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ADVICE FROM ESTIMATED MARGINAL PRODUCTIVITIES

ADVICE FROM ESTIMATED MARGINAL PRODUCTIVITIES ADVICE FROM ESTIMATED MARGINAL PRODUCTIVITIES R. G. MAULDON University of Western Australia In a recent major contribution to the statistical analysis of farm pro- duction, its author concludes that “management advice given to farmers which is based upon calculated ‘Marginal Productivities’ will only touch the fringe of management problerns.”l This conclusion is based upon an analysis of components of variance of “eff~ciency”, as indicated by gross return relative to total costs. In Denmark the “scale of farming” and “allocation of resources at a given scale of farming” accounted for only 11 per cent of the variation in “efficiency” whereas “management” (k., the choice of products, tech- nologies, and day to day supervision) accounted for 72 per cent of this variation. It is the purpose of this note to suggest that even were these com- ponents of variance correctly identified,2 this conclusion does not follow, at least in the short-run. By way of illustration, reference is made to an Australian study which indicates that, without deprecating the impor- tance of “management” decisions, management advice based on mar- ginal productivities, albeit taking the distribution of fixed assets into account when they are estimated, may make significant contributions to net farm incomes. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Australian Journal of Agricultural Resource Economics Wiley

ADVICE FROM ESTIMATED MARGINAL PRODUCTIVITIES

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Publisher
Wiley
Copyright
Copyright © 1963 Wiley Subscription Services, Inc., A Wiley Company
ISSN
1364-985X
eISSN
1467-8489
DOI
10.1111/j.1467-8489.1963.tb00312.x
Publisher site
See Article on Publisher Site

Abstract

ADVICE FROM ESTIMATED MARGINAL PRODUCTIVITIES R. G. MAULDON University of Western Australia In a recent major contribution to the statistical analysis of farm pro- duction, its author concludes that “management advice given to farmers which is based upon calculated ‘Marginal Productivities’ will only touch the fringe of management problerns.”l This conclusion is based upon an analysis of components of variance of “eff~ciency”, as indicated by gross return relative to total costs. In Denmark the “scale of farming” and “allocation of resources at a given scale of farming” accounted for only 11 per cent of the variation in “efficiency” whereas “management” (k., the choice of products, tech- nologies, and day to day supervision) accounted for 72 per cent of this variation. It is the purpose of this note to suggest that even were these com- ponents of variance correctly identified,2 this conclusion does not follow, at least in the short-run. By way of illustration, reference is made to an Australian study which indicates that, without deprecating the impor- tance of “management” decisions, management advice based on mar- ginal productivities, albeit taking the distribution of fixed assets into account when they are estimated, may make significant contributions to net farm incomes.

Journal

The Australian Journal of Agricultural Resource EconomicsWiley

Published: Jun 1, 1963

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