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Technology choice and efficiency on Australian dairy farms

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  • Tom Kompas
  • Tuong Nhu Che

Abstract

Deregulation of the Australian dairy industry, specifically the removal of price subsidies to 'market milk', as well as ongoing drought in many dairy regions, has placed considerable pressure on farm cash income and a search for ways in which dairy farms can be made to operate more efficiently. Using traditional farm survey data and a unique biannual data set on farm technology use, this paper estimates a stochastic production frontier and technical efficiency model for dairy farms in New South Wales and Victoria, determining the relative importance of each input in dairy production, the effects of key technology variables on farm efficiency, and overall farm profiles based on the efficiency rankings of dairy producers. Results show that production exhibits constant returns to scale and although feed concentration and the number of cows milked at peak season matter, the key determinants of differences in dairy farm efficiency are the type of dairy shed used and the proportion of irrigated farm area. Overall farm profiles indicate that those in the 'high efficiency group' largely employ either rotary or swing-over dairy shed technology and have almost three times the proportional amount of land under irrigation. Copyright Australian Agricultural and Resource Economics Society Inc. and Blackwell Publishing Ltd 2006.

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Bibliographic Info

Article provided by Australian Agricultural and Resource Economics Society in its journal Australian Journal of Agricultural and Resource Economics.

Volume (Year): 50 (2006)
Issue (Month): 1 (03)
Pages: 65-83

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Handle: RePEc:bla:ajarec:v:50:y:2006:i:1:p:65-83

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Cited by:
  1. Mary Graham, 2008. "Developing a Social Perspective to Farm Performance Analysis," Economics Series 2008_17, Deakin University, Faculty of Business and Law, School of Accounting, Economics and Finance.
  2. del Corral, Julio & Alvarez, Antonio & Tauer, Loren W., 2009. "Detecting Technological Heterogeneity in New York Dairy Farms," Working Papers, Cornell University, Department of Applied Economics and Management 51143, Cornell University, Department of Applied Economics and Management.
  3. Graham, Mary, 2008. "Biophysical Modelling and Performance Measurement," 2008 Conference (52nd), February 5-8, 2008, Canberra, Australia, Australian Agricultural and Resource Economics Society 6773, Australian Agricultural and Resource Economics Society.
  4. Sauer, Johannes & Graversen, Jesper T. & Park, Timothy A., 2006. "Breathtaking or Stagnating? - Productivity, Technical Change and Structural Dynamics in Danish Organic Farming," 2006 Annual meeting, July 23-26, Long Beach, CA, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) 21481, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  5. Tsimpo Nkengne, Clarence, 2010. "Technical Efficiency and Optimal Farm Size in the Tajik's Cotton Sector," MPRA Paper 35192, University Library of Munich, Germany.

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