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Productivity pathways: climate-adjusted production frontiers for the Australian broadacre cropping industry

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  • Hughes, Neal
  • Lawson, Kenton
  • Davidson, Alistair
  • Jackson, Tom
  • Sheng, Yu

Abstract

This study introduces two advances to the aggregate productivity index methodology typically employed by ABARES. First, it accounts for the effects of climate variability on measured productivity by matching spatial climate data to individual farms in the ABARES farm surveys database. Second, a farm-level production frontier estimation technique is employed to facilitate the decomposition of productivity change into several key components, including technical change and technical efficiency change. The study makes use of farm-level data from the ABARES Australian agricultural and grazing industries survey database. An unbalanced panel dataset is constructed containing 13 430 observations (4255 farms) over the period 1977–78 to 2007–08. Spatial climate data, including winter and summer seasonal rainfall and average maximum and minimum temperatures, were obtained via the Australian Water Availability Project. These data were mapped to individual farms using Geographic Information System methods. The study employed stochastic frontier analysis methods to estimate a production frontier with time varying technical efficiency effects of the form proposed by Battese and Coelli (1992). Production frontiers are estimated for each of the three major Grains Research and Development Corporation regions: southern, northern and western. Selected climate variables are shown to display a high degree of explanatory power over farm output. The results confirm that deterioration in average climate conditions has contributed significantly to the decline in estimated productivity over the post-2000 period. Technical change is shown to be the primary driver of productivity growth in the industry in the long run, offset by a gradual decline in technical efficiency. After controlling for climate variability, a gradual decline in the rate of technical change is still observed.

Suggested Citation

  • Hughes, Neal & Lawson, Kenton & Davidson, Alistair & Jackson, Tom & Sheng, Yu, 2011. "Productivity pathways: climate-adjusted production frontiers for the Australian broadacre cropping industry," 2011 Conference (55th), February 8-11, 2011, Melbourne, Australia 100563, Australian Agricultural and Resource Economics Society.
  • Handle: RePEc:ags:aare11:100563
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    File URL: http://purl.umn.edu/100563
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    References listed on IDEAS

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    1. Christopher J. O'Donnell, 2010. "Measuring and decomposing agricultural productivity and profitability change ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(4), pages 527-560, October.
    2. Christopher O’Donnell & Robert Chambers & John Quiggin, 2010. "Efficiency analysis in the presence of uncertainty," Journal of Productivity Analysis, Springer, vol. 33(1), pages 1-17, February.
    3. Boris Bravo-Ureta & Daniel Solís & Víctor Moreira López & José Maripani & Abdourahmane Thiam & Teodoro Rivas, 2007. "Technical efficiency in farming: a meta-regression analysis," Journal of Productivity Analysis, Springer, vol. 27(1), pages 57-72, February.
    4. Sheng, Yu & Mullen, John D. & Zhao, Shiji, 2010. "Has growth in productivity in Australian broadacre agriculture slowed?," 2010 Conference (54th), February 10-12, 2010, Adelaide, Australia 59266, Australian Agricultural and Resource Economics Society.
    5. Chambers, Christopher P. & Miller, Alan D., "undated". "Inefficiency," Working Papers WP2011/14, University of Haifa, Department of Economics, revised 30 Nov 2011.
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    1. Hunt, Warren & Birch, Colin & Vanclay, Frank & Coutts, Jeff, 2014. "Recommendations arising from an analysis of changes to the Australian agricultural research, development and extension system," Food Policy, Elsevier, vol. 44(C), pages 129-141.
    2. Yu Sheng & Shiji Zhao & Katarina Nossal & Dandan Zhang, 2015. "Productivity and farm size in Australian agriculture: reinvestigating the returns to scale," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 59(1), pages 16-38, January.
    3. Nossal, Katarina, 2012. "Innovative capacity and productivity: an empirical analysis of Australian grain growers," 2012 Conference (56th), February 7-10, 2012, Freemantle, Australia 124353, Australian Agricultural and Resource Economics Society.
    4. Kingwell, Ross & Marie Jeanne, Rose & Hailu, Atakelty, 2016. "A longitudinal analysis of some Australian broadacre farms' greenhouse gas emissions, farming systems and efficiency of production," Agricultural Systems, Elsevier, vol. 146(C), pages 120-128.
    5. Lachaud, Michee & Bravo-Ureta, Boris & Ludena, Carlos, 2015. "Agricultural Productivity Growth in Latin America and the Caribbean (LAC): An analysis of Climatic Effects, Convergence, and Catch-up," 2015 Conference, August 9-14, 2015, Milan, Italy 211721, International Association of Agricultural Economists.
    6. Blight, D.G. & Craswell, E.T. & Mullen, J.D., 2013. "Doing Well by Doing Good: International Agricultural Research – How it benefits Australia as well as developing countries," Food Security Task Force Reports 244396, Crawford Fund.
    7. Qi, Lingqiao & Bravo-Ureta, Boris E. & Cabrera, Victor E., 2014. "From Cold To Hot: A Preliminary Analysis Of Climatic Effects On The Productivity Of Wisconsin Dairy Farms," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 172411, Agricultural and Applied Economics Association.
    8. Hutchings, T.R., 2013. "Financial risk on dryland farms in south-eastern Australia," Dissertations-Doctoral 204434, AgEcon Search.
    9. Islam, Nazrul & Xayavong, Vilaphonh & Anderton, Lucy & Feldman, David, 2014. "Farm productivity in an Australian region affected by a changing climate," 2014 Conference (58th), February 4-7, 2014, Port Maquarie, Australia 165842, Australian Agricultural and Resource Economics Society.
    10. Lachaud, Michee Arnold & Bravo-Ureta, Boris E. & Ludena, Carlos E., 2015. "Agricultural productivity growth in Latin America and the Caribbean and other world regions: An analysis of climatic effects, convergence and catch-up," Working Papers 40, University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy.
    11. Vidoli, Francesco & Cardillo, Concetta & Fusco, Elisa & Canello, Jacopo, 2016. "Spatial nonstationarity in the stochastic frontier model: An application to the Italian wine industry," Regional Science and Urban Economics, Elsevier, vol. 61(C), pages 153-164.
    12. Stephan, Mary, 2013. "Trends in total factor productivity of five key Commonwealth managed fisheries," 2013 Conference (57th), February 5-8, 2013, Sydney, Australia 152180, Australian Agricultural and Resource Economics Society.
    13. repec:spr:climat:v:143:y:2017:i:3:d:10.1007_s10584-017-2013-1 is not listed on IDEAS
    14. Mullen, John D., 2011. "Public investment in agricultural research and development in Australia remains a sensible policy option," AFBM Journal, Australasian Farm Business Management Network, vol. 8(2).
    15. Bradbear, Catherine & Friel, Sharon, 2013. "Integrating climate change, food prices and population health," Food Policy, Elsevier, vol. 43(C), pages 56-66.
    16. Grundy, Michael J. & Bryan, Brett A. & Nolan, Martin & Battaglia, Michael & Hatfield-Dodds, Steve & Connor, Jeffery D. & Keating, Brian A., 2016. "Scenarios for Australian agricultural production and land use to 2050," Agricultural Systems, Elsevier, vol. 142(C), pages 70-83.
    17. Mullen, John & Keogh, Mick, 2013. "The Future Productivity and Competitiveness Challenge for Australian Agriculture," 2013 Conference (57th), February 5-8, 2013, Sydney, Australia 152170, Australian Agricultural and Resource Economics Society.

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    Keywords

    Productivity Analysis;

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