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An analysis of the factors associated with technical and scale efficiency of Irish dairy farms

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  • Kelly, E
  • Shalloo, L
  • Geary, U
  • Kinsella, A.
  • Thorne, F
  • Wallace, M

Abstract

The objectives of this study were to estimate the levels of technical and scale efficiency for a sample of pasture based Irish dairy producers, to identify the factors that contributed to reaching the optimum scale and to examine the relationship between technical and scale efficiency with farm size, intensification and specialisation. Efficiency scores were calculated using Data Envelopment Analysis (DEA). Technical efficiency was on average 0.757 under constant returns to scale (CRS), 0.799 under variable returns to scale (VRS) and scale efficiency was estimated at 0.951. Twelve per cent of the sample was operating at optimum scale (CRS). Fifty six percent of the sample was operating below optimum scale and 32% of the sample was operating above optimum scale. Overall optimum scale was associated with production systems operating with larger land area, with reduced proportion of rented land, increased amounts of hired labour, a higher quantity of quota and achieving a longer grazing season. It was also shown that increased farm size, intensification and dairy specialisation were associated with increases in technical and scale efficiency at farm level.

Suggested Citation

  • Kelly, E & Shalloo, L & Geary, U & Kinsella, A. & Thorne, F & Wallace, M, 2013. "An analysis of the factors associated with technical and scale efficiency of Irish dairy farms," International Journal of Agricultural Management, Institute of Agricultural Management, vol. 2(3), pages 1-11, April.
    • Handle: RePEc:ags:ijameu:175048
    DOI: 10.22004/ag.econ.175048
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    2. Xiaoxin, Zhang, 2024. "Greening the bottom line: Unlocking efficiency in natural resource markets for resilience," Resources Policy, Elsevier, vol. 89(C).
    3. Tozer, Peter R & Siddique, Muhammad Imran, 2016. "Ownership, region, system or ? – What leads to efficiency?," 2016 Conference, August 25-26, Nelson, New Zealand 260808, New Zealand Agricultural and Resource Economics Society.
    4. Mihailescu, E. & Ryan, W. & Murphy, P.N.C. & Casey, I.A. & Humphreys, J., 2015. "Economic impacts of nitrogen and phosphorus use efficiency on nineteen intensive grass-based dairy farms in the South of Ireland," Agricultural Systems, Elsevier, vol. 132(C), pages 121-132.
    5. Tracy Bradfield & Robert Butler & Emma Dillon & Thia Hennessy & Paul Kilgarriff, 2021. "The Effect of Land Fragmentation on the Technical Inefficiency of Dairy Farms," Journal of Agricultural Economics, Wiley Blackwell, vol. 72(2), pages 486-499, June.
    6. Zhu, Liyun & Schneider, Kevin & Oude Lansink, Alfons, 2023. "Economic, environmental, and social inefficiency assessment of Dutch dairy farms based on the dynamic by-production model," European Journal of Operational Research, Elsevier, vol. 311(3), pages 1134-1145.
    7. Jean‐Paul Chavas & Doris Läpple & Bradford Barham & Emma Dillon, 2022. "An economic analysis of production efficiency: Evidence from Irish farms," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 70(2), pages 153-173, June.
    8. Rangalal Mohapatra & Bondona Lama, 2024. "An analysis of the determinants of productivity of Assam tea growers," SN Business & Economics, Springer, vol. 4(12), pages 1-33, December.
    9. Tozer, Peter, 2017. "Pr - Impact Of Feeding Systems On The Profit And Efficiency Of New Zealand Dairy Farms," 21st Congress, Edinburgh, Scotland, July 2-7, 2017 345807, International Farm Management Association.
    10. Artur Wilczynski & Ewa Koloszycz & Michal Switlyk, 2020. "Technical Efficiency of Dairy Farms: An Empirical Study of Producers in Poland," European Research Studies Journal, European Research Studies Journal, vol. 0(1), pages 117-127.
    11. Garcia, Luis & Laepple, Doris & Dillon, Emma & Thorne, Fiona, 2020. "The role of hired labor in transient and persistent technical efficiency on Irish dairy farms," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304395, Agricultural and Applied Economics Association.
    12. Cathal O'Donoghue & Thia Hennessy, 2015. "Policy and Economic Change in the Agri-Food Sector in Ireland," The Economic and Social Review, Economic and Social Studies, vol. 46(2), pages 315-337.
    13. Cathal O'Donoghue & Thia Hennessy, 2014. "Chapter 03: The Agri-Food Sector," Chapters from Rural Economic Development in Ireland, in: Rural Economic Development in Ireland, edition 1, chapter 3, Rural Economy and Development Programme,Teagasc.
    14. Popovic, Rade, 2013. "Economic Efficiency Of Dairy Farms With Intensive And Grazing Production Systems," 50th Anniversary Seminar, Agriculture and Rural Development -Challenges of Transition and Integration Processes, September 27, 2013 161805, University of Belgrade, Department of Agricultural Economics, Faculty of Agriculture.
    15. Lungelo P. Cele & Thia Hennessy & Fiona Thorne, 2023. "Regional technical efficiency rankings and their determinants in the Irish dairy industry: A stochastic meta‐frontier analysis," Agribusiness, John Wiley & Sons, Ltd., vol. 39(3), pages 727-743, July.
    16. Iordanis Parikoglou & Grigorios Emvalomatis & Doris Läpple & Fiona Thorne & Michael Wallace, 2024. "The contribution of innovation to farm-level productivity," Journal of Productivity Analysis, Springer, vol. 62(2), pages 239-255, October.

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