Abstract
After the 1990s, farm size in Hokkaido’s dairy farming has exceeded 50 cows. However, familylabor is fixed and farms are short of labor. As a result, the shadow price of labor is expected to exceed the market price of labor. This paper estimated the cost and profit function of Hokkaido’s dairy farming during 1995-2003 and investigated the shadow price of labor. The analysis shows that theshadow price of labor rises as farm size increases, and in farms with over 60 cows, the shadow price of labor exceeds the market price. This means that there is a shortage of family labor on large farms. For the development of dairy farming, transformation of dairy farming is suggested, as well as institutions where workers from the non-agricultural sector can get permanent jobs in dairy farming.
