IDEAS home Printed from https://ideas.repec.org/a/ags/auagre/126554.html
   My bibliography  Save this article

Productivity and the Dairy Industry

Author

Listed:
  • Watson, Alistair S.

Abstract

Productivity measurement is useful in some circumstances but not others. Measured productivity is poor for the Australian dairy industry as a whole. This finding is consistent across a range of studies and is confirmed by other information and analysis.It is useful to explore reasons for this poor performance because some public policy questions are related to overall industry performance. In particular, productivity measurement concentrates attention on industry-based research and extension programs.Production (and exports) have increased rapidly in the dairy industry but input use has increased faster. The major change has been increased grain feeding. Both increased purchases of grain and a higher proportion of exports exacerbate the financial risks of dairy farming. Recent drought and associated water shortages in irrigated dairying areas have compounded these systematic changes. By definition, estimates of average productivity in the whole dairy industry have little to say about what is happening on individual farms. Moreover, productivity is measured using annual data on inputs and outputs. While day-to-day technical and management skills are important, many of the crucial economic decisions by farmers are long-term. Aggregate productivity analysis is a useful first step in analysing industry performance. A next step is disaggregating the data to identify inputs, regions or time periods of particular interest. The time path of prices, policy changes and the weather continue to have most effect on the dairy industry. A conclusion that follows from recent experience is that the change to increased grain feeding has not been well understood in its scientific dimension, nor well executed at the farm level. Furthermore, expected gains from specialisation in manufacturing milk production following deregulation have not been realised for technical reasons, presumably related to poor reproductive performance. In particular, it appears that farmers have been given poor information on the difference between the marginal costs and marginal benefits of concentrate feeding in different time periods and circumstances. Nor have the financial consequences been properly considered in advice that has been given to farmers. Production is not the same as productivity. Increased production and exports should not be promoted as such by dairy companie

