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Efficiency Measurement of Australian Dairy Farms: National and Regional Performance

  • Fraser, Iain
  • Graham, Mary

In this paper we use Data Envelopment Analysis (DEA) to estimate technical efficiency for a sample of 1742 Australian dairy farms. Bearing in mind data limitations we find that average technical efficiency is 59 per cent, but there are significant regional differences. These results reflect differences in State level milk marketing arrangements in place before dairy deregulation in July 2000 providing an ex post explanation for the changing composition of dairy farms in Australia. We also examine two important technical aspects of DEA implementation. First, how changes in model input specification alter the relative performance of farms. Second, we employ a simple bootstrap procedure to show how changes in sample size affects estimates of technical efficiency. These results have simple but important implications for the use of DEA as an industry-benchmarking tool.

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File URL: http://purl.umn.edu/126400
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Article provided by University of Melbourne, Melbourne School of Land and Environment in its journal Australasian Agribusiness Review.

Volume (Year): 13 (2005)
Issue (Month): ()
Pages:

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Handle: RePEc:ags:auagre:126400
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  1. Edwards, Geoff W., 2003. "The story of deregulation in the dairy industry," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 47(1), March.
  2. L. Martin Cloutier & Robin Rowley, 1993. "Relative Technical Efficiency: Data Envelopment Analysis and Quebec's Dairy Farms," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 41(2), pages 169-176, 07.
  3. Jaforullah, Mohammad & Whiteman, John, 1999. "Scale efficiency in the New Zealand dairy industry: a non-parametric approach," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 43(4), December.
  4. Alfons Weersink & Calum G. Turvey & Abdulahi Godah, 1990. "Decomposition Measures of Technical Efficiency for Ontario Dairy Farms," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 38(3), pages 439-456, November.
  5. Léopold Simar & Paul Wilson, 2000. "Statistical Inference in Nonparametric Frontier Models: The State of the Art," Journal of Productivity Analysis, Springer, vol. 13(1), pages 49-78, January.
  6. Fraser, I. & Cordina, D., 1999. "An application of data envelopment analysis to irrigated dairy farms in Northern Victoria, Australia," Agricultural Systems, Elsevier, vol. 59(3), pages 267-282, March.
  7. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
  8. Geoff Edwards, 2003. "The story of deregulation in the dairy industry," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 47(1), pages 75-98, 03.
  9. Doucouliagos, Hristos & Hone, Phillip, 2000. "Deregulation and Subequilibrium in the Australian Dairy Processing Industry," The Economic Record, The Economic Society of Australia, vol. 76(233), pages 152-62, June.
  10. Chambers, Robert G. & Fare, Rolf & Jaenicke, Edward & Lichtenberg, Erik, 1998. "Using dominance in forming bounds on DEA models: The case of experimental agricultural data," Journal of Econometrics, Elsevier, vol. 85(1), pages 189-203, July.
  11. Kumbhakar, Subal C & Ghosh, Soumendra & McGuckin, J Thomas, 1991. "A Generalized Production Frontier Approach for Estimating Determinants of Inefficiency in U.S. Dairy Farms," Journal of Business & Economic Statistics, American Statistical Association, vol. 9(3), pages 279-86, July.
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