Files
Abstract
Deregulation of the Australian dairy industry, specifically the removal of price subsidies
to ‘market milk’, as well as ongoing drought in many dairy regions, has placed
considerable pressure on farm cash income and a search for ways in which dairy farms
can be made to operate more efficiently. Using traditional farm survey data and a
unique biannual data set on farm technology use, this paper estimates a stochastic
production frontier and technical efficiency model for dairy farms in New South
Wales and Victoria, determining the relative importance of each input in dairy production,
the effects of key technology variables on farm efficiency, and overall farm
profiles based on the efficiency rankings of dairy producers. Results show that production
exhibits constant returns to scale and although feed concentration and the
number of cows milked at peak season matter, the key determinants of differences in
dairy farm efficiency are the type of dairy shed used and the proportion of irrigated
farm area. Overall farm profiles indicate that those in the ‘high efficiency group’
largely employ either rotary or swing-over dairy shed technology and have almost
three times the proportional amount of land under irrigation.