Broadacre Farm Productivity Trajectories and Farm Characteristics

Improving farm productivity is touted as essential for the future prospects of Australian agriculture, particularly for the export-oriented broadacre farm sector. Accordingly, this paper examines productivity gain in a large sample of Australian farms over the period 2002 to 2011. The annual components of productivity of the same group of 223 farms are measured each year for a decade by using a multiplicatively complete Färe-Primont index number and applying DEA methods. Results show the variability and trends in these farms’ annual productivity. Farms are classed according to the geometric mean of their total factor productivity and the variance of this productivity. This relationship displays convexity, and high growth in productivity is associated with greater volatility in productivity. Only a small proportion of farms over the decade achieved high, stable growth in productivity. Most farms either experienced high growth and high variability in productivity or low growth and low variability in productivity. The characteristics of farm businesses in both categories are examined to ascertain links between farm characteristics and their trend in farm productivity. Key findings are that, overall, most farms experienced growth in their total factor productivity with the principal cause of this growth being greater technical efficiency rather than technical change. Farms that experienced the highest growth in their total factor productivity typically increased their farm size, became more crop dominant, often operated farms in lower-rainfall regions, generated more profit and were less exposed to debt and generated more crop yield and more livestock income per millimetre (mm) of growing season rainfall.