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

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.

Economic impacts of nitrogen and phosphorus use efficiency on nineteen intensive grass-based dairy farms in the South of Ireland

“…However, on intensive dairy farms, concerned with production levels and profitability, a more achievable objective may be to optimise the use of external inputs such as chemical fertilisers (Arriaga et al, 2009;Kelly et al, 2013). Therefore, from an environmental point of view, SR can be maintained, or even increased, while decreasing N and P balances and improving NUE and PUE.…”

“…Grazed grass-based dairy systems offer opportunities to reduce these expenditures during the grazing season (MacDonald et al, 2008;Soder and Rotz, 2001). These strategies include increasing resource use efficiency (Finneran et al, 2011;Kelly et al, 2013;Patton et al, 2012;Ridler, 2008), nutrient use efficiency , and N-eco-efficiency (the amount of milk produced per kilogram of N balance; Beukes et al, 2012), as well as accounting for chemical N fertiliser replacement value (NFRV) of organic N contained in slurry (Lalor, 2008) or fixed by white clover in pastures (Humphreys et al, 2012).…”

Technical Efficiency of Dairy Farms: An Empirical Study of Producers in Poland

“…The results of the analyses prove that efficiency is related to the amount of expenditure per unit of production (Michaličková et al, 2013), with farm size and production intensity (Jiang and Sharp, 2015;Ma et al, 2019). Research also indicates a link between farm efficiency and milk quality (Kelly et al, 2013) and animal welfare (Allendorf and Wettemann, 2015). However, the conducted research did not clearly indicate the direction and strength of the impact of subsidies on the technical efficiency of farms (Latruffe et al, 2016).…”

Review: Grass-based dairy systems, data and precision technologies

“…A number of factors influence costs of production and farm profitability in grass-based systems. Overall pasture utilisation, grazing season length, overall pasture management and level of supplementation are all strongly associated with profitability (Shalloo et al, 2004;MacDonald et al, 2010;Läpple et al, 2012;Kelly et al, 2013;Ramsbottom et al, 2015;Hanrahan et al, 2018).…”

“…In particular, a focus on increasing output through increased pasture growth and utilisation is associated with profitability . There is significant potential for improvement in efficiency even within well-developed pasture based systems such as Ireland Kelly et al, 2013) as well as other countries (MacDonald and Penno 1998;MacDonald et al, 2010).…”