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Abstract
Farming activities are often financed using debt yet empirical studies that investigate the
relationship between farm debt structure and performance are still rare. In a ten years unbalanced
panel (1995-2005) of Western Australia broadacre farms, we relate the impact of long-term debt,
short-term debt and tax liability on farm performance measured by input-oriented technical
efficiency and return on assets (ROA). To check for the robustness of our results, both data
envelopment analysis (DEA) and stochastic frontier analysis (SFA) methods are employed.
Results from both models are consistent: farm production efficiency is positively related to shortterm
debt, tax liability and investment and negative related to off-farm income activities. Longterm
debt has no effect on production efficiency and ROA.