Total Factor Productivity Change in Dairy Production in Southern Chile: Is Farm Size Significant?

This paper examines the connection between total factor productivity change and dairy farm size in Southern Chile, a translog stochastic production frontier is estimated using an unbalanced panel for 2005-2009 including 417 farms and 1,186 observations. Descriptive analyses and econometric evidence indicate that the farms exhibit decreasing returns to size, productivity gains through technical efficiency or management improvements are limited while technological progress is rather low; thus, investments in research appear promising. Although the findings reveal that farm size is not associated with productivity growth, a clear positive association between farm size and net income is found.