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Productivity Change in the Australian Sheep Industry Revisited

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  • Villano, Renato A.
  • Fleming, Euan M.
  • Farrell, Terence C.
  • Fleming, Pauline

Abstract

Recent low estimates of total factor productivity change for wool producers in the Australian sheep industry indicate that they are struggling to improve their performance. This evidence is at odds with the views of many technical observers of industry performance, prompting us to re-estimate total factor productivity change for farmers in a benchmarking group in south-west Victoria who had been the subject of such a negative finding. An important transformation in sheep production in Australia in recent decades has been a change in enterprise mix, notably a greater presence of prime lamb production. This change complicates the process of computing efficiency and productivity change. We demonstrate that a multi-input multi-output approach, based on the use of a stochastic output distance function, is essential to avoid errors of estimation of productivity change. Following this approach, we find substantial technical progress and productivity gains on farms over the period, 1995/1996 to 2003/2004. Growth in total factor productivity on both specialist wool-producing properties and properties operating wool and prime lamb enterprises averaged around an estimated 5 per cent per annum over the study period.

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Bibliographic Info

Paper provided by International Association of Agricultural Economists in its series 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia with number 25593.

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Date of creation: 2006
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Handle: RePEc:ags:iaae06:25593

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Related research

Keywords: sheep; stochastic output distance function; technical change; total factor productivity; Livestock Production/Industries; Productivity Analysis; C23; O3; Q12; Q16;

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  1. Fraser, Iain & Hone, Phillip, 2001. "Farm-level efficiency and productivity measurement using panel data: wool production in south-west Victoria," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 45(2), June.
  2. Denis Lawrence & Lloyd McKay, 1980. "Inputs, Outputs And Productivity Change In The Australian Sheep Industry," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 24(1), pages 46-59, 04.
  3. John D. Mullen & Thomas L. Cox, 1996. "Measuring Productivity Growth In Australian Broadacre Agriculture," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 40(3), pages 189-210, December.
  4. Mullen, John D. & Cox, Thomas L., 1996. "Measuring Productivity Growth In Australian Broadacre Agriculture," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 40(03), December.
  5. Lawrence, Denis & McKay, Lloyd, 1980. "Inputs, Outputs And Productivity Change In The Australian Sheep Industry," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 24(01), April.
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Cited by:
  1. George Verikios, 2006. "Understanding the World Wool Market: Trade, Productivity and Grower Incomes. Part 5: Relative Returns to Australian Wool Producers of On- and Off-Farm Research," Economics Discussion / Working Papers 06-23, The University of Western Australia, Department of Economics.

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