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Measuring Regional Productivity Differences in the Australian Wool Industry: A Metafrontier Approach

Author

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  • Villano, Renato A.
  • Fleming, Euan M.
  • Fleming, Pauline

Abstract

Using panel data, we estimate technology gaps for four distinct sheep-producing regions in Eastern Australia (Northern New South Wales, Central and South-Eastern New South Wales, South-Western New South Wales and South-West Victoria) that reflect spatial environmental and technological differences in wool production. A deterministic stochastic metafrontier production function model is estimated that envelops the stochastic frontiers of the four regions. This metafrontier approach enables us to estimate the environment-technology gap ratio that reflects these spatial differences in the environment and variations in production technologies in the wool enterprise for benchmarked farmers in each region. As a result, a more accurate estimation is possible of changes in total factor productivity on farms in the different regions. The major findings are that environment-technology gaps do exist between regions but they are relatively small. Greater variation is apparent within regions. Variation in technical efficiency seems to depend on the harshness of the production environment and whether consultancy advice is regularly received by the benchmarking group.

Suggested Citation

  • Villano, Renato A. & Fleming, Euan M. & Fleming, Pauline, 2008. "Measuring Regional Productivity Differences in the Australian Wool Industry: A Metafrontier Approach," 2008 Conference (52nd), February 5-8, 2008, Canberra, Australia 6036, Australian Agricultural and Resource Economics Society.
  • Handle: RePEc:ags:aare08:6036
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    File URL: http://purl.umn.edu/6036
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    References listed on IDEAS

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    1. C. J. O'Donnell & W. E. Griffiths, 2006. "Estimating State-Contingent Production Frontiers," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(1), pages 249-266.
    2. Christopher O’Donnell & D. Rao & George Battese, 2008. "Metafrontier frameworks for the study of firm-level efficiencies and technology ratios," Empirical Economics, Springer, vol. 34(2), pages 231-255, March.
    3. Greene, William, 2005. "Reconsidering heterogeneity in panel data estimators of the stochastic frontier model," Journal of Econometrics, Elsevier, vol. 126(2), pages 269-303, June.
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    Cited by:

    1. Gatti, Nicolas & Lema, Daniel & Brescia, Victor, 2015. "A Meta-Frontier Approach to Measuring Technical Efficiency and Technology Gaps in Beef Cattle Production in Argentina," 2015 Conference, August 9-14, 2015, Milan, Italy 211647, International Association of Agricultural Economists.
    2. Eihab Fathelrahman & Sherin Sherif & Dana L. K. Hoag, 2014. "Small Ruminant Production System Efficiency under Abu-Dhabi, United Arab Emirates Arid Land Conditions," Agriculture, MDPI, Open Access Journal, vol. 4(4), pages 1-20, December.

    More about this item

    Keywords

    Efficiency; Productivity; Metafrontier; Technology Gaps; Wool Production; Spatial; Livestock Production/Industries; Productivity Analysis; Research Methods/ Statistical Methods;

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