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Cost Efficiency of Dairy Farming in New Zealand: A Stochastic Frontier Analysis

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  • Jiang, Nan
  • Sharp, Basil

Abstract

Research on the efficiency of dairy farming in New Zealand is limited and has focused predominantly on technical efficiency. We contribute to the literature on empirical analysis by examining cost efficiency of New Zealand dairy farms. We construct simplified translog stochastic cost frontiers based on an unbalanced panel of 824 farms. Average cost efficiency is estimated at 83 percent for dairy farms in the North Island and 80 percent for farms in the South Island. Our analysis of the relationship between inefficiency and farm characteristics suggests significant associations between cost efficiency and capital intensity, livestock quality, and farm size.

Suggested Citation

  • Jiang, Nan & Sharp, Basil, 2014. "Cost Efficiency of Dairy Farming in New Zealand: A Stochastic Frontier Analysis," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 43(3), pages 1-13, December.
    • Handle: RePEc:ags:arerjl:190994
    DOI: 10.22004/ag.econ.190994
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    Cited by:

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    2. Le, Stephanie & Jeffrey, Scott R. & An, Henry, 2017. "Greenhouse gas emissions and productive efficiency in Alberta dairy production: What are the trade-offs?," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258487, Agricultural and Applied Economics Association.
    3. Anastasiadis, Simon & Kerr, Suzi, 2012. "Mitigation and Heterogeneity in Management Practices on New Zealand Dairy Farms," 2012 Conference, August 31, 2012, Nelson, New Zealand 136039, New Zealand Agricultural and Resource Economics Society.
    4. Welsh, Melissa & Marshall, Sarah & Noy, Ilan, 2016. "Modelling New Zealand milk: From the farm to the factory," Working Paper Series 5280, Victoria University of Wellington, School of Economics and Finance.
    5. Soliman, Tarek & Djanibekov, Utkur, 2018. "Assessing dairy farming eco-efficiency in New Zealand: A two–stage data envelopment analysis," 2018 Annual Meeting, August 5-7, Washington, D.C. 274374, Agricultural and Applied Economics Association.
    6. Robbie Maris & Zack Dorner, 2021. "Cost Efficiency Analysis using Operating Profit Margin for the New Zealand Dairy Industry," Working Papers in Economics 21/04, University of Waikato.
    7. David Fleming & Suzi Kerr & Edmund Lou, 2019. "Cows, cash and climate: Low stocking rates, high-performing cows, emissions and profitability across New Zealand farms," Working Papers 19_11, Motu Economic and Public Policy Research.
    8. Welsh, Melissa & Marshall, Sarah & Noy, Ilan, 2016. "Modelling New Zealand milk: From the farm to the factory," Working Paper Series 19496, Victoria University of Wellington, School of Economics and Finance.

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