IDEAS home Printed from https://ideas.repec.org/a/ags/aareaj/260086.html
   My bibliography  Save this article

Broadacre farm productivity and profitability in south-western Australia

Author

Listed:
  • Islam, Nazrul
  • Xayavong, Vilaphonh
  • Kingwell, Ross

Abstract

This paper examines broadacre farm performance in south-western Australia. This region has experienced pronounced climate variability and volatile commodity prices since the late 1990s. Relationships between productivity and profitability are explored using panel data from 47 farms in the study region. The data are analysed using nonparametric methods. By applying the Fare-Primont index method, components of farm productivity and profitability are measured over the period 1998–2008. Growth in productivity is found to be the main contributor of profitability. Gains in efficiency and technical change are identified as jointly and similarly important in their contribution to total factor productivity for the farm sample in the region from 1998 to 2008. However, across environments, efficiency gains play an increasingly important role in influencing productivity as growing season rainfall increases. We conclude that R,D&E that delivers further improvement in technical efficiency and technical change is needed to support the profitability of farms across the study region.

Suggested Citation

  • Islam, Nazrul & Xayavong, Vilaphonh & Kingwell, Ross, 2014. "Broadacre farm productivity and profitability in south-western Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 58(2), April.
    • Handle: RePEc:ags:aareaj:260086
    DOI: 10.22004/ag.econ.260086
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/260086/files/ajar12040.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.260086?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    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. Ilke Van Beveren, 2012. "Total Factor Productivity Estimation: A Practical Review," Journal of Economic Surveys, Wiley Blackwell, vol. 26(1), pages 98-128, February.
    3. Kingwell, Ross S., 2011. "Managing complexity in modern farming," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 55(1), pages 1-23.
    4. Mullen, John D., 2007. "Productivity Growth and the Returns from Public Investment in R&D in Australian Broadacre Agriculture," 2007 Conference (51st), February 13-16, 2007, Queenstown, New Zealand 9451, Australian Agricultural and Resource Economics Society.
    5. Ruhul A. Salim & Nazrul Islam, 2010. "Exploring the impact of R&D and climate change on agricultural productivity growth: the case of Western Australia ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(4), pages 561-582, October.
    6. Unknown, 2005. "Trends in Australian Agriculture," Commission Research Papers 31903, Productivity Commission.
    7. repec:bla:canjag:v:58:y:2010:i:s1:p:531-554 is not listed on IDEAS
    8. repec:lic:licosd:18207 is not listed on IDEAS
    9. Productivity Commission, 2005. "Trends in Australian Agriculture," Research Papers 0502, Productivity Commission, Government of Australia.
    10. Shingo Kimura & Jesús Antón, 2011. "Risk Management in Agriculture in Australia," OECD Food, Agriculture and Fisheries Papers 39, OECD Publishing.
    11. Johannes Van Biesebroeck, 2007. "Robustness Of Productivity Estimates," Journal of Industrial Economics, Wiley Blackwell, vol. 55(3), pages 529-569, September.
    12. John Quiggin & David Adamson & Sarah Chambers & Peggy Schrobback, 2010. "Climate Change, Uncertainty, and Adaptation: The Case of Irrigated Agriculture in the Murray–Darling Basin in Australia," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 58(4), pages 531-554, December.
    13. E. Grifell-Tatjé & C. A. K. Lovell, 1999. "Profits and Productivity," Management Science, INFORMS, vol. 45(9), pages 1177-1193, September.
    14. John Mullen, 2007. "Productivity growth and the returns from public investment in R&D in Australian broadacre agriculture," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(4), pages 359-384, December.
    15. Yujiro Hayami, 1969. "Sources of Agricultural Productivity Gap Among Selected Countries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 51(3), pages 564-575.
    16. George Battese & D. Rao & Christopher O'Donnell, 2004. "A Metafrontier Production Function for Estimation of Technical Efficiencies and Technology Gaps for Firms Operating Under Different Technologies," Journal of Productivity Analysis, Springer, vol. 21(1), pages 91-103, January.
    17. Ross Garnaut, 2010. "Climate change and the Australian agricultural and resource industries," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(1), pages 9-25, January.
