Evidence of Scope Economies in Australian Agriculture
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Scope economies can be used in studies of farming systems to provide a measure of synergies between different farm enterprises and between activities within farm enterprises. In this paper, they are reported for farms in three benchmarking groups in Australia by estimating stochastic input distance functions and calculating an 'economies of scope parameter'. Evidence of significant scope economies between sheep and crop enterprises, and between beef and crop enterprises, is presented and discussed. Similar evidence is reported between wool and lamb activities and wool and mature sheep trading activities within the sheep enterprise.