. The research results suggest that U.S. meat goat farms can be scale efficient if their optimal size of operation is greater than approximately 64 goats or greater than 40 breeding does. This research finding provides significant contributions to the U.S. meat goat industry. The increasing returns to scale finding suggests that the U.S. meat goat industry would benefit from significant increases in farm size. The U.S. Census results suggest the average meat goat farm includes 21 goats; our results show the size of operation that is scale efficient is 60 goats. Furthermore, in the Southeast, scope economies in meat goat production suggest diversification results in decrease total cost.