Input Disposability and efficiency in Dutch arable farming

This paper develops a test for disposability of individual inputs based on non-radial efficiency measures. Furthermore, the paper analyses the impact of congestion on overall technical efficiency for individual inputs. The application uses panel data from Dutch cash crop farms over the period 1989-1992. A significant difference between the efficiency measures under different assumptions on input disposability is detected by a t-test, indicating that all inputs are weakly disposable. Analysis of the composition of overall technical efficiency reveals that weak disposability constitutes the largest component Of inefficiency. Moreover, congested farms on average have a less effective management and operate on a larger, though less efficient, production scale.