Measuring and explaining multi-directional inefficiency in the Malaysian dairy industry

The association of dairy cattle longevity with farm level technical inefficiency

Prolonging dairy cattle longevity is regarded as one of the options to contribute to a more sustainable milk production. Cattle longevity is a direct result from culling decisions, which is primarily driven by economic considerations. As a consequence, at the herd level, cattle longevity can have effects on the efficiency of dairy production. This study investigates the technical inefficiency of dairy input, and its association with cattle longevity under Dutch commercial dairy production conditions, using a two-stage data envelopment analysis (DEA) approach. First, the technical inefficiency of capital, labor, land, seed & crop protection expenses, veterinary services, livestock purchase & services, feed purchase, miscellanea, livestock units and total input on total farm revenues was computed using DEA. Secondly, a bootstrap truncated regression analysis was applied to identify the association of cattle longevity with the evaluated input-specific and total input scores for technical inefficiency. Data were compiled from performance and accountancy records of 1,037 commercial Dutch dairy herds over the period of 2007 to 2014. In general, Dutch dairy farms displayed a relatively good overall technical efficiency, represented by an average inefficiency score of 0.09. The economic benefit of extending cattle longevity was evidenced by the negative association of cattle longevity with total input inefficiency. Of the evaluated inputs, the utilization of livestock units and feed was most efficient, with inefficiency scores below 0.26. This contrasts with the poor input efficiency of capital and livestock purchase & services with inefficiency scores around 0.52. Although the strength of the evaluated associations was generally low, the regression results illustrated that, except for labor, the age of culled cows was significantly negatively associated (P < 0.05) with each of the input inefficiencies. This contrasts with the significant associations of input inefficiencies with lifetime milk production, which were mostly positive. Since lifetime milk production is driven by length of cattle lifespan in combination with production level of the cows, the reverse direction of the associations with the two longevity indices illustrates that prolonging cattle longevity can improve efficiency performance of a dairy farm as long as the milk yield per cow remains unchanged.

Technical inefficiency of Dutch vegetable farms: Specific-input analyses

Differences in technical efficiency across farms are one of the major factors explaining differences in farm survival and growth and changes in farm industry structure. This study employs Data Envelopment Analysis (DEA) to compute technical inefficiency scores for output, energy, materials, pesticides and fertiliser of a sample of Dutch indoor vegetable farms within the period 2006–2016. A bootstrap truncated regression model is used to determine statistical associations between producer-specific characteristics and technical inefficiency scores for the specified inputs. For the sample of indoor growers, the average technical inefficiency was about 14% for energy, 23% for materials, 24% for pesticides and 22% for fertilisers. The bootstrap truncated regression suggested that the degree of specialisation exerts adverse effects on the technical inefficiency of variable inputs. While age, short-term, long-term debt and subsidy were statistically significant, the coefficients were not economically significant. Building the capacity of farmers to reduce input inefficiency will enable farmers to be competitive and reduce the adverse effects of input overuse on the environment.

Analysing the determinants of technical efficiency of dairy farms in Brazil

Purpose

The purpose of this paper is to analyse the determinants of technical efficiency (TE) in dairy farms located in the South of Brazil, aiming for a better understanding of the topic for academics, dairy farmers and policymakers to improve the productivity and competitiveness of dairy farms.

Design/methodology/approach

This study was developed using a two-stage approach. Data envelopment analysis was used to estimate the TE level and regression models to understand the factors affecting TE in dairy farms. The sample size is 253 dairy farms in the South of Brazil.

Findings

The variation in the mean TE indexes reported in the literature can be explained by the attributes of the analysed studies, including the education of the farm operator, farm size (number of cows and milk), feed and labour costs, and use of services. Additionally, the results suggest that dairy farmers in the sample could increase milk output by 50.1 per cent (level of inefficiency) on average if they improve their TE.

Originality/value

This study makes three important contributions: first, it formulates hypotheses from the previous literature’s propositions on the estimation of TE in dairy farms; second, it tests the hypotheses in an empirical study to understand the main factors affecting the TE in dairy farms of the selected municipalities in the South of Brazil; and third, it compares previous findings on the determinants of TE in dairy farms serving different stakeholders, such as researchers, farmers and government representatives, to improve the productivity and competitiveness of dairy farms.