A metafrontier approach to measuring technical efficiencies across the UK dairy sector

A regional approach is applied to measure technical efficiencies on dairy farms which employs the deterministic metafrontier approach. We construct six super regions for the UK, i.e. Eastern, Western, Northern England, Wales, Scotland and Northern Ireland. Data are collected through three different administrative systems, all be it under the same FADN guidance. We find for dairy farming comparative indicators of performance in all three data sets. The stochastic frontier approach is applied to construct 6 regional frontiers and a pooled (UK) dataset for comparison. A likelihood ratio test rejects the null hypothesis that these regions operate under a common frontier which may indicate bias in previous attempts to measure dairying efficiency at the country level. Mean technical efficiencies are high for the period 2005 to 2008, though there is some indication that little technical progress has occurred since decoupling of CAP payments from production in all regions. The metafrontier presents estimates against a common technology and mean scores range from below 0.50 for the English regions and Northern Ireland, 0.52 for Wales and 0.56 for Scotland. This paper promotes the application of the deterministic metafrontier approach for similar sub-country studies.