2005, Volume 13, Paper 7

ISSN: 1883-5675

Efficiency Measurement of Australian Dairy Farms: National and Regional Performance

Iain Fraser –  Department of Agricultural Sciences, Imperial College, London

Mary Graham – School of Economics, Deakin University

Abstract 

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.

Key words: Dairy farms, DEA, regions, bootstrapping

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