Measuring the Efficiency Effect of Banning Anti-Microbial Growth Promoters: The Case of Danish Pig Production

This study examines the effect of banning antimicrobial growth promoters on efficiency in the production of weaned and slaughter (finishing) pigs. We focus on the reaction of producers and production efficiency. We evaluate the estimated output and input shadow prices relative to market prices to analyse producer reactions and capture the impact on production efficiency by evaluating the effects of the ban changes on total factor productivity. To this end we model a multi product shadow profit function and incorporate output and input related shadow prices by using a second order flexible functional form. The development in total factor productivity is subsequently measured by calculating the Malmquist index on the farm level. To make inferences on the effect of banning growth promoters over time we regress in a second estimation step the changes in total factor productivity on potential explanatory factors by applying a bootstrapped censored regression procedure. Our results suggest that there was no effect of the ban on total factor productivity due to outputs and inputs substitution. Breeding pigs are produced at the expense of weaned and finisher pigs. Feed input is over utilised relative to other inputs. The high shadow prices for substituting outputs are associated with better export market prices. These findings may have critical implications for the slaughtering plants with over capacity. JEL: Q1 Q11 Q12 D24