Suggested Citation

  • Watson, Alistair S., 2005. "Productivity and the Dairy Industry," Australasian Agribusiness Review, University of Melbourne, Department of Agriculture and Food Systems, vol. 13.
    • Handle: RePEc:ags:auagre:126554
    DOI: 10.22004/ag.econ.126554
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/126554/files/Watson2.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.126554?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. 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.
    2. Kompas, Tom & Che, Tuong Nhu, 2004. "Productivity in the Australian Dairy Industry," Australasian Agribusiness Review, University of Melbourne, Department of Agriculture and Food Systems, vol. 12.
    3. Graham, Mary, 2004. "Environmental efficiency: meaning and measurement and application to Australian dairy farms," Working Papers eco_2004_02, Deakin University, Department of Economics.
    4. Fraser, Iain & Graham, Mary, 2005. "Efficiency Measurement of Australian Dairy Farms: National and Regional Performance," Australasian Agribusiness Review, University of Melbourne, Department of Agriculture and Food Systems, vol. 13.
    5. Harris, David N., 2004. "Producer adjustment to policy reform: A case study on the Australian dairy industry," 2004 Conference (48th), February 11-13, 2004, Melbourne, Australia 58456, Australian Agricultural and Resource Economics Society.
    6. 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), pages 1-18.
    7. Graham, Mary & Fraser, Iain, 2003. "Scale Efficiency In Australian Dairy Farms," 2003 Conference (47th), February 12-14, 2003, Fremantle, Australia 57878, Australian Agricultural and Resource Economics Society.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kelvin Balcombe & Hristos Doucouliagos & Iain Fraser, 2007. "Input usage, output mix and industry deregulation: an analysis of the Australian dairy manufacturing industry ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(2), pages 137-156, June.
    2. Seyoum, Emayenesh & Karanja, Francis, 2014. "Investment decisions of dairy farmers in south-west Victoria under price and yield uncertainty," 2014 Conference (58th), February 4-7, 2014, Port Macquarie, Australia 183419, Australian Agricultural and Resource Economics Society.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gelan, Ayele & Muriithi, Beatrice W., 2015. "Examining Returns to Scale in Smallholder Dairy Farms in East Africa," Quarterly Journal of International Agriculture, Humboldt-Universitaat zu Berlin, vol. 54(3), pages 1-23, September.
    2. Kelvin Balcombe & Hristos Doucouliagos & Iain Fraser, 2007. "Input usage, output mix and industry deregulation: an analysis of the Australian dairy manufacturing industry ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(2), pages 137-156, June.
    3. I. Fraser & W. Horrace, 2003. "Technical Efficiency of Australian Wool Production: Point and Confidence Interval Estimates," Journal of Productivity Analysis, Springer, vol. 20(2), pages 169-190, September.
    4. Henderson, Benjamin B. & Kingwell, Ross S., 2001. "An Investigation of the Technical and Allocative Efficiency of Broadacre Farmers," 2002 Conference (46th), February 13-15, 2002, Canberra, Australia 125109, Australian Agricultural and Resource Economics Society.
    5. Wanglin Ma & Kathryn Bicknell & Alan Renwick, 2019. "Feed use intensification and technical efficiency of dairy farms in New Zealand," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 63(1), pages 20-38, January.
    6. Tozer, Peter R. & Villano, Renato, 2013. "Decomposing Productivity and Efficiency among Western Australian Grain Producers," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 38(3), pages 1-15.
    7. Paul Rouse & Julie Harrison & Li Chen, 2010. "Data Envelopment Analysis: A Practical Tool to Measure Performance," Australian Accounting Review, CPA Australia, vol. 20(2), pages 165-177, June.
    8. Graham, Mary, 2008. "Biophysical Modelling and Performance Measurement," 2008 Conference (52nd), February 5-8, 2008, Canberra, Australia 6773, Australian Agricultural and Resource Economics Society.
    9. Sheng, Yu & Chancellor, Will & Jackson, Thomas, 2020. "Deregulation reforms, resource reallocation and aggregate productivity growth in the Australian dairy industry," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 64(2), April.
    10. Mohammed, Rezgar & Saghaian, Sayed, 2014. "Technical Efficiency Estimation of Rice Production in South Korea," 2014 Annual Meeting, February 1-4, 2014, Dallas, Texas 162231, Southern Agricultural Economics Association.
    11. Yuhang Bai & Kuixing Han & Lichun Xiong & Yifei Li & Rundong Liao & Fengting Wang, 2022. "Differences and Factors of Raw Milk Productivity between China and the United States," Agriculture, MDPI, vol. 12(11), pages 1-13, November.
    12. Scheierling, Susanne M. & Treguer, David O. & Booker, James F. & Decker, Elisabeth, 2014. "How to assess agricultural water productivity ? looking for water in the agricultural productivity and efficiency literature," Policy Research Working Paper Series 6982, The World Bank.
    13. Amar Oukil & Slim Zekri, 2021. "Investigating farming efficiency through a two stage analytical approach: Application to the agricultural sector in Northern Oman," Papers 2104.10943, arXiv.org.
    14. Hamsa, K.R. & Umesh, K.B., 2021. "Technical Efficiency in Finger Millet and Paddy Crop in Southern Karnataka: Application of Data Envelop Analysis and Stochastic Frontier Approach," 2021 Conference, August 17-31, 2021, Virtual 315862, International Association of Agricultural Economists.
    15. Pahlavan, Reza & Omid, Mahmoud & Akram, Asadollah, 2011. "Energy use efficiency in greenhouse tomato production in Iran," Energy, Elsevier, vol. 36(12), pages 6714-6719.
    16. Bopp, Carlos & Jara-Rojas, Roberto & Bravo-Ureta, Boris & Engler, Alejandra, 2022. "Irrigation water use, shadow values and productivity: Evidence from stochastic production frontiers in vineyards," Agricultural Water Management, Elsevier, vol. 271(C).
    17. Villano, Renato A. & Fleming, Euan M. & Farrell, Terence C. & Fleming, Pauline, 2006. "Productivity Change in the Australian Sheep Industry Revisited," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25593, International Association of Agricultural Economists.
    18. Ramilan, Thiagarajah & Scrimgeour, Frank & Marsh, Dan, 2011. "Analysis of environmental and economic efficiency using a farm population micro-simulation model," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 81(7), pages 1344-1352.
    19. Vavra, Pavel & Colman, David, 2003. "The analysis of UK crop allocation at the farm level: implications for supply response analysis," Agricultural Systems, Elsevier, vol. 76(2), pages 697-713, May.
    20. Chad Turner & Robert Tamura & Sean Mulholland, 2013. "How important are human capital, physical capital and total factor productivity for determining state economic growth in the United States, 1840–2000?," Journal of Economic Growth, Springer, vol. 18(4), pages 319-371, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:auagre:126554. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: http://www.agrifood.info/review/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.