Estimating technical efficiency of Australian dairy farms using alternative frontier methodologies

Author: Balcombe Kelvin   Fraser Iain   Kim Jae H.  

Publisher: Routledge Ltd

ISSN: 1466-4283

Source: Applied Economics, Vol.38, Iss.19, 2006-10, pp. : 2221-2236

Disclaimer: Any content in publications that violate the sovereignty, the constitution or regulations of the PRC is not accepted or approved by CNPIEC.

Previous Menu Next

Abstract

Technical efficiency is estimated and examined for a cross-section of Australian dairy farms using various frontier methodologies; Bayesian and Classical stochastic frontiers, and Data Envelopment Analysis. The results indicate technical inefficiency is present in the sample data. Also identified are statistical differences between the point estimates of technical efficiency generated by the various methodologies. However, the rank of farm level technical efficiency is statistically invariant to the estimation technique employed. Finally, when confidence/credible intervals of technical efficiency are compared significant overlap is found for many of the farms' intervals for all frontier methods employed. The results indicate that the choice of estimation methodology may matter, but the explanatory power of all frontier methods is significantly weaker when interval estimate of technical efficiency is examined.