    18. David Hadley & Xavier Irz, 2008. "Productivity and farm profit - a microeconomic analysis of the cereal sector in England and Wales," Applied Economics, Taylor & Francis Journals, vol. 40(5), pages 613-624.
    19. Christopher O’Donnell & D. Rao & George Battese, 2008. "Metafrontier frameworks for the study of firm-level efficiencies and technology ratios," Empirical Economics, Springer, vol. 34(2), pages 231-255, March.
    20. Lau, Lawrence J. & Yotopoulos, Pan A., 1989. "The meta-production function approach to technological change in world agriculture," Journal of Development Economics, Elsevier, vol. 31(2), pages 241-269, October.
    21. 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.
    22. Ross Kingwell, 2011. "Managing complexity in modern farming," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 55(1), pages 12-34, January.
    23. 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.
    24. Mullen, John D., 2007. "Productivity growth and the returns from public investment in R&D in Australian broadacre agriculture," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(4), pages 1-26.
    25. Kingwell, Ross S., 2006. "Climate change in Australia: agricultural impacts and adaptation," Australasian Agribusiness Review, University of Melbourne, Department of Agriculture and Food Systems, vol. 14.
    26. C.J. O'Donnell, 2010. "DPIN Version 1.0: A Program for Decomposing Productivity Index Numbers," CEPA Working Papers Series WP012010, School of Economics, University of Queensland, Australia.
    27. Garnaut, Ross, 2010. "Climate change and the Australian agricultural and resource industries," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(1), pages 1-17.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dakpo, K Hervé & Desjeux, Yann & Jeanneaux, Philippe & Latruffe , Laure, 2017. "Productivity, technical efficiency and technological change in French agriculture during 2002-2014: A Färe-Primont index decomposition," Working Papers 263010, Institut National de la recherche Agronomique (INRA), Departement Sciences Sociales, Agriculture et Alimentation, Espace et Environnement (SAE2).
    2. Dakpo, K Hervé & Desjeux, Yann & Jeanneaux, Philippe & Latruffe, Laure, 2016. "Productivity, efficiency and technological change in French agriculture during 2002-2014: A Färe-Primont index decomposition," 149th Seminar, October 27-28, 2016, Rennes, France 244793, European Association of Agricultural Economists.
    3. María Molinos-Senante & Alexandros Maziotis & Ramon Sala-Garrido, 2017. "Assessment of the Total Factor Productivity Change in the English and Welsh Water Industry: a Färe-Primont Productivity Index Approach," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 31(8), pages 2389-2405, June.
    4. Chancellor, Will & Hughes, Neal & Zhao, Shiji & Soh, Wei Ying & Valle, Haydn & Boult, Christopher, 2021. "Controlling for the effects of climate on total factor productivity: A case study of Australian farms," Food Policy, Elsevier, vol. 102(C).
    5. S. C. West & A. W. Mugera & R. S. Kingwell, 2022. "The choice of efficiency benchmarking metric in evaluating firm productivity and viability," Journal of Productivity Analysis, Springer, vol. 57(2), pages 193-211, April.
    6. Łukasz Kryszak & Marta Guth & Bazyli Czyżewski, 2021. "Determinants of farm profitability in the EU regions. Does farm size matter?," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 67(3), pages 90-100.
    7. Viet Nguyen, Thanh & Simioni, Michel & Le Van, Dao, 2019. "Assessment of TFP change at provincial level in Vietnam: New evidence using Färe–Primont productivity index," Economic Analysis and Policy, Elsevier, vol. 64(C), pages 329-345.
    8. Briec, Walter & Kerstens, Kristiaan & Prior, Diego & Van de Woestyne, Ignace, 2018. "Testing general and special Färe-Primont indices: A proposal for public and private sector synthetic indices of European regional expenditures and tourism," European Journal of Operational Research, Elsevier, vol. 271(2), pages 756-768.
    9. Neal Hughes & Michael Lu & Wei Ying Soh & Kenton Lawson, 2022. "Modelling the effects of climate change on the profitability of Australian farms," Climatic Change, Springer, vol. 172(1), pages 1-22, May.
    10. Temoso, Omphile & Villano, Renato & Hadley, David, 2015. "Agricultural productivity, efficiency and growth in a semi-arid country: a case study of Botswana," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 10(3), pages 1-15, September.
    11. Reziti, Ioanna, 2019. "Total factor productivity change of agriculture in five Southern European countries," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 0(Issue 2).
    12. Kevin J. Fox & Yu Sheng & Tom Jackson & Shiji Zhao & Dandan Zhang, 2017. "Measuring Output, Input and Total Factor Productivity in Australian Agriculture: An Industry-Level Analysis," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 63, pages 169-193, February.
    13. Ioanna Reziti & Leonidas Zangelidis, 2019. "Regional Productivity and Efficiency Growth in Greek Agriculture," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 69(4), pages 3-20, October-D.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. 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 Macquarie, Australia 165842, Australian Agricultural and Resource Economics Society.
    3. Islam, Nazrul & Kingwell, Ross & Xayavong, Vilaphonh & Anderton, Lucy & Feldman, David & Speijers, Jane, 2018. "Broadacre Farm Productivity Trajectories and Farm Characteristics," Australasian Agribusiness Review, University of Melbourne, Department of Agriculture and Food Systems, vol. 26.
    4. Mullen, John D., 2012. "Public investment in agricultural research and development in Australia remains a sensible policy option," AFBM Journal, Australasian Farm Business Management Network, vol. 8(2), pages 1-11, April.
    5. Sheng, Yu & Zhao, Shiji & Nossal, Katarina & Zhang, Dandan, 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), January.
    6. Gatti, Nicolas & Lema, Daniel & Brescia, Victor, 2015. "A Meta-Frontier Approach to Measuring Technical Efficiency and Technology Gaps in Beef Cattle Production in Argentina," 2015 Conference, August 9-14, 2015, Milan, Italy 211647, International Association of Agricultural Economists.
    7. Sheng, Yu & Gray, Emily M. & Mullen, John D., 2011. "Public investment in R&D and extension and productivity in Australian broadacre agriculture," 2011 Conference (55th), February 8-11, 2011, Melbourne, Australia 100712, Australian Agricultural and Resource Economics Society.
    8. Brendan Lynch & Rick S. Llewellyn & Wendy J. Umberger & Marit E. Kragt, 2018. "Farmer interest in joint venture structures in the Australian broadacre grains sector," Agribusiness, John Wiley & Sons, Ltd., vol. 34(2), pages 472-491, March.
    9. Marijn Verschelde & Michel Dumont & Glenn Rayp & Bruno Merlevede, 2016. "Semiparametric stochastic metafrontier efficiency of European manufacturing firms," Journal of Productivity Analysis, Springer, vol. 45(1), pages 53-69, February.
    10. Michee Arnold Lachaud & Boris E. Bravo-Ureta & Carlos E. Ludena, 2017. "Agricultural productivity in Latin America and the Caribbean in the presence of unobserved heterogeneity and climatic effects," Climatic Change, Springer, vol. 143(3), pages 445-460, August.
    11. Lawes, R.A. & Kingwell, R.S., 2012. "A longitudinal examination of business performance indicators for drought-affected farms," Agricultural Systems, Elsevier, vol. 106(1), pages 94-101.
    12. Tim Lefroy & James Key, 2018. "Determinants of Broadacre Farming Efficiency in Western Australia: A Stochastic Frontier Analysis," Economic Papers, The Economic Society of Australia, vol. 37(2), pages 180-196, June.
    13. Víctor Moreira & Boris Bravo-Ureta, 2010. "Technical efficiency and metatechnology ratios for dairy farms in three southern cone countries: a stochastic meta-frontier model," Journal of Productivity Analysis, Springer, vol. 33(1), pages 33-45, February.
    14. David Colman, 2010. "Agriculture's terms of trade: issues and implications," Agricultural Economics, International Association of Agricultural Economists, vol. 41(s1), pages 1-15, November.
    15. 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.
    16. Owusu, Eric S. & Bravo-Ureta, Boris E., 2022. "Reap when you sow? The productivity impacts of early sowing in Malawi," Agricultural Systems, Elsevier, vol. 199(C).
    17. Hang, Ye & Sun, Jiasen & Wang, Qunwei & Zhao, Zengyao & Wang, Yizhong, 2015. "Measuring energy inefficiency with undesirable outputs and technology heterogeneity in Chinese cities," Economic Modelling, Elsevier, vol. 49(C), pages 46-52.
    18. Afsharian, Mohsen & Ahn, Heinz & Harms, Sören Guntram, 2019. "Performance comparison of management groups under centralised management," European Journal of Operational Research, Elsevier, vol. 278(3), pages 845-854.
    19. Ruhul A. Salim & Nazrul Islam, 2010. "Exploring the impact of R&D and climate change on agricultural productivity growth: the case of Western Australia ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(4), pages 561-582, October.
    20. Thanh Pham Thien Nguyen & Son Hong Nghiem & Eduardo Roca & Parmendra Sharma, 2016. "Efficiency, innovation and competition: evidence from Vietnam, China and India," Empirical Economics, Springer, vol. 51(3), pages 1235-1259, November.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aareaj:260086. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaresea